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[G.R. No. L-8967. May 31, 1956.

ANASTACIO VIAA, Petitioner, vs. ALEJO AL-LAGADAN and FILOMENA PIGA, Respondents.

DECISION

CONCEPCION, J.:

Petitioner Anastacio Viaa owned the fishing sailboat Magkapatid, which, in the night of September 3, 1948, sunk in the waters between
the province of Bataan and the island of Corregidor, as a consequence of a collision with the USS TINGLES, a vessel of the U.S. Navy.
Inasmuch as Alejandro Al-Lagadan, a member of the crew of the Magkapatid, disappeared with the craft, his parents, Respondent Alejo Al-
Lagadan and Filomena Piga, filed the corresponding claim for compensation under Act No. 3428. After appropriate proceedings, a Referee of
the Workmens Compensation Commission rendered a decision, dated February 23, 1953:chanroblesvirtuallawlibrary

1. Ordering Mr. Anastacio Viaa to pay the above-named claimants through the Workmens Compensation Commission, Manila, the sum of
P1,560 in lump sum with interest at 6 per cent from September 3, 1948 until fully paid; chan roblesvirtualawlibraryand.

To pay the sum of P16 to the Workmens Compensation Commission as costs.

Said decision was, on petition for review filed by Viaa, affirmed by the Workmens Compensation Commissioner, on or about October 22,
1954, with additional fee of P5.00. Said Commissioner, having subsequently denied a reconsideration of this action, Viaa has brought the
matter to us, for review by certiorari, upon the ground that this case does not fall within the purview of Act No. 3428, because the gross
income of his business for the year 1947 was allegedly less than P10,000, and because Alejandro Al-Lagadan was, at the time of his death,
his (Petitioners) industrial partner, not his employee.

The first ground is untenable, Petitioner not having invoked it before the rendition of the Referees decision on February 23, 1953. The
objection to the application of Act No. 3428, upon said ground, was made for the first time when Petitioner sought a review of said decision
by the Workmens Compensation Commissioner. The non- applicability of said Act to employers whose gross income does not reach P20,000
is, however, a matter of defense, which cannot be availed of unless pleaded in the employers answer to the claim for compensation filed by
the employee or his heirs. Petitioner herein having failed to do so, said defense may not now be entertained (Rolan vs. Perez, 63 Phil., 80,
85-86).

As regards the second ground, Petitioner maintains, contrary to the finding of the Referee and said Commissioner, that the deceased was his
industrial partner, not employee. In this connection, it is alleged in paragraph (6) of the petition:chanroblesvirtuallawlibrary

That the practice observed then and now in engaging the services of crewmen of sailboats plying between Mindoro and Manila is on a
partnership basis, to wit:chanroblesvirtuallawlibrary that the owner of the vessel, on one hand receives one-half of the earnings of the
sailboat after deducting the expenses for the maintenance of the crew, the other half is divided pro rata among the members of the crew, the
patron or captain receiving four parts, the piloto or next in command three parts, the wheelsman or timonel 1 1/2 parts and the rest of the
members of the crew one part each, as per Annex B hereof.

It appears that, before rendering his aforementioned decision, the Referee requested Mr. Manuel O. Morente, an attorney of the Workmens
Compensation Commission, to look into and inquire and determine the method of and the basis of engaging the services of crewmen for
sailboats (batel) of twenty (20) tons or more plying between Manila and Mariveles and moored along Manila North Harbor, and that,
thereafter, said Atty. Morente reported:chanroblesvirtuallawlibrary

The basis of engaging the services of crewmen of a batel is determined in accordance with the contract executed between the owner and the
patron. The contract commonly followed is on a share basis after deducting all the expenses incurred on the voyage. One half goes to the
owner of the batel and the other half goes to the patron and the members of the crew and divided among themselves on a share basis also in
accordance with their agreement with the patron getting the lions share. The hiring of the crew is done by the patron himself. Usually, when
a patron enters into a contract with the owner of the batel, he has a crew ready with him. (Italics supplied.)

In sustaining the Referees finding to the effect that the deceased was an employee of Viaa, the Workmens Compensation Commissioner
said:chanroblesvirtuallawlibrary

The trial referee found that there was an employer-employee relation between the Respondentand the deceased, Alejandro Al-Lagadan, and
the share which the deceased received at the end of each trip was in the nature of wages which is defined under section 39 of the
Compensation Act. This is so because such share could be reckoned in terms of money. In other words, there existed the relation of employer
and employee between the Respondent and Alejandro Al-Lagadan at the time of the latters death.

We believe that the trial referee did not err in finding the deceased an employee of the Respondent. We cite the following cases which
illustrate the point at issue:chanroblesvirtuallawlibrary

The officers and crews of whaling and other fishing vessels who are to receive certain proportions of produce of the voyage in lieu of
wages; chan roblesvirtualawlibrary(Rice vs. Austin, 17 Mass. 206; chan roblesvirtualawlibrary2Y & C. 61); chan
roblesvirtualawlibraryCaptains of merchant ships who, instead of wages, receive shares in the profits of the adventure; chan
roblesvirtualawlibrary(4 Maule & C. 240); chan roblesvirtualawlibraryor who take vessels under an agreement to pay certain charges and
receive a share of the earnings; chan roblesvirtualawlibrary(Tagard vs. Loring, 16 Mass. 336, 8 Am. Dec. 140; chan
roblesvirtualawlibraryWinsor vs. Cutts, 7 Greenl. Me. 261) have generally been held not to be partners with the Respondent, and the like.
Running a steamboat on shares does not make the owners partners in respect to the vessel (The Daniel Koine, 35 Fed. 785); chan
roblesvirtualawlibraryso of an agreement between two parties to farm on shares; chan roblesvirtualawlibrary(Hooloway vs. Brinkley, 42 Ga.
226); chan roblesvirtualawlibraryA seaman who is to receive pay in proportion to the amount of fish caught is not a partner; chan
roblesvirtualawlibrary(Holdren vs. French, 68 Me. 241); chan roblesvirtualawlibrarysharing profits in lieu of wages is not a partnership.
There is no true contribution; chan roblesvirtualawlibrary(Crawford vs. Austin, 34 Md. 49; chan roblesvirtualawlibraryWhitehill vs. Shickle,
43 Mo. 538; chan roblesvirtualawlibrarySankey vs. Iron Works, 44 Ga. 228.) (Italics supplied.)

In other words, in the opinion of the Referee, as well as of said Commissioner, the mere fact that Alejandros share in the understanding
could be reckoned in terms of money, sufficed to characterize him as an employee of Viaa. We do not share this view. Neither can we
accept, however, Petitioners theory to the effect that the deceased was his partner, not an employee, simply because he (the deceased) shared
in the profits, not in the losses. In determining the existence of employer-employee relationship, the following elements are generally
considered, namely:chanroblesvirtuallawlibrary (1) the selection and engagement of the employee; chan roblesvirtualawlibrary(2) the
payment of wages; chan roblesvirtualawlibrary(3) the power of dismissal; chan roblesvirtualawlibraryand (4) the power to control the
employees conduct although the latter is the most important element (35 Am. Jur. 445). Assuming that the share received by the deceased
could partake of the nature of wages on which we need not, and do not, express our view and that the second element, therefore, exists
in the case at bar, the record does not contain any specific data regarding the third and fourth elements.

With respect to the first element, the facts before us are insufficient to warrant a reasonable conclusion, one way or the other. On the one
hand, Atty. Morente said, in his aforementioned report, that the contract commonly followed is on a share basis cralaw The hiring of a crew
is done by the patron himself. Usually, when a patron enters into a contract with the owner of the batel, he has a crew ready with him. This
statement suggests that the members of the crew are chosen by the patron, seemingly, upon his sole responsibility and authority. It is
noteworthy, however, that said report referred to a practice commonly and usually observed in a given place. The record is silent on
whether such practice had been followed in the case under consideration. More important still, the language used in said report may be
construed as intimating, not only that the patron selects and engages the crew, but, also, that the members thereof are subject to his control
and may be dismissed by him. To put it differently, the literal import of said report is open to the conclusion that the crew has a contractual
relation, not with the owner of the vessel, but with the patron, and that the latter, not the former, is either their employer or their partner.

Upon the other hand, the very allegations of the petition show otherwise, for Petitioner explicitly averred therein that the deceased Alejandro
Al-Lagadan was his industrial partner. This implies that a contract of partnership existed between them and that, accordingly, if the crew
was selected and engaged by the patron, the latter did so merely as agent or representative of Petitionerherein. Again, if Petitioner were a
partner of the crew members, then neither the former nor the patron could control or dismiss the latter.

In the interest of justice and equity, and considering that a decision on the merits of the issue before us may establish an important precedent,
it would be better to remand the case to the Workmens Compensation Commission for further evidence and findings on the following
questions:chanroblesvirtuallawlibrary (1) who selected the crew of the Magkapatid and engaged their services; chan
roblesvirtualawlibrary(2) if selected and engaged by the patron, did the latter act in his own name and for his own account, or on behalf
and for the account of Viaa; chan roblesvirtualawlibrary(3) could Viaa have refused to accept any of the crew members chosen and
engaged by the patron; chan roblesvirtualawlibrary(4) did Petitioner have authority to determine the time when, the place where and/or the
manner or conditions in or under which the crew would work; chan roblesvirtualawlibraryand (5) who could dismiss its members.

Wherefore, let the case be remanded to the Workmens Compensation Commission, for further proceedings in conformity with this decision,
without special pronouncement as to costs. SO ORDERED.
G.R. No. L-28280-81 November 28, 1969

GERONIMO DE LOS REYES, petitioner,


vs.
GREGORIO ESPINELI, RUPERTO ALCANTARA, JORGE LOBREN, PEDRO AMANTE, MATEO GUTIERREZ, ISIDRO
RAMOS, SANTOS DANGUE, MIGUEL RAMOS, CORNELIO GARCIA, MARGARITO BELARMINO, IRENEO BATRALO,
SIMPLICIO CASTRO, VICENTE ANIVES, MIGUEL HERNANDEZ, EUGENIO DALISAY, LEON LACSAMANA, and BELEN
ALVAREZ, respondents.

Luis A. L. Javellana and Yolanda Q. Javellana for petitioner.


Manuel A. Cordero for respondents.

CASTRO, J.:

Petition for review of the decision of the Court of Appeals in C.A.-G.R. No. 37689-R and C.A.-G.R. No. 37690-R modifying that of the
Court of Agrarian Relations in CAR cases 1185 and 1186.

The petitioner Geronimo de los Reyes is the owner of a 200-hectare coconut plantation located in Calauan, Laguna. In 1958 his overseer
("katiwala") therein was Gonzalo Belarmino, who took into the land the 17 respondents under an agreement that the latter were to receive 1/7
portion of every coconut harvest. Sometime in October, 1962, the petitioner dismissed Belarmino, upon the suspicion that the latter had been
deceiving him, in connivance with the respondents.

On March 2, 1963 Ruperto Alcantara, et al., and Gregorio Espineli (respondents here) filed separate petitions (subsequently amended)
against De los Reyes in the Court of Agrarian Relations, seeking the delivery to them of the difference between the 1/7 share which the
petitioner had been giving them and the 30% share to which they, as share tenants, were allegedly entitled. Upon the finding that the
respondents were mere agricultural workers of the petitioner, the CAR ordered the latter to retain them as such and to pay them the sum of
P4,559.07 "which is the total of their unpaid share of 1/7 of the net coconut harvests for the period from September 13 to December 23, 1962
and February 25 to May 28, 1963," plus P500 as attorney's fees. Upon respondents' appeal, the Court of Appeals modified the decision of the
CAR, by declaring the respondents tenants of the petitioner and ordering the latter to pay them "the difference between the one-seventh (1/7)
share of the crops and the thirty (30%) per cent provided for in the Tenancy Law from the year 1958 up to the filing of the petitions and so
on; the resulting amount for this purpose to be arrived at in a liquidation to be submitted, if and when this judgment shall have become final
and the record remanded to the lower court."

Basically, the petitioner contends that (1) there existed no contractual relationship between him and the respondents; (2) the respondents were
not his tenants; and (3) the decision of the Court of Appeals deprives him of his property without due process of law.

The respondents attempted to have the present appeal dismissed on the ground that it involves questions of fact. If indeed the issues posed by
the petitioner necessarily invite calibration of the entire evidence, 1 then the appeal should be dismissed since issues only of law may be raised
in an appeal from the Court of Appeals to this Court.2 It seems to us clear, however, that the petitioner accepts the findings of fact made by
the appellate court, but takes exception to the conclusions drawn therefrom. Such being the case, the questions here tendered for resolution
are purely of law.3

At the outset, we must resolve the question of existence of a contract, the petitioner alleging, as he does, that his consent, express or implied,
had never been given. His position, simply stated, is that at the time the respondents were taken into his land by Belarmino, the latter was a
mere laborer and therefore without the requisite authority to contract in his behalf, and it was only later that he was promoted to the position
of overseer. However, in his "Amended Complaint" of April 22, 1968,4 the petitioner prayed that "judgment be rendered ... finding the
defendants guilty of a breach of their contractual obligation with the plaintiff," and in the body thereof he incorporated statements from
which it can plainly be seen that a contractual relationship existed between the parties.

Verily, there was and still is a contractual relationship between the petitioner and the respondents. In our view the pith of the problem is,
actually, whether the relationship is that of agricultural share tenancy (as averred by the respondents) or that of farm employer and
agricultural laborer (as asserted by the petitioner). On a determination of this question depends the respective rights of the parties, more
particularly the proper assessment of the share of the respondents under the law.

Of fundamental relevance in this discussion are definitions of basic terms.

"Agricultural tenancy" is the physical possession by a person of land devoted to agriculture belonging to, or legally possessed by, another for
the purpose of production through the labor of the former and of the members of his immediate farm household, in consideration of which
the former agrees to share the harvest with the latter, or to pay a price certain or ascertainable, either in produce or in money, or in
both.5 "Share tenancy" exists whenever two persons agree on a joint undertaking for agricultural production wherein one party furnishes the
land and the other his labor, with either or both contributing any one or several of the items of production, the tenant cultivating the land
personally with the aid of labor available from members of his immediate farm household, and the produce thereof to be divided between the
landholder and the tenant in proportion to their respective contributions.6 And a "share tenant" is a person who, himself and with the aid
available from within his immediate farm household, cultivates the land belonging to or possessed by another, with the latter's consent, for
purposes of production, sharing the produce with the landholder."7

It is to be readily deduced from the foregoing definitions that aside from the usual essential requisites of a contract, 8the characteristics of a
share tenancy contract are: (1) the parties are a landholder, who is a natural or juridical person and is the owner, lessee, usufructuary or legal
possessor of agricultural land,9 and a tenant who, himself and with the aid available from within his immediate farm household, cultivates the
land which is the subject-matter of the tenancy; (2) the subject-matter is agricultural land; (3) the purpose of the contract is agricultural
production; and (4) the cause or consideration is that the landholder and the share tenant would divide the agricultural produce between
themselves in proportion to their respective contributions.

While the Agricultural Tenancy Act did not define the term "agricultural laborer" or "agricultural worker," the Agricultural Land Reform
Code does. A "farm worker" is "any agricultural wage, salary or piece worker but is not limited to a farm worker of a particular farm
employer unless this Code explicitly states otherwise, and any individual whose work has ceased as a consequence of, or in connection with,
a current agrarian dispute or an unfair labor practice and who has not obtained a substantially equivalent and regular employment." The term
includes "farm laborer and/or farm employees."10 An "agricultural worker" is not a whit different from a "farm worker."

From the definition of a "farm worker" thus fashioned, it is quite apparent that there should be an employer-employee relationship between
the "farm employer"11 and the farm worker. In determining the existence of an employer-employee relationship, the elements that are
generally considered are the following: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the employer's power to control the employee's conduct. It is this last element that constitutes the most important index of
the existence of relationship.12

This is not to say that agricultural workers or farm laborers are industrial workers. Not by any means, although they may both appear in the
same establishment. The difference lies in the kind of work they do. Those whose labor is devoted to purely agricultural work are agricultural
laborers. All others are industrial workers.13 Nonetheless, they belong to the same class. Both are workers. Both are employees.

We are here primarily interested in the basic differences between a farm employer-farm worker relationship and an agricultural sharehold
tenancy relationship. Both, of course, are leases, but there the similarity ends. In the former, the lease is one of labor, with the agricultural
laborer as the lessor of his services, and the farm employer as the lessee thereof. 14 In the latter, it is the landowner who is the lessor, and the
sharehold tenant is the lessee of agricultural land. As lessee he has possession of the leased premises. 15 But the relationship is more than a
mere lease. It is a special kind of lease, the law referring to it as a "joint undertaking." 16 For this reason, not only the tenancy laws are
applicable, but also, in a suppletory way, the law on leases, the customs of the place and the civil code provisions on partnership. 17 The share
tenant works for that joint venture. The agricultural laborer works for the farm employer, and for his labor he receives a salary or wage,
regardless of whether the employer makes a profit.18 On the other hand, the share tenant participates in the agricultural produce. His share is
necessarily dependent on the amount of the harvest.

Since the relationship between farm employer and agricultural laborer is that of employer and employee, the decisive factor is the control
exercised by the former over the latter. On the other hand, the landholder has the "right to require the tenant to follow those proven farm
practices which have been found to contribute towards increased agricultural production and to use fertilizer of the kind or kinds shown by
proven farm practices to be adapted to the requirements of the land." This is but the right of a partner to protect his interest, not the control
exercised by an employer. If landholder and tenant disagree as to farm practices, the former may not dismiss the latter. It is the court that
shall settle the conflict according to the best interests of both parties. 19

The record is devoid of evidentiary support for the notion that the respondents are farm laborers. They do not observe set hours of work. The
petitioner has not laid down regulations under which they are supposed to do their work. The argument tendered is that they are guards.
However, it does not appear that they are under obligation to report for duty to the petitioner or his agent. They do not work in shifts. Nor has
the petitioner prescribed the manner by which the respondents were and are to perform their duties as guards. We do not find here that degree
of control and supervision evincive of an employer-employee relationship. Furthermore, if the respondents are guards, then they are not
agricultural laborers, because the duties and functions of a guard are not agricultural in nature. 20 It is the Industrial Court that has jurisdiction
over any dispute that might arise between employer and employee. Yet, the petitioner filed his complaint against the respondents in the Court
of Agrarian Relations.

We now proceed to determine if there are present here the salient characteristics of an agricultural share tenancy contract. The subject-matter
is coconut land, which is considered agricultural land under both the Agricultural Land Tenancy ACT21 and the Agricultural Land Reform
Code.22 The purpose of the contract is the production of coconuts; the respondents would receive 1/7 of the harvest. The petitioner is the
landholder of the coconut plantation.

The crucial factors are that the tenant must have physical possession of the land for the purpose of production 23and he must personally
cultivate the land. If the tenant does not cultivate the land personally he cannot be considered a tenant even if he is so designated in the
written agreement of the parties.24

"Cultivation" is not limited to the plowing and harrowing of the land. It includes the various phrases of farm labor described and provided by
law, the maintenance, repair and weeding of dikes, paddies and irrigation canals in the holding. Moreover, it covers attending to the care of
the growing plants.25 Where the parties agreed that they would "operate a citrus nursery upon the condition that they would divide the budded
citrus in the proportion of 1/3 share of respondents and 2/3 as share of petitioner," and that the "petitioner would furnish all the necessary
seedlings and seeds, as well as the technical know-how in the care, cultivation, budding and balling of the budded citrus, while respondents
would furnish the land necessary for the nursery, the farm labor that may be needed to plant and cultivate, and all the chemicals, fertilizers,
and bud tapes that may be necessary for such cultivation," then "the tenancy agreement entered into between the parties has relation to the
possession of agricultural land to be devoted to the production of agricultural products thru the labor of one of the parties, and as such comes
within the purview of the term 'agricultural tenancy' as defined in section 3 of Republic Act No. 1199 as amended."26

In one instance,27 the landholder claimed that his caretaker was not an agricultural tenant because he "does not till or cultivate the land in
order to grow the fruit bearing trees because they are already full grown," and "he does not even do the actual gathering of the fruits" but
"merely supervises the gathering, and after deducting the expenses, he gives one-half of the fruits to plaintiff all in consideration of his stay
in the land." This Court's answer was to the point:

Anyone who has had fruit trees in his yard will disagree with the above description of the relationship. He knows the caretaker, must water
the trees, even fertilize them for better production, uproot weeds and turn the soil, sometimes fumigate to eliminate plant pests, etc. Those
chores obviously mean "working or cultivating" the land. Besides, it seems that defendant planted other crops, [i.e., cultivated the lot] giving
the landowner his corresponding share.

The Court of Appeals made some essential findings of fact. The respondents were called "kasama." They have plowing implements. The
respondent Pedro Amante even used to have a carabao which he subsequently exchanged for a horse. Almost all of the respondents have
banana plantations on the land. They live in the landholding. They are charge with the obligation to clean their respective landholdings.
Certain portions of the land are planted to palay.

These factual findings may not be reviewed by the Supreme Court.28 Furthermore, the said facts are supported by the testimony of the
petitioner himself, who admitted that the respondents are his "kasama," although he tried to minimize the effect of this admission by alleging
that although called "kasama," the respondents "do not perform the work of a "kasama," and that in Quezon the "kasama" plow the land, they
plant rice, but here in Laguna, they do not do anything." The appellate court was correct in concluding that "kasama" means "tenant," 29 not
worker or laborer, which is translated into our national language as "manggagawa." 30 Respecting farm implements, the petitioner admitted
that "they have the implements," but again he tried to minimize the significance of his statement by adding that "they have not used it in the
farm." However, the report of the CAR clerk of court, based on his ocular inspection, pertinently states that he found "certain portions
planted with palay."

The petitioner cannot deny that the respondents were all living in the landholding and that "all of them have banana plantation, small or big,
"though he averred," not one single banana was given to me as my share."

We now come to the all-important question of whether the respondents have the duty to cultivate the land in order that the trees would bear
more coconuts. The petitioner's answers on cross-examination are quite revealing. Thus:

Q. Where these petitioners duty bound to do any cleaning or clearing of the underbrush within the coconut land?

A. These laborers clean the land from where . . . They are getting their food and subsistence.

COURT: The question is that, are they duty bound to clean the landholding in question?

A. To make my answer short, I say that the responsibility is to Gonzalo Belarmino, to him, because he is the one who engaged them.

xxx xxx xxx

A. One, to guard the property and use their names as threat to people who might ... have the intention of stealing my coconuts, and two,
to assist in the clearing of the land because that is the responsibility of Gonzalo Belarmino. . . . 31
Undeniably, the petitioner considers it one of the duties of the respondents to clear and clean the land. Additionally, in his complaint the
petitioner claimed that "the defendants have abandoned their posts at the plaintiff's plantation and have likewise failed and refused to comply
with their contractual obligation with the plaintiff to keep the areas respectively assigned to them clean and clear of undergrowths and
cogonal grass at all times, with the result that it is now impossible for the plaintiff to harvest the mature coconuts as these would only be lost
amid the undergrowth and cogonal which have now grown to unreasonable heights, thereby causing further damage and prejudice to the
plaintiff." (Emphasis supplied).

The petitioner clearly expected the respondents to perform the duties of a tenant, especially, to maintain the land clean and clear "at all
times," which not only would facilitate harvesting but, more importantly, would necessarily result in greater production. As found by the
CAR clerk of court during the ocular inspection,

the planting of palay has a direct effect on the growing of the coconuts because in the places he found planted with palay, the coconut trees
displayed white leaves gray in color with plenty of nuts or fruits, compared to the portion in the hacienda where we encountered cogon
grasses, under brushes and ipil-ipil tress, there is a need for thorough cleaning, especially the ipil-ipil trees which are growing high for years
already in-between the rows of coconut trees.32

Therefore, the parties to the contract understood, in sum and substance, that the respondents were to "cultivate" the land. Whether the latter
had been remiss in the performance of their contractual obligations, does not affect the nature of the contract which the appellate court
analyzed and found to be that of share tenancy. It is the principal features and stipulations which determine the true essence of a
contract.33 Considering then that the respondents are duty bound to cultivate their respective holdings (of which they have possession), and
that they share in the harvest, the Court of Appeals' conclusion must be upheld. This, especially in the light of the facts that the respondents
raise secondary crops and have their homes in their respective holdings.

The petitioner having entered into a share tenancy contract with the respondents, it certainly cannot be seriously claimed that the relationship
of landlord and tenant is unjustifiably being imposed on him without due process of law. It was the petitioner himself who voluntarily entered
the relationship, and, therefore, should shoulder the consequences thereof, one of which is that the tenants must be given, as they are entitled
to, a 30% share in the produce.34

ACCORDINGLY, the decision appealed from is affirmed, at petitioner's cost.

G.R. No. 87700 June 13, 1990

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II, HERMINIA REYES, MARCELA
PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166, RTC, PASIG, and SAN MIGUEL
CORPORATION, respondents.

Romeo C. Lagman for petitioners.

Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.

MELENCIO-HERRERA, J.:

Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in this special civil action for certiorari
and Prohibition for having issued the challenged Writ of Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court
entitled "San Miguel Corporation vs. SMCEU-PTGWO, et als."

Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse of discretion, a labor dispute being
involved. Private respondent San Miguel Corporation (SanMig. for short), for its part, defends the Writ on the ground of absence of any
employer-employee relationship between it and the contractual workers employed by the companies Lipercon Services, Inc. (Lipercon) and
D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of personality to represent said workers for purposes of collective
bargaining. The Solicitor General agrees with the position of SanMig.

The antecedents of the controversy reveal that:

Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with Lipercon and D'Rite (Annexes K and I,
SanMig's Comment, respectively). These companies are independent contractors duly licensed by the Department of Labor and Employment
(DOLE). SanMig entered into those contracts to maintain its competitive position and in keeping with the imperatives of efficiency, business
expansion and diversity of its operation. In said contracts, it was expressly understood and agreed that the workers employed by the
contractors were to be paid by the latter and that none of them were to be deemed employees or agents of SanMig. There was to be no
employer-employee relation between the contractors and/or its workers, on the one hand, and SanMig on the other.

Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly authorized representative of the monthly
paid rank-and-file employees of SanMig with whom the latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to
30 June 1989 (Annex A, SanMig's Comment). Section 1 of their CBA specifically provides that "temporary, probationary, or contract
employees and workers are excluded from the bargaining unit and, therefore, outside the scope of this Agreement."

In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some Lipercon and D'Rite workers had signed up
for union membership and sought the regularization of their employment with SMC. The Union alleged that this group of employees, while
appearing to be contractual workers supposedly independent contractors, have been continuously working for SanMig for a period ranging
from six (6) months to fifteen (15) years and that their work is neither casual nor seasonal as they are performing work or activities necessary
or desirable in the usual business or trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting situation. It was then
demanded that the employment status of these workers be regularized.

On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig, the Union filed a notice of strike for
unfair labor practice, CBA violations, and union busting (Annex D, Petition).

On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex F, Petition).

As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently, the two (2) notices of strike were
consolidated and several conciliation conferences were held to settle the dispute before the National Conciliation and Mediation Board
(NCMB) of DOLE (Annex G, Petition).

Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and D'Rite workers in various SMC plants and
offices.

On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent Court to enjoin the Union from:

a. representing and/or acting for and in behalf of the employees of LIPERCON and/or D'RITE for the purposes of collective bargaining;

b. calling for and holding a strike vote, to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;

c. inciting, instigating and/or inducing the employees or workers of LIPERCON and D'RITE to demonstrate and/or picket at the plants and
offices of plaintiff within the bargaining unit referred to in the CBA,...;

d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;

e. using the employees or workers of LIPERCON AND D'RITE to man the strike area and/or picket lines and/or barricades which the
defendants may set up at the plants and offices of plaintiff within the bargaining unit referred to in the CBA ...;

f. intimidating, threatening with bodily harm and/or molesting the other employees and/or contract workers of plaintiff, as well as those
persons lawfully transacting business with plaintiff at the work places within the bargaining unit referred to in the CBA, ..., to compel
plaintiff to hire the employees or workers of LIPERCON and D'RITE;

g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to, and egress from, the work places within the bargaining
unit referred to in the CBA .., to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;

h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the work places within the bargaining unit referred to in the
CBA, Annex 'C' hereof, to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE. (Annex H, Petition)

Respondent Court found the Complaint sufficient in form and substance and issued a Temporary Restraining Order for the purpose of
maintaining the status quo, and set the application for Injunction for hearing.

In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the ground of lack of jurisdiction over the
case/nature of the action, which motion was opposed by SanMig. That Motion was denied by respondent Judge in an Order dated 11 April
1989.
After several hearings on SanMig's application for injunctive relief, where the parties presented both testimonial and documentary evidence
on 25 March 1989, respondent Court issued the questioned Order (Annex A, Petition) granting the application and enjoining the Union from
Committing the acts complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding Writ of Preliminary
Injunction after SanMig had posted the required bond of P100,000.00 to answer for whatever damages petitioners may sustain by reason
thereof.

In issuing the Injunction, respondent Court rationalized:

The absence of employer-employee relationship negates the existence of labor dispute. Verily, this court has jurisdiction to take cognizance
of plaintiff's grievance.

The evidence so far presented indicates that plaintiff has contracts for services with Lipercon and D'Rite. The application and contract for
employment of the defendants' witnesses are either with Lipercon or D'Rite. What could be discerned is that there is no employer-employee
relationship between plaintiff and the contractual workers employed by Lipercon and D'Rite. This, however, does not mean that a final
determination regarding the question of the existence of employer-employee relationship has already been made. To finally resolve this
dispute, the court must extensively consider and delve into the manner of selection and engagement of the putative employee; the mode of
payment of wages; the presence or absence of a power of dismissal; and the Presence or absence of a power to control the putative
employee's conduct. This necessitates a full-blown trial. If the acts complained of are not restrained, plaintiff would, undoubtedly, suffer
irreparable damages. Upon the other hand, a writ of injunction does not necessarily expose defendants to irreparable damages.

Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)

Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the challenged Writ. On 24 April 1989, we
issued a Temporary Restraining Order enjoining the implementation of the Injunction issued by respondent Court. The Union construed this
to mean that "we can now strike," which it superimposed on the Order and widely circulated to entice the Union membership to go on strike.
Upon being apprised thereof, in a Resolution of 24 May 1989, we required the parties to "RESTORE the status quo ante declaration of
strike" (p. 2,62 Rollo).

In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the contractual workers of Lipercon and D'Rite
had been laid off. The strike adversely affected thirteen (13) of the latter's plants and offices.

On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to conciliation. The Union stated that it would lift
the strike if the thirty (30) Lipercon and D'Rite employees were recalled, and discussion on their other demands, such as wage distortion and
appointment of coordinators, were made. Effected eventually was a Memorandum of Agreement between SanMig and the Union that
"without prejudice to the outcome of G.R. No. 87700 (this case) and Civil Case No. 57055 (the case below), the laid-off individuals ... shall
be recalled effective 8 May 1989 to their former jobs or equivalent positions under the same terms and conditions prior to "lay-off" (Annex
15, SanMig Comment). In turn, the Union would immediately lift the pickets and return to work.

After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and required the parties to submit their
memoranda simultaneously, the last of which was filed on 9 January 1990.

The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction over the present controversy and properly
issued the Writ of Preliminary Injunction to the resolution of that question, is the matter of whether, or not the case at bar involves, or is in
connection with, or relates to a labor dispute. An affirmative answer would bring the case within the original and exclusive jurisdiction of
labor tribunals to the exclusion of the regular Courts.

Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves or arose out of a labor dispute and is
directly connected or interwoven with the cases pending with the NCMB-DOLE, and is thus beyond the ambit of the public respondent's
jurisdiction. That the acts complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private respondent) are
within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners' Memo).

On the other hand, SanMig denies the existence of any employer-employee relationship and consequently of any labor dispute between itself
and the Union. SanMig submits, in particular, that "respondent Court is vested with jurisdiction and judicial competence to enjoin the
specific type of strike staged by petitioner union and its officers herein complained of," for the reasons that:

A. The exclusive bargaining representative of an employer unit cannot strike to compel the employer to hire and thereby create an
employment relationship with contractual workers, especially were the contractual workers were recognized by the union, under the
governing collective bargaining agreement, as excluded from, and therefore strangers to, the bargaining unit.
B. A strike is a coercive economic weapon granted the bargaining representative only in the event of a deadlock in a labor dispute over
'wages, hours of work and all other and of the employment' of the employees in the unit. The union leaders cannot instigate a strike to compel
the employer, especially on the eve of certification elections, to hire strangers or workers outside the unit, in the hope the latter will help re-
elect them.

C. Civil courts have the jurisdiction to enjoin the above because this specie of strike does not arise out of a labor dispute, is an abuse of right,
and violates the employer's constitutional liberty to hire or not to hire. (SanMig's Memorandum, pp. 475-476, Rollo).

We find the Petition of a meritorious character.

A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter concerning terms and conditions of
employment or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and
conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee."

While it is SanMig's submission that no employer-employee relationship exists between itself, on the one hand, and the contractual workers
of Lipercon and D'Rite on the other, a labor dispute can nevertheless exist "regardless of whether the disputants stand in the proximate
relationship of employer and employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns, among others, the terms
and conditions of employment or a "change" or "arrangement" thereof (ibid). Put differently, and as defined by law, the existence of a labor
dispute is not negative by the fact that the plaintiffs and defendants do not stand in the proximate relation of employer and employee.

That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union seeks is to regularize the status of the
employees contracted by Lipercon and D'Rite in effect, that they be absorbed into the working unit of SanMig. This matter definitely dwells
on the working relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their employment and the
arrangement of those terms are thus involved bringing the matter within the purview of a labor dispute. Further, the Union also seeks to
represent those workers, who have signed up for Union membership, for the purpose of collective bargaining. SanMig, for its part, resists that
Union demand on the ground that there is no employer-employee relationship between it and those workers and because the demand violates
the terms of their CBA. Obvious then is that representation and association, for the purpose of negotiating the conditions of employment are
also involved. In fact, the injunction sought by SanMig was precisely also to prevent such representation. Again, the matter of representation
falls within the scope of a labor dispute. Neither can it be denied that the controversy below is directly connected with the labor dispute
already taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-093-83).

Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and D'Rite constitute "labor-only" contracting
and, therefore, a regular employer-employee relationship may, in fact, be said to exist; whether or not the Union can lawfully represent the
workers of Lipercon and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the notice of strike was
valid and the strike itself legal when it was allegedly instigated to compel the employer to hire strangers outside the working unit; those
are issues the resolution of which call for the application of labor laws, and SanMig's cause's of action in the Court below are inextricably
linked with those issues.

The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon by SanMig is not controlling as in that
case there was no controversy over terms, tenure or conditions, of employment or the representation of employees that called for the
application of labor laws. In that case, what the petitioning union demanded was not a change in working terms and conditions, or the
representation of the employees, but that its members be hired as stevedores in the place of the members of a rival union, which petitioners
wanted discharged notwithstanding the existing contract of the arrastre company with the latter union. Hence, the ruling therein, on the basis
of those facts unique to that case, that such a demand could hardly be considered a labor dispute.

As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As explicitly provided for in Article 217 of
the Labor Code, prior to its amendment by R.A. No. 6715 on 21 March 1989, since the suit below was instituted on 6 March 1989, Labor
Arbiters have original and exclusive jurisdiction to hear and decide the following cases involving all workers including "1. unfair labor
practice cases; 2. those that workers may file involving wages, hours of work and other terms and conditions of employment; ... and 5. cases
arising from any violation of Article 265 of this Code, including questions involving the legality of striker and lockouts. ..." Article 217 lays
down the plain command of the law.

The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil Code would not suffice to keep the case
within the jurisdictional boundaries of regular Courts. That claim for damages is interwoven with a labor dispute existing between the parties
and would have to be ventilated before the administrative machinery established for the expeditious settlement of those disputes. To allow
the action filed below to prosper would bring about "split jurisdiction" which is obnoxious to the orderly administration of justice (Philippine
Communications, Electronics and Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).
We recognize the proprietary right of SanMig to exercise an inherent management prerogative and its best business judgment to determine
whether it should contract out the performance of some of its work to independent contractors. However, the rights of all workers to self-
organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law
(Section 3, Article XIII, 1987 Constitution) equally call for recognition and protection. Those contending interests must be placed in proper
perspective and equilibrium.

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

SO ORDERED.
G.R. No. 106231 November 16, 1994

HAWAIIAN-PHILIPPINE COMPANY, petitioner,


vs.
REYNALDO J. GULMATICO, Labor Arbiter, Regional Arbitration Branch No. VI, AND NATIONAL FEDERATION OF SUGAR
WORKERS-FOOD AND GENERAL TRADES representing all the sugar farm workers of the HAWAIIAN PHILIPPINE MILLING
DISTRICT, respondents.

Angara, Abella, Concepcion, Regala & Cruz for petitioner.

Manlapao, Ymballa and Chaves for private respondent.

BIDIN, J.:

This petition for certiorari and prohibition with preliminary injunction seeks to annul the Order dated June 29, 1992 issued by public
respondent Labor Arbiter Reynaldo J. Gulmatico denying petitioner's motion for "Claims on R.A. 809" in RAB VI Case No. 06-07-10256-
89, the dispositive portion of which reads, in part:

WHEREFORE, premises considered, the motion to dismiss dated July 31, 1989 and the supplement thereto dated September 19, 1989 filed
by respondent company together with the motion to dismiss filed by respondent Ramon Jison dated August 27, 1990 and Francisco Jison
dated September 20, 1990, respectively, are hereby DENIED.

xxx xxx xxx

(Rollo, p. 59)

The antecedent facts are as follows:

On July 4, 1989, respondent union, the National Federation of Sugar Workers-Food and General Trades (NFSW-FGT) filed RAB VI Case
No. 06-07-10256-89 against herein petitioner Hawaiian-Philippine Company for claims under Republic Act 809 (The Sugar Act of 1952).
Respondent union claimed that the sugar farm workers within petitioner's milling district have never availed of the benefits due them under
the law.

Under Section 9 of R.A 809, otherwise known as the Sugar Act of 1952, it is provided, to wit:

Sec. 9. In addition to the benefits granted by the Minimum Wage Law, the proceeds of any increase in participation granted to planters under
this Act and above their present share shall be divided between the planter and his laborers in the following proportions;

Sixty per centum of the increase participation for the laborers and forty per centum for the planters. The distribution of the share
corresponding to the laborers shall be made under the supervision of the Department of Labor.

xxx xxx xxx

(Emphasis supplied.)

On July 31, 1989, petitioner filed a "Motion to Dismiss," followed by a "Supplemental Motion to Dismiss" on September 19, 1989. Petitioner
contended that public respondent Labor Arbiter has no jurisdiction to entertain and resolve the case, and that respondent union has no cause
of action against petitioner.

On August 23, 1989, respondent union filed an "Opposition to Motion to Dismiss."

On October 3,1989, petitioner applied a "Reply to Opposition" followed by a "Citation of Authorities in Support of Motion to Dismiss."

On December 20, 1989, respondent union filed an amended complaint additionally impleading as complainants Efren Elaco, Bienvenido
Gulmatico, Alberto Amacio, Narciso Vasquez, Mario Casociano and all the other farm workers of the sugar planters milling with petitioner
from 1979 up to the present, and as respondents, Jose Maria Regalado, Ramon Jison, Rolly Hernaez, Rodolfo Gamboa, Francisco Jison and
all other sugar planters milling their canes with petitioner from 1979 up to the present.
On August 27, 1990, Ramon Jison, one of the respondents impleaded in the amended complaint, filed a "Motion to Dismiss and/or to Include
Necessary Parties," praying for the inclusion as co-respondents of the Asociacion de Hacenderos de Silan-Saravia, Inc. and the Associate
Planters of Silay-Saravia, Inc.

On June 29, 1992, public respondent promulgated the assailed Order denying petitioner's Motion to Dismiss and Supplemental Motion to
Dismiss.

Hence, this petition filed by Hawaiian-Philippine Company.

Petitioner reasserts the two lesson earlier raised in its Motion to Dismiss which public respondent unfavorably resolved in the assailed Order.

These two issues are first, whether public respondent Labor Arbiter has jurisdiction to hear and decide the case against petitioner; and the
second, whether respondent union and/or the farm workers represented by it have a cause of action against petitioner.

Petitioner contends that the complaint filed against it cannot be categorized under any of the cases falling within the jurisdiction of the Labor
Arbiter as enumerated in Article 217 of the Labor Code, as amended, considering that no employer-employee relationship exists between
petitioner milling company and the farm workers represented by respondent union. Article 217 of the Labor Code provides:

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

1. Unfair labor practice cases;

2. Termination disputes;

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

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

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

6. Except claims for employees' compensation, social security, medicare from maternity benefits, all other claims arising from employer-
employee relations, including those of persons in domestic or household service, involving an amount exceeding Five Thousand Pesos
(P5,000.00), whether or not accompanied with a claim for reinstatement. (Emphasis supplies)

In support of the contention that the Labor Arbiter has no jurisdiction to hear and decide the case against petitioner, the latter cites the ruling
in San Miguel Corporation vs. NLRC, 161 SCRA 719 [1988], wherein it was held that a single unifying element runs through the cases and
disputes falling under the jurisdiction of the Labor Arbiter and that is that all the enumerated cases and disputes arise out of or are in
connection with an employer-employee relationship, or some aspect or incident of such relationship. Likewise, in Federation of Free
Farmers vs. Court of Appeals, 107 SCRA 411 [1981], this Court held that:

. . . . From the beginning of the sugar industry, the centrals have never had any privity with the plantation laborers, since they had their own
laborers to take care of. . . . Nowhere in Republic Act 809 (the Sugar Act of 1952) can we find anything that creates any relationship between
the laborers of the planters and the centrals. . . .

. . . Under no principle of law or equity can we impose on the central . . . any liability to the plantation laborers. . . . (Emphasis supplied)

On the strength of the aforecited authorities, petitioner contends that it is not a proper party and has no involvement in the case filed by
respondent union as it is not the employer of the respondent sugar workers.

Furthermore, to bolster its contention, petitioner cites the Rules and Regulations Implementing RA 809 issued by the then Wage
Administration Service pursuant to the Administrative Order of the Labor Secretary dated October 1, 1952. Section 1 thereof states:

Sec. 1. The payment of the proceeds derived from the sixty per centum of any increase in the participation due the laborers shall be directly
paid to the individual laborer concerned at the end of each milling season by his respective planter under the Supervision of the Secretary of
Labor or his duly authorized representative by means of payrolls prepared by said planter. (Emphasis supplied)

In addition, under Letter of Instruction No. 854 dated May 1, 1979, it is provided:
1. Payment subject to supervision. The workers' share shall be paid directly by the planter concerned to the workers or claimants entitled
thereto subject to the supervision of the Minister of Labor or his duly designated representative.

The responsibility for the payment of the sugar workers' benefits under R.A. 809 was categorically ruled upon in the Federation of Free
Farmers case, supra., to wit:

. . . the matter of paying the plantation laborers of the respective planters becomes exclusively the concern of the planters, the laborers and
the Department of Labor. Under no principle of law or equity can we impose on the Central here VICTORIAS any liability to the
respective plantation laborers, should any of their respective planters-employers fail to pay their legal share. After all, since under the law it
is the Department of Labor which is the office directly called upon to supervise such payment, it is but reasonable to maintain that if any
blame is to be fixed for the unfortunate situation of the unpaid laborers, the same should principally be laid on the planters and secondarily
on the Department of Labor, but surely never on the central.

Whatever liability there exists between favor of the plantation laborers should be pinned on the PLANTERS, their respective employers.
(Emphasis supplied)

On the other hand, public respondent and respondent union maintain the position that privity exists between petitioner and the sugar workers.
Actually, public respondent, in resolving petitioner's Motion to Dismiss, skirted the issue of whether an employer-employee relationship
indeed exists between petitioner milling company and the sugar workers. He did not categorically rule thereon but instead relied on the
observation that when petitioner delivered to its planters the quedans representing its share, petitioner did not first ascertain whether the
shares of all workers or claimants were fully paid/covered pursuant to LOI No. 854, and that petitioner did not have the necessary
certification from the Department of Labor attesting to such fact of delivery. In view of these observations, public respondent subscribed to
the possibility that petitioner may still have a liability vis-a-vis the workers' share. Consequently, in order that the workers would not have to
litigate their claim separately, which would be tantamount to tolerating the splitting of a cause of action, public respondent held that
petitioner should still be included in this case as an indispensable party without which a full determination of this case would not be obtained.

We find for petitioner.

The Solicitor General, in its adverse Comment, correctly agreed with petitioner's contention that while the jurisdiction over controversies
involving agricultural workers has been transferred from the Court of Agrarian Relations to the Labor Arbiters under the Labor Code as
amended, the said transferred jurisdiction is however, not without limitations. The dispute or controversy must still fall under one of the cases
enumerated under Article 217 of the Labor Code, which cases, as ruled in San Miguel, supra., arise out of or are in connection with an
employer-employee relationship.

In the case at bar, it is clear that there is no employer-employee relationship between petitioner milling company and respondent union and/or
its members-workers, a fact which, the Solicitor General notes, public respondent did not dispute or was silent about. Absent the
jurisdictional requisite of an employer-employee relationship between petitioner and private respondent, the inevitable conclusion is that
public respondent is without jurisdiction to hear and decide the case with respect to petitioner.

Anent the issue of whether respondent union and/or its members-workers have a cause of action against petitioner, the same must be resolved
in the negative. To have a cause of action, the claimant must show that he has a legal right and the respondent a correlative duty in respect
thereof, which the latter violated by some wrongful act or omission (Marquez vs. Varela, 92 Phil. 373 [1952]). In the instant case, a simple
reading of Section 9 of R.A. 809 and Section 1 of LOI 845 as aforequoted, would show that the payment of the workers' share is a liability of
the planters-employers, and not of the milling company/sugar central. We thus reiterate Our ruling on this matter, as enunciated
in Federation of Free Farmers, supra., to wit:

. . . . Nowhere in Republic Act No. 809 can we find anything that creates any relationship between the laborers of the planters and the
centrals. Under the terms of said Act, the old practice of the centrals issuing the quedans to the respective PLANTERS for their share of the
proceeds of milled sugar per their milling contracts has not been altered or modified. In other words, the language of the Act does not in any
manner make the central the insurer on behalf of the plantation laborers that the latter's respective employers-planters would pay them their
share. . . .

. . . . Accordingly, the only obligation of the centrals (under Section 9 of the Act), like VICTORIAS, is to give to the respective planters, like
PLANTERS herein, the planters' share in the proportion stipulated in the milling contract which would necessarily include the portion of
60% pertaining to the laborers. Once this has been done, the central is already out of the picture. . . . (Emphasis supplied)

In the case at bar, it is disputed that petitioner milling company has already distributed to its planters their respective shares. Consequently,
petitioner has fulfilled its part and has nothing more to do with the subsequent distribution by the planters of the workers' share.
Public respondent's contention that petitioner is an indispensable party is not supported by the applicable provisions of the Rules of Court.
Under Section 7, Rule 3 thereof, indispensable parties are "parties in interest" without whom no final determination of the action can be
obtained. In this case, petitioner cannot be deemed as a party in interest since there is no privity or legal obligation linking it to respondent
union and/or its members-workers.

In order to further justify petitioner's compulsory joinder as a party to this case, public respondent relies on petitioners' lack of certification
from the Department of Labor of its delivery of the planters' shares as evidence of an alleged "conspicuous display of concerted conspiracy
between the respondent sugar central (petitioner) and its adherent planters to deprive the workers or claimants of their shares in the increase
in participation of the adherent planters." (Rollo, p. 56)

The assertion is based on factual conclusions which have yet to be proved. And even assuming for the sake of argument that public
respondent's conclusions are true, respondent union's and/or its workers' recourse lies with the Secretary of Labor, upon whom authority is
vested under RA 809 to supervise the payment of the workers' shares. Any act or omission involving the legal right of the workers to said
shares may be acted upon by the Labor Secretary either motu proprio or at the instance of the workers. In this case however, no such action
has been brought by the subject workers, thereby raising the presumption that no actionable violation has been committed.

Public respondent is concerned that the respondent planters may easily put up the defense that the workers' share is with petitioner milling
company, giving rise to multiplicity of suits. The Solicitor General correctly postulates that the planters cannot legally set up the said defense
since the payment of the workers' share is a direct obligation of the planters to their workers that cannot be shifted to the miller/central.
Furthermore, the Solicitor General notes that there is nothing in RA 809 which suggests directly or indirectly that the obligation of the planter
to pay the workers' share is dependent upon his receipt from the miller of his own share. If indeed the planter did not receive his just and due
share from the miller, he is not without legal remedies to enforce his rights. The proper recourse against a reneging miller or central is for the
planter to implead the former not as an indispensable party but as a third party defendant under Section 12, Rule 6 of the Rules of Court. In
such case, herein petitioner milling company would be a proper third party dependent because it is directly liable to the planters (the original
defendants) for all or part of the workers' claim. However, the planters involved in this controversy have not filed any complaint of such a
nature against petitioner, thereby lending credence to the conclusion that petitioner has fulfilled its part vis-a-vis its obligation under RA 809.

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

SO ORDERED.
G.R. No. L-60716 October 27, 1983

AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INC., ANTONIO L. SUAREZ, as General Manager and Ex-Oficio Member
of the Board of Directors, et al., petitioners,
vs.
HON. FORTUNATO A. VAILOCES, in his capacity as Judge of the Court of First Instance of Agusan del Norte & Butuan City, 15th
Judicial District, and PERLITA S. JONGKO, respondents.

Balanon & Acain Law Office for petitioners.

Jesus S. Delfin for private respondent.

PLANA, J.:

This is a petition for certiorari with preliminary injunction set against the following background:

From 1977 to December 1981, Perlita S. Jongko was employed by the Agusan del Norte Electric Company, Inc. (ANECO) initially as
accountant and later as office manager. on December 7, 1981, allegedly in the absence of a substantial basis and without giving Jongko
reasonably sufficient opportunity to put up her defense, the ANECO general manager, Antonio Suarez, with the concurrence of the ANECO
board of directors, dismissed Jongko as office manager for alleged dishonesty, conflicting interest, abuse of authoritv and insubordination.

On December 22, 1981, Jongko filed with the Court of First Instance of Agusan del Norte and Butuan City a petition for prohibition and
mandamus against ANECO and its officers based on illegal dismissal, with a praver for reinstatement with back salary. (Civil Case No. 410.)
The defendants filed a motion to dismiss on the ground, among others, that the CFI had no jurisdiction over the subject matter of the action.
The court denied the motion and refused to reconsider the same. Hence, this petition for certiorari filed on June 14, 1982 assailing the denial
of the motion to dismiss on the ground that ordinary courts have no jurisdiction over illegal dismissal cases which have been assigned by law
exclusively to labor arbiters.

Meanwhile, on the same date that the instant petition was filed, Jongko also filed with the court a quo an amended petition seeking not only
reinstatement with back salary but also moral and exemplary damages.

Under Article 217 of Presidential Decree 442 (Labor Code), as amended by Presidential Decree 1367, labor arbiters had exclusive
jurisdiction over labor cases involving illegal dismissal and all other cases arising from employer- employee relations, exclusive of claims for
damages. For under P.D. 1367, "labor-arbiters shall not entertain claims of moral or other forms of damages."

On May 1, 1980, however, PD 1691 amended the Labor Code by deleting the ban against labor arbiters taking cognizance of claims for
damages, This amendment had the effect of restoring the jurisdiction of labor arbiters over said claims under their broad and exclusive
authority to hear and decide-

All money claims of workers, including those based on non-payment ... of wages ... and other benefits provided by law ...

All other claims arising from employer-employee relations, unless expressly excluded by this Code. [Article 217 (a). See Aguda vs. Vallejos,
113 SCRA 69; Cardinal Industries, Inc. vs. Vallejos, 114 SCRA 472; Getz Corp. (Phil.), Inc. vs. Court of Appeals, 116 SCRA 86.]

The legal situation remained despite the subsequent enactment of Batas Pambansa 130 on August 21, 1980.

Thus, when in December, 1981 the services of private respondent Jongko were terminated by ANECO and Jongko filed her petition for
prohibition and mandamus against ANECO with the Court of First Instance of Agusan del Norte and Butuan City praying for reinstatement
with back salary (without asking for damages), the applicable law was Article 217 of the Labor Code, as amended on August 21, 1980 by
Batas Pambansa 130 giving labor arbiters exclusive jurisdiction over all money claims of workers (including those based on non-payment of
wages and other benefits provided by law) as well as all other claims arising from employer-employee relations, including moral and other
forms of damages.

And when Jongko filed on June 14, 1982 her amended petition praying not only for reinstatement and backwages but also moral and
exemplary damages, the law applicable was the same Article 217 of the Labor Code, as amended by Batas Pambansa 227 effective June 1,
1982, under which "all money claims of workers including those based on non-payment . . . of wages . . . and other benefits provided by law"
were still under the exclusiue jurisdiction of labor arbiters, inclusive of illegal dismissal cases with prayer for reinstatement, backwages and
damages, notwithstanding the fact that Batas Pambansa 227 deleted the basket clause in Article 217 of the Labor Code which previously
gave labor arbiters jurisdiction over 11 all other claims arising from employer-employee relations," For as observed by this Court in Ebon vs.
De Guzman, 113 SCRA 52 at 56 -

The provisions ... that the Labor Arbiters and the NLRC have jurisdiction over "all money claims of workers ..." . . . are comprehensive
enough to include claims for moral and exemplary damages of a dismiss employee against his employer. (See also Getz Corp. (Phil.), Inc.
116 SCRA 86.)

Therefore, when the court a quo denied petitioner' motion to dismiss the illegal dismissal case instituted by private respondent, it resolved to
take cognizance of a case over which it had no jurisdiction.

WHEREFORE, the petition is granted. Respondent judge or his successor is directed to dismiss Civil Case 410 without prejudice to the right
of private respondent to re-file her claim with the proper labor arbiter. No costs.

SO ORDERED.
G.R. No. 75837 December 11, 1987

DOMINADOR BASAYA JR., FLORENCIO ABELLA, DOMINADOR ORDINEZA, FLORO ROSALEJOS, PABLO PADILLA,
ELVIN ELISORIO PATRICIO GUTIB, JOSE LEOPOLDO, HONORATO SININA, EFREMIO CATUBAY, RAUL DE REAL,
VIRGINIO ALEGRIA, EDUARDO BULAK, BALTAZAR DACARA, DIOSDADO REAL, MICHAEL DUMALAGAN, RAMON
FLORES, WILFREDO BACATAN, PEDRO CANAZARES, LUCIFERO PESQUERA, FLORENTINO DURAN, CATALINO
TIENGCO, EDUARDO CABRERA, and RENATO ANTONINO, petitioners,
vs.
HON. FRANCIS MILITANTE, President Judge, Regional Trial Court, 7th Judicial Region, Branch XII, Cebu City, and
PHILIPPINE TUNA VENTURES, INC., respondents.

In this Petition for Review on Certiorari, petitioners challenge the assumption of jurisdiction by Respondent Judge of the Regional Trial
Court of Cebu City, Branch XI 1, over a complaint for Replevin filed by private respondent, Philippine Tuna Ventures, Inc. against
petitioners, upon the allegation that it is intertwined with a labor dispute so that exclusive jurisdiction belongs to the National Labor
Relations Commission (NLRC).

Respondent Philippine Tuna Ventures, Inc. (TUNA, Inc., for short), is the charterer of the fishing vessel, the F/B Caribbean (hereinafter
referred to simply as the Vessel). TUNA, Inc. has been operating this Vessel in its deep-sea fishing business since 1977 together with eight
(8) other fishing boats. Sometime in 1985, TUNA, Inc. transferred the operation of the Vessel to a sister corporation, the Eastship Fishing
Corporation (Eastship, for brevity). Petitioners, twenty-four (24) in all, constitute the crew of the Vessel, with petitioner Dominador Basaya
Jr., as its Captain.

On 9 July 1986, TUNA, Inc. sought the remedy of Replevin (the Replevin Case) against petitioners before the Regional Trial Court presided
over by Respondent Judge, praying that petitioners (defendants in that case) be ordered to deliver to it the possession of its Vessel, which
petitioners were allegedly possessing in violation of its rights.

In their defense below petitioners maintained that they were in possession of the Vessel as its crew; that their possession is "an extension of
the possession of the plaintiff over the Vessel" and that to deprive them of its possession by a Writ of Replevin would amount to an illegal
termination of their employment.

On 10 July 1986, the Writ of Replevin was ordered issued upon TUNA, Inc.'s filing of a bond in the amount of P2M. The Sheriff served the
Writ on petitioners on 12 July 1986 and they disembarked from the Vessel in the evening of that day. However, after about an hour, they re-
embarked and re-took possession.

On 29 August 1986 judgment was rendered in the Replevin Case declaring TUNA, Inc. to have a better right to the possession of the Vessel
and ordering petitioners to immediately deliver possession thereof.

On 15 September 1986 petitioners resorted to this appeal by certiorari on a question of law with a prayer for a restraining order.

On 17 September 1986 we issued a Temporary Restraining Order enjoining respondents from enforcing the judgment in the Replevin Case or
any Writ of Execution issued therein.

The only issue for resolution is whether or not the Trial Court had jurisdiction to hear and decide the Replevin Case.

Said Court upheld its jurisdiction and ruled, as heretofore stated, that the charterer, TUNA, Inc., has a better right to the possession of the
Vessel and ordered petitioners to immediately deliver possession.

In this Petition, petitioners argue that the Trial Court erred in:

I. ... assuming a split jurisdiction over the civil rights of the respondent corporation to possess the vessel F/B Caribbean and oust the
petitioners- appellants separately from the labor rights of the petitioners-appellants to be protected from their sudden arbitrary ouster from
their positions in the said vessel as crew members and officers thereof.

II. ... holding that the legal responsibility of the respondent, Philippine Tuna Ventures, Inc. as the employer of the petitioners-appellants has
been transferred to Eastship Fishing Corporation.

III. ... assuming jurisdiction over this case which involves the labor violation of unfair labor practice committed by the respondent Phil. Tuna
Ventures, Inc. and which, therefore, appertains to the exclusive jurisdiction of the National Labor Relations Commission.
It appears that on 26 June 1986, petitioners had presented to the management of TUNA, Inc., a set of labor demands; that on 28 June 1986
they had informed Eastship that they would not move the Vessel to any destination until their demands were met; that on 2 July 1986 TUNA,
Inc., had applied for a "shut-down" or closure allegedly due to business losses; that on 8 July 1986 Eastship filed with the National Labor
Relations Commission, Regional Office No. 7, Cebu City, a Petition to declare petitioners' strike illegal; and that on 8 August 1986,
petitioners instituted a Complaint for Unfair Labor Practice against TUNA, Inc. and Eastship. Incidentally, petitioners allege that they are not
on strike,

Developments subsequent to the judgment in the Replevin Case also disclose that on 18 November 1986, in NLRC Injunction Case No. 1270
entitled Eastship Fishing Corporation vs. Concerned Seamen of the Philippines, the NLRC issued an Injunction Writ enjoining petitioners
from blocking the free ingress and egress to the Vessel and seven (7) other fishing boats and to disembark from and vacate the Vessel without
prejudice to the exercise of their right to lawful and peaceful picketing; that on 28 November 1986, the NLRC Sheriffs attempted to enforce
the Injunction but petitioners refused to comply thereby compelling the NLRC on the same date to seek the assistance of the Philippine
Constabulary and the Philippine Coast Guard; that it was only on 11 December 1986, after a series of refusals, that petitioners left the Vessel
peacefully only to retake possession on 16 December 1986.

An ocular inspection on 10 January 1987 by Eastship disclosed that petitioners were still in possession.

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

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

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

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

In thus ruling, this Court is not sanctioning split jurisdiction but defining avenues of jurisdiction as laid down by pertinent laws.

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

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

This judgment is immediately executory.

SO ORDERED.
G.R. No. 74621 February 7, 1990

BROKENSHIRE MEMORIAL HOSPITAL, INC., petitioner,


vs.
THE HONORABLE MINISTER OF LABOR & EMPLOYMENT AND BROKENSHIRE MEMORIAL HOSPITAL EMPLOYEES
AND WORKER'S UNION-FFW Represented by EDUARDO A. AFUAN, respondents.

Renato B. Pagatpatan for petitioner.

PARAS, J.:

This petition for review by certiorari seeks the annulment or modification of the Order of public respondent Minister of Labor dated
December 9, 1985 in a case for non-compliance with Wage Order Nos. 5 and 6 docketed as ROXI-LSED Case No. 14-85 which 1) denied
petitioner's Motion for Reconsideration dated February 3, 1986 and 2) affirmed the Order of Regional Director Eugenio I. Sagmit, Jr.,
Regional Office No. XI Davao City, dated April 12, 1985, the dispositive portion of which reads as follows:

WHEREFORE, premises considered, respondent Brokenshire Memorial Hospital, Incorporated is hereby ordered to pay the above-named
workers, through this Office, within fifteen (15) days from receipt hereof, the total sum of TWO HUNDRED EIGHTY- FOUR THOUSAND
SIX HUNDRED TWENTY FIVE (P284,625.00) PESOS representing their living allowance under Wage Order No. 5 covering the period
from October 16, 1984 to February 28, 1985 and under Wage Order No. 6 effective November 1, 1984 to February 28, 1985. Respondent is
further ordered to pay the employees who are likewise entitled to the claims here presented, but whose names were inadvertently omitted in
the list and computation. (Rollo, p. 7)

Petitioner contends that the respondent Minister of Labor and Employment acted without, or in excess of his jurisdiction or with grave abuse
of discretion in failing to hold:

A) That the Regional Director committed grave abuse of discretion in asserting exclusive jurisdiction and in not certifying this case to the
Arbitration Branch of the National Labor Relations Commission for a full-blown hearing on the merits;

B) That the Regional Director erred in not ruling on the counterclaim raised by the respondent (in the labor case, and now petitioner in this
case);

C) That the Regional Director erred -in skirting the constitutional and legal issues raised. (Rollo, p. 4)

This case originated from a complaint filed by private respondents against petitioner on September 21, 1984 with the Regional Office of the
MOLE, Region XI, Davao City for non-compliance with the provisions of Wage Order No. 5. After due healing the Regional Director
rendered a decision dated November 16, 1984 in favor of private respondents. Judgment having become final and executory, the Regional
Director issued a Writ of Execution whereby some movable properties of the hospital (petitioner herein) were levied upon and its operating
expenses kept with the bank were garnished. The levy and garnishment were lifted when petitioner hospital paid the claim of the private
respondents (281 hospital employees) directly, in the total amount of P163,047.50 covering the period from June 16 to October 15, 1984.

After making said payment, petitioner hospital failed to continue to comply with Wage Order No. 5 and likewise, failed to comply with the
new Wage Order No. 6 which took effect on November 1, 1984, prompting private respondents to file against petitioner another complaint
docketed as ROXI-LSED-14-85, which is now the case at bar.

In its answer, petitioner raised the following affirmative defenses:

1) That the Regional Office of the Ministry of Labor did not acquire jurisdiction over it for want of allegation that it has the capacity to be
sued and

2) That Wage Order Nos. 5 and 6 are non-constitutional and therefore void. Significantly petitioner never averred any counterclaim in its
Answer.

After the complainants had filed their reply, petitioner filed a Motion for the Certification of the case to the National Labor Relations
Commission for a full-blown hearing on the matter, including the counterclaim interposed that the complainants had unpaid obligations with
the Hospital which might be offset with the latter's alleged obligation to the former.
Issues having been joined, the Regional Director rendered a decision on April 12, 1985 in favor of the complainants (private respondents
herein) declaring that petitioner (respondent therein) is estopped from questioning the acquisition of jurisdiction because its appearance in the
hearing is in itself submission to jurisdiction and that this case is merely a continuance of a previous case where the hospital already willingly
paid its obligations to the workers on orders of the Regional Office. On the matter of the constitutionality of the Wage Order Nos. 5 and 6,
the Regional Director declared that only the court can declare a law or order unconstitutional and until so declared by the court, the Office of
the Regional Director is duly bound to enforce the law or order.

Aggrieved, petitioner appealed to the Office of the Minister of Labor, which dismissed the appeal for lack of merit. A motion for
reconsideration was likewise denied by said Office, giving rise to the instant petition reiterating the issues earlier mentioned.

The crucial issue We are tasked to resolve is whether or not the Regional Director has jurisdiction over money claims of workers concurrent
with the Labor Arbiter.

It is worthy of note that the instant case was deliberated upon by this Court at the same time that Briad Agro Development Corporation v. de
la Cerna, G.R. No. 82805 and L.M. Camus Engineering Corporation v. Hon. Secretary of Labor, et al. G.R. No. 83225, promulgated on June
29,1989 and Maternity Children's Hospital vs. Hon. Secretary of Labor, et al., G.R. No. 78909, promulgated 30 June 1989, where deliberated
upon; for all three (3) cases raised the same issue of jurisdiction of the Regional Director of the Department of Labor to pass upon money
claims of employees. Hence, we will be referring to these cases, most especially the case of Briad Agro which, as will be seen later, was
reconsidered by the court.

Contrary to the claim of petitioners that the original and exclusive jurisdiction over said money claims is properly lodged in the Labor Arbiter
(relying on the case of Zambales Base Metals Inc. v. Minister of Labor, 146 SCRA 50) and the Regional Director has no jurisdiction over
workers' money claims, the Court in the three (3) cases above-mentioned ruled that in view of the promulgation of Executive Order No. 111,
the ruling in the earlier case of Zambales Base Metals is already abandoned. In accordance with the rulings in Briad Agro, L.M. Camus, and
Maternity Children's Hospital, the Regional Director exercises concurrent jurisdiction with the Labor Arbiter over money claims. Thus,

. . . . Executive Order No. 111 is in the character of a curative law, that is to say, it was intended to remedy a defect that, in the opinion of the
legislative (the incumbent Chief Executive in this case, in the exercise of her lawmaking power under the Freedom Constitution) had
attached to the provision subject of the amendment. This is clear from the proviso: "The provisions of Article 217 to the contrary
notwithstanding . . ." Plainly, the amendment was meant to make both the Secretary of Labor (or the various Regional Directors) and the
Labor Arbiter share jurisdiction. (Briad Agro Dev. Corp. v. Sec. of Labor, supra).

Under the present rules, a Regional Director exercises both visitorial and enforcement power over labor standards cases, and is therefore
empowered to adj udicate money claims, provided there still existsan employer-employee relationship, and the findings of the regional office
is not contested by the employer concerned. (Maternity Children's Hospital v. Sec. of Labor, supra).

However, it is very significant to note, at this point, that the decision in the consolidated cases of Briad Agro Development Corp. and L.M.
Camus Engineering Corp. was reconsidered and set aside by this Court in a Resolution promulgated on November 9,1989. In view of the
enactment of Republic Act No. 6715, approved on March 2, 1989, the Court found that reconsideration was proper.

RA 6715 amended Art. 129 and Art. 217 of the Labor Code, to read as follows:

ART. 129. Recovery of wages, simple money claims and other benefits.Upon complaint of any interested party, the Regional Director of
the Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through summary
proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits,
including legal interest, owing to an employee or person employed in domestic or household service or househelper under this code, arising
from employer-employee relations, Provided, That such complaint does not include a claim for reinstatement; Provided, further, That the
aggregate money claims of each employee or househelper do not exceed five thousand pesos (P5,000.00). The Regional Director or hearing
officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same . . .

Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be appealed on the same grounds
provided in Article 223 of this Code, within five (5) calendar days from 11 receipt of a copy of said decision or resolution, to the National
Labor Relations Commission which shall resolve the appeal within ten (10) calendar days from the submission of the last pleading required
or allowed under its rules.

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

(2) Termination disputes;

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

(4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relation;

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

(6) Except claims for employees compensation, social security, medicare and maternity benefits, all other claims arising from employer-
employee relations, including those of persons in domestic or household service, involving an amount not exceeding five thousand pesos
(P5,000.00), whether or not accompanied with a claim for reinstatement.

It will be observed that what in fact conferred upon Regional Directors and other hearing officers of the Department of Labor (aside from the
Labor Arbiters) adjudicative powers, i.e., the power to try and decide, or hear and determine any claim brought before them for recovery of
wages, simple money claims, and other benefits, is Republic Act 6715, provided that the following requisites concur, to wit:

1) The claim is presented by an employee or person employed in domestic or household service, or househelper under the code;

2) The claimant, no longer being employed, does not seek reinstatement; and

3) The aggregate money claim of the employee or househelper does not exceed five thousand pesos (P5,000.00).

In the absence of any of the three (3) requisites, the Labor Arbiters have exclusive original jurisdiction over all claims arising from employer-
employee relations, other than claims for employee's compensation, social security, medicare and maternity benefits.

We hereby adopt the view taken by Mr. Justice Andres Narvasa in his Separate Opinion in the case of Briad Agro Dev. Corp., as
reconsidered, a portion of which reads:

In the resolution, therefore, of any question of jurisdiction over a money claim arising from employer-employee relations, the first inquiry
should be into whether the employment relation does indeed still exist between the claimant and the respondent.

If the relation no longer exists, and the claimant does not seek reinstatement, the case is cognizable by the Labor Arbiter, not by the Regional
Director. On the other hand, if the employment relation still exists, or reinstatement is sought, the next inquiry should be into the amount
involved.

If the amount involved does not exceed P5,000.00, the Regional Director undeniably has jurisdiction. But even if the amount of the claim
exceeds P5,000.00, the claim is not on that account necessary removed from the Regional Director's competence. In respect thereof, he may
still exercise the visitorial and enforcement powers vested in him by Article 128 of the Labor Code, as amended, supra; that is to say, he may
still direct his labor regulations officers or industrial safety engineers to inspect the employer's premises and examine his records; and if the
officers should find that there have been violations of labor standards provisions, the Regional Director may, after due notice and hearing,
order compliance by the employer therewith and issue a writ of execution to the appropriate authority for the enforcement thereof. However,
this power may not, to repeat, be exercised by him where the employer contests the labor regulation officers' findings and raises issues which
cannot be resolved without considering evidentiary matters not verifiable in the normal course of inspection. In such an event, the case will
have to be referred to the corresponding Labor Arbiter for adjudication, since it falls within the latter's exclusive original jurisdiction.

Anent the other issue involved in the instant case, petitioner's contention that the constitutionality of Wage Order Nos. 5 and 6 should be
passed upon by the National Labor Relations Commission, lacks merit. The Supreme Court is vested by the Constitution with the power to
ultimately declare a law unconstitutional. Without such declaration, the assailed legislation remains operative and can be the source of rights
and duties especially so in the case at bar when petitioner complied with Wage Order No. 5 by paying the claimants the total amount of
P163,047.50, representing the latter's minimum wage increases up to October 16, 1984, instead of questioning immediately at that stage
before paying the amount due, the validity of the order on grounds of constitutionality. The Regional Director is plainly ,without the authority
to declare an order or law unconstitutional and his duty is merely to enforce the law which stands valid, unless otherwise declared by this
Tribunal to be unconstitutional. On our part, We hereby declare the assailed Wage Orders as constitutional, there being no provision of the
1973 Constitution (or even of both the Freedom Constitution and the 1987 Constitution) violated by said Wage Orders, which Orders are
without doubt for the benefit of labor.

Based on the foregoing considerations, it is our shared view that the findings of the labor regulations officers may not be deemed uncontested
as to bring the case at bar within the competence of the Regional Director, as duly authorized representative of the Secretary of Labor,
pursuant to Article 128 of the Labor Code, as amended. Considering further that the aggregate claims involve an amount in excess of
P5,000.00, We find it more appropriate that the issue of petitioner hospital's liability therefor, including the proposal of petitioner that the
obligation of private respondents to the former in the aggregate amount of P507,237.57 be used to offset its obligations to them, be ventilated
and resolved, not in a summary proceeding before the Regional Director under Article 128 of the Labor Code, as amended, but in accordance
With the more formal and extensive proceeding before the Labor Arbiter. Nevertheless, it should be emphasized that the amount of the
employer's liability is not quite a factor in determining the jurisdiction of the Regional Director. However, the power to order compliance
with labor standards provisions may not be exercised where the employer contends or questions the findings of the labor regulation officers
and raises issues which cannot be determined without taking into account evidentiary matters not verifiable in the normal course of
inspection, as in the case at bar.

Viewed in the light of RA 6715 and read in consonance with the case of Briad Agro Development Corp., as reconsidered, We hold that the
instant case falls under the exclusive original jurisdiction of the Labor Arbiter RA 6715 is in the nature of a curative statute. Curative statutes
have long been considered valid in our jurisdiction, as long as they do not affect vested rights. In this case, We do not see any vested right
that will be impaired by the application of RA 6715. Inasmuch as petitioner had already paid the claims of private respondents in the amount
of P163,047.50 pursuant to the decision rendered in the first complaint, the only claim that should be deliberated upon by the Labor Arbiter
should be limited to the second amount given by the Regional Director in the second complaint together with the proposal to offset the
obligations.

WHEREFORE, the assailed decision of the Regional Director dated April 12, 1985, is SET ASIDE. The case is REFERRED, if the
respondents are so minded, to the Labor Arbiter for proper proceedings.

SO ORDERED.
G.R. No. L-68544 October 27, 1986

LORENZO C. DY, ZOSIMO DY, SR., WILLIAM IBERO, RICARDO GARCIA AND RURAL BANK OF AYUNGON,
INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND EXECUTIVE LABOR ARBITER ALBERTO L. DALMACION, AND
CARLITO H. VAILOCES, respondents.

NARVASA, J.:

Petitioners assail in this Court the resolution of the National Labor Relations Commission (NLRC) dismissing their appeal from the decision
of the Executive Labor Arbiter 1 in Cebu City which found private respondent to have been illegally dismissed by them.

Said private respondent, Carlito H. Vailoces, was the manager of the Rural Bank of Ayungon (Negros Oriental), a banking institution duly
organized under Philippine laws. He was also a director and stockholder of the bank.

On June 4, 1983, a special stockholders' meeting was called for the purpose of electing the members of the bank's Board of Directors.
Immediately after the election the new Board proceeded to elect the bank's executive officers.

Pursuant to Article IV of the bank's by-laws, 2 providing for the election by the entire membership of the Board of the executive officers of
the bank, i.e., the president, vice-president, secretary, cashier and bank manager, in that board meeting of June 4, 1983, petitioners Lorenzo
Dy, William Ibero and Ricardo Garcia were elected president, vice-president and corporate secretary, respectively. Vailoces was not re-
elected as bank manager, 3 Because of this development, the Board, on July 2, 1983, passed Resolution No. 5, series of 1983, relieving him as
bank manager.

On August 3, 1983, Vailoces filed a complaint for illegal dismissal and damages with the Ministry of Labor and Employment against
Lorenzo Dy and Zosimo Dy, Sr. The complaint was amended on September 22, 1983 to include additional respondents-William Ibero,
Ricardo Garcia and the Rural Bank of Ayungon, and additional causes of action for underpayment of salary and non-payment of living
allowance.

In his complaint and position paper, Vailoces asserted that Lorenzo Dy, after obtaining control of the majority stock of the bank by buying the
shares of Marcelino Maximo, called an illegal stockholders' meeting and elected a Board of Directors controlled by him; that after its illegal
constitution, said Board convened on July 2, 1983 and passed a resolution dismissing him as manager, without giving him the opportunity to
be heard first; that his dismissal was motivated by Lorenzo Dy's desire to take over the management and control of the bank, not to mention
the fact that he (Dy) harbored ill feelings against Vailoces on account of the latter's filing of a complaint for violation of the corporation code
against him and another complaint for compulsory recognition of natural child with damages against Zosimo Dy, Sr. 4

In their answer, Lorenzo Dy, et al. denied the charge of illegal dismissal. They pointed out that Vailoces' position was an elective one, and he
was not re-elected as bank manager because of the Board's loss of confidence in him brought about by his absenteeism and negligence in the
performance of his duties; and that the Board's action was taken to protect the interest of the bank and was "designed as an internal control
measure to secure the check and balance of authority within the organization." 5

The Executive Labor Arbiter found that Vailoces was:

(a) Illegally dismissed, first not because of absenteeism and negligence, but of the resentment of petitioners against Vailoces which arose
from the latter's filing of the cases for recognition as natural child against Zosimo Dy, Sr. and for violation of the corporation code against
Lorenzo Dy; and second, because he was not afforded the due process of law when he was dismissed during the Board meeting of July 2,
1983 the validity of which is seriously doubted;

(b) Not paid his cost of living allowance; and

(c) Underpaid with only P500 monthly salary,

and consequently ordered the individual petitioners Lorenzo Dy and Zosimo Dy-but not the Bank itself, to:

(a) Pay Vailoces jointly and severally, the sum of P111,480.60 representing his salary differentials, cost of living allowances, back wages
from date of dismissal up to the date of the decision (November 29, 1983), moral and exemplary damages, and attorney's fees; and
(b) Reinstate Vailoces to his position as bank manager, with additional backwages from December 1, 1983 on the adjusted salary rate of
P620.00 r month until he is actually reinstated, plus cost-of-living allowance. 6

Lorenzo Dy, et al. appealed to the NLRC, assigning error to the decision of the Labor Arbiter on various grounds, among them: that Vailoces
was not entitled to notice of the Board meeting of July 2, 1983 which decreed his relief because he was no longer a member of the Board on
said date; that he nonetheless had the opportunity to refute the charges against him and seek a formal investigation because he received a
copy of the minutes of said meeting while he was still the bank manager (his removal was to take effect only on August 15, 1983), instead of
which he simply abandoned the work he was supposed to perform up to the effective date of his relief; and that the matter of his relief was
within the adjudicatory powers of the Securities and Exchange Commission.7

The NLRC, however bypassed the issues raised and simply dismissed the appeal for having been filed late. It ruled that:

The record shows that a copy of the decision sent by registered mail to respondents' counsel, Atty. Edmund Tubio, was received on January
11, 1984 by a certain Atty. Ramon Elesteria, a law office partner of Atty. Tubio. ... This fact is corroborated by the certification issued by the
Postmaster of Dumaguete City... Moreover, the same is admitted by no less than Atty. Ramon Elesteria himself in his affidavit. It further
appears in the record that on January 30, 1984 a certain Atty. Francisco Zerna, a new lawyer engaged by the respondents for the appeal,
received a copy of the decision in this case as certified by Julia Pepito in an affidavit subscribed before the Senior Labor Arbitration
Specialist. The appeal was filed only on February 17, 1984.

Considering that it was a law partner of the respondents' counsel who received on January 11, 1984 the registered letter, his actual receipt
thereof completes the service. ... And even assuming that such was not a valid service, since the respondents received another copy of the
decision on January 30, 1984, through their newly engaged counsel, it is therefore our opinion that the appeal herein was filed out of time,
whether the time is reckoned from the receipt by Atty. Elesteria or Atty. Zerna, and, for this reason, we can not give due course to his
appeal. 8

In this Court, petitioners assail said ruling as an arbitrary deprivation of their right to appeal through unreasonable adherence to procedural
technicality. They argue that they should not be bound by the service of the Labor Arbiter's decision by Atty. Elesteria on January 11, 1984 or
by Atty. Zerna on January 30, 1984, because neither lawyer was authorized to accept service for their counsel Atty. Tubio, and that their 10
day period of appeal should be counted from February 10, 1984 when they actually received the copy of the decision from Atty. Zerna. On
the merits, they assert that the Arbiter's finding of illegal dismissal was without evidentiary basis, that it was error to impose the obligation to
pay damages upon the individual petitioners, instead of the Rural Bank of Ayungon, which was Vailoces' real employer, and that the damages
awarded are exorbitant and oppressive.

While the comment of Vailoces traverses the averments of the petition, that of the Solicitor General on behalf of public respondents perceives
the matter as an intracorporate controversy of the class described in Section 5, par. (c), of Presidential Decree No. 902-A, namely:

(c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or
associations.

explicitly declared to be within the original and exclusive jurisdiction of the Securities and Exchange Commission, and recommends that the
questioned resolution of the NLRC as well as the decision of the Labor Arbiter be set aside as null and void. 9

In truth, the issue of jurisdiction is decisive and renders unnecessary consideration of the other questions raised.

There is no dispute that the position from which private respondent Vailoces claims to have been illegally dismissed is an elective corporate
office. He himself acquired that position through election by the bank's Board of Directors at the organizational meeting of November 17,
1979. 10 He lost that position because the Board that was elected in the special stockholders' meeting of June 4, 1983 did not re-elect him.
And when Vailoces, in his position paper submitted to the Labor Arbiter, impugned said stockholders' meeting as illegally convoked and the
Board of Directors thereby elected as illegally constituted, 11 he made it clear that at the heart of the matter was the validity of the directors'
meeting of June 4, 1983 which, by not re-electing him to the position of manager, in effect caused termination of his services.

The case thus falls squarely within the purview of Section 5, par. (c), No. 902-A just cited. In PSBA vs. Leao, 12 this Court, confronted with
a similar controversy, ruled that the Securities and Exchange Commission, not the NLRC, has jurisdiction:

It was at a Board regular monthly meeting held on August 1, 1981, that three directors were elected to fill vacancies. And, it was at the
regular Board meeting of September 5, 1981 that all corporate positions were declared vacant in order to effect a reorganization, and at the
ensuing election of officers, Tan was not re-elected as Executive Vice-President.

Basically, therefore, the question is whether the election of directors on August 1, 1981 and the election of officers on September 5, 1981,
which resulted in Tan's failure to be re-elected, were validly held. This is the crux of the question that Tan has raised before the SEC. Even in
his position paper before the NLRC, Tan alleged that the election on August 1, 1981 of the three directors was in contravention of the PSBA
By-Laws providing that any vacancy in the Board shall be filled by a majority vote of the stockholders at a meeting specially called for the
purpose. Thus, he concludes, the Board meeting on September 5, 1981 was tainted with irregularity on account of the presence of illegally
elected directors without whom the results could have been different.

Tan invoked the same allegations in his complaint filed with the SEC. So much so, that on December 17, 1981, the SEC (Case No. 2145)
rendered a Partial Decision annulling the election of the three directors and ordered the convening of a stockholders' meeting for the purpose
of electing new members of the Board. The correctness of d conclusion is not for us to pass upon in this case. Tan was present at said meeting
and again sought the issuance of injunctive relief from the SEC.

The foregoing indubitably show that, fundamentally, the controversy is intra-corporate in nature. It revolves around the election of directors,
officers or managers of the PSBA, the relation between and among its stockholders, and between them and the corporation. Private
respondent also contends that his "ouster" was a scheme to intimidate him into selling his shares and to deprive him of his just and fair return
on his investment as a stockholder received through his salary and allowances as Executive Vice-President. Vis-a-vis the NLRC, these
matters fall within the jurisdiction of the SEC. Presidential Decree No. 902-A vests in the Securities and Exchange Commission:

... Original and exclusive jurisdiction to hear and decide cases involving:

a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers or partners, amounting to fraud and
misrepresentation) which may be detrimental to the interest of the public and/or of the stockholders, partners, members of associations or
organizations registered with the Commission.

b) Controversies arising out of intracorporate or partnership relations, between and among stockholders, members or associates; between any
of all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and
between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such
entity;

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnership or associations.

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

Respondent Vailoces' invocation of estoppel as against petitioners with respect to the issue of jurisdiction is unavailing. In the first place, it is
not quite correct to state that petitioners did not raise the point in the lower tribunal. Although rather off handedly, in their appeal to the
NLRC they called attention to the Labor Arbiter's lack of jurisdiction to rule on the validity of the meeting of July 2, 1983, but the dismissal
of the appeal for alleged tardiness effectively precluded consideration of that or any other question raised in the appeal. More importantly,
estoppel cannot be invoked to prevent this Court from taking up the question of jurisdiction, which has been apparent on the face of the
pleadings since the start of litigation before the Labor Arbiter. It is well settled that the decision of a tribunal not vested with appropriate
jurisdiction is null and void. Thus, in Calimlim vs. Ramirez, 13 this Court held:

A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the jurisdiction of a court over the
subject matter of the action is a matter of law and may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a
court may be raised at any stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which
stemmed principally from the ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding in said case had been
applied to situations which were obviously not contemplated therein. The exceptional circumstances involved in Sibonghanoy which justified
the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had
been repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but rather the general rule, virtually
overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or by estoppel.

xxx xxx xxx

It is neither fair nor legal to bind a party by the result of a suit or proceeding which was taken cognizance of in a court which lacks
jurisdiction over the same irrespective of the attendant circumstances. The equitable defense of estoppel requires knowledge or consciousness
of the facts upon which it is based . The same thing is true with estoppel by conduct which may be asserted only when it is shown, among
others, that the representation must have been made with knowledge of the facts and that the party to whom it was made is ignorant of the
truth of the matter (De Castro vs. Gineta, 27 SCRA 623). The filing of an action or suit in a court that does not possess jurisdiction to
entertain the same may not be presumed to be deliberate and intended to secure a ruling which could later be annulled if not favorable to the
party who filed such suit or proceeding in a court that lacks jurisdiction to take cognizance of the same, such act may not at once be deemed
sufficient basis of estoppel. It could have been the result of an honest mistake or of divergent interpretation of doubtful legal provisions. If
any fault is to be imputed to a party taking such course of action, part of the blame should be placed on the court which shall entertain the
suit, thereby lulling the parties into believing that they pursued their remedies in the correct forum. Under the rules, it is the duty of the court
to dismiss an action 'whenever it appears that court has no jurisdiction over the subject matter.' (Section 2, Rule 9, Rules of Court) Should the
Court render a judgment without jurisdiction, such judgment may be impeached or annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid),
within ten (10) years from the finality of the same (Art. 1144, par. 3, Civil Code).

To be sure, petitioners failed to raise the issue of jurisdiction in their petition before this Court. But this, too, is no hindrance to the Court's
considering said issue.

The failure of the appellees to invoke anew the aforementioned solid ground of want of jurisdiction of the lower court in this appeal should
not prevent this Tribunal to take up that issue as the lack of jurisdiction of the lower court is apparent upon the face of the record and it is
fundamental that a court of justice could only validly act upon a cause of action or subject matter of a case over which it has jurisdiction and
said jurisdiction is one conferred only by law; and cannot be acquired through, or waived by, any act or omission of the parties (Lagman vs.
CA, 44 SCRA 234 [1972]); hence may be considered by this court motu proprio (Gov't. vs. American Surety Co., 11 Phil. 203 [1908])... 14

These considerations make inevitable the conclusion that the judgment of the Labor Arbiter and the resolution of the NLRC are void for lack
of cause of jurisdiction, and this Court must set matters aright in the exercise of its judicial power. It is of no moment that Vailoces, in his
amended complaint, seeks other relief which would seemingly fan under the jurisdiction of the Labor Arbiter, because a closer look at these-
underpayment of salary and non-payment of living allowance-shows that they are actually part of the perquisites of his elective position,
hence, intimately linked with his relations with the corporation. The question of remuneration, involving as it does, a person who is not a
mere employee but a stockholder and officer, an integral part, it might be said, of the corporation, is not a simple labor problem but a matter
that comes within the area of corporate affairs and management, and is in fact a corporate controversy in contemplation of the Corporation
Code.

WHEREFORE, the questioned decision of the Labor Arbiter and the Resolution of the NLRC dismissing petitioners' appeal from said
decision are hereby set aside because rendered without jurisdiction. The amended complaint for illegal dismissal, etc., basis of said decision
and Resolution, is ordered dismissed, without prejudice to private respondent's seeking recourse in the appropriate forum.SO ORDERED.

G.R. No. 79762 January 24, 1991

FORTUNE CEMENT CORPORATION, petitioner,


vs.
NATIONAL LABOR RELATIONS COMMISSION (First Division) and ANTONIO M. LAGDAMEO, respondents.

GRIO-AQUINO, J.:

This is a petition for certiorari with prayer to annul the resolution dated May 29, 1987 of respondent National Labor Relations Commission
(NLRC) reversing the order dated December 3, 1985 of the Labor Arbiter which dismissed private respondent Antonio M. Lagdameo's
(Lagdameo for brevity) complaint for Illegal Dismissal (NLRC NCR Case No. 1-228-85) against petitioner Fortune Cement Corporation
(FCC for brevity) for lack of jurisdiction.

Lagdameo is a registered stockholder of FCC.

On October 14, 1975, at the FCC Board of Directors' regular monthly meeting, he was elected Executive Vice-President of FCC effective
November 1, 1975 (p. 3, Rollo).

Some eight (8) years later, or on February 10, 1983, during a regular meeting, the FCC Board resolved that all of its incumbent corporate
officers, including Lagdameo, would be "deemed" retained in their respective positions without necessity of yearly reappointments, unless
they resigned or were terminated by the Board (p. 4, Rollo).

At subsequent regular meetings held on June 14 and 21, 1983, the FCC Board approved and adopted a resolution dismissing Lagdameo as
Executive Vice-President of the company, effective immediately, for loss of trust and confidence (p. 4, Rollo).

On June 21, 1983, Lagdameo filed with the National Labor Relations Commission (NLRC), National Capital Region, a complaint for illegal
dismissal against FCC (NLRC-NCR Case No. 1-228-85) alleging that his dismissal was done without a formal hearing and investigation and,
therefore, without due process (p. 63, Rollo).
On August 5, 1985, FCC moved to dismiss Lagdameo's complaint on the ground that his dismiss as a corporate officer is a purely intra-
corporate controversy over which the Securities and Exchange Commission (SEC) has original and exclusive jurisdiction.

The Labor Arbiter granted the motion to dismiss (p. 22, Rollo). On appeal, however, the NLRC set aside the Labor Arbiter's order and
remanded the case to the Arbitration Branch "for appropriate proceedings" (NLRC Resolution dated April 30, 1987). The NLRC denied
FCC's motion for reconsideration (p. 5, Rollo). Dissatisfied, FCC filed this petition for certiorari.

We find merit in the petition.

The sole issue to be resolved is whether or not the NLRC has jurisdiction over a complaint filed by a corporate executive vice-president for
illegal dismissal, resulting from a board resolution dismissing him as such officer.

Section 5 of Presidential Decree No. 902-A vests in the SEC original and exclusive jurisdiction over this controversy:

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commissionover corporations, partnerships
and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive
jurisdiction to hear and decide cases involving:

a) Devices and schemes employed by or any acts, of the board of directors, business associates, its officers or partners, amounting to fraud
and misrepresentation which may be detrimental to the interest of the public and/or stockholders, partners, members of associations or
organization registered with the Commission;

b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between
any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and
between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such
entity;

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnership or associations."
(Section 5, P.D. 902-A; Emphasis supplied.)

In reversing the decision of Labor Arbiter Porfirio E. Villanueva, respondent NLRC held:

. . . . It is not disputed that complainant Lagdameo was an employee of respondent Fortune Cement Corporation, being then the Executive
Vice-President. For having been dismissed for alleged loss of trust and confidence, complainant questioned his dismissal on such ground and
the manner in which he was dismissed, claiming that no investigation was conducted, hence, there was and is denial of due process.
Predicated on the above facts, it is clear to Us that a labor dispute had arisen between the appellant and the respondent corporation, a dispute
which falls within the original and exclusive jurisdiction of the NLRC. A labor dispute as defined in the Labor Code includes any controversy
or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions of employment regardless of whether or not the disputants stand in the proximate relations of
employers and employees." (pp. 16-17, Rollo).

The Solicitor General, declining to defend public respondent in its pleading entitled "Manifestation in Lieu of Comment," aptly observed:

The position of "Executive Vice-President," from which private respondent Lagdameo claims to have been illegally dismissed, is an elective
corporate office. He himself acquired that position through election by the corporation's Board of Directors, although he also lost the same as
a consequence of the latter's resolution.

Indeed the election, appointment and/or removal of an executive vice-president is a prerogative vested upon a corporate board.

And it must be, not only because it is a practice observed in petitioner Fortune Cement Corporation, but more so, because of an express
mandate of law. (p. 65, Rollo.)

The Solicitor General pointed out that "a corporate officer's dismissal is always a corporate act and/or intra-corporate controversy and that
nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action." The dispute between petitioner
and Lagdameo is of the class described in Section 5, par. (c) of Presidential Decree No. 902-A, hence, within the original and exclusive
jurisdiction of the SEC. The Solicitor General recommended that the petition be granted and NLRC-NCR Case No. 1-228-85 be dismissed by
respondent NLRC for lack of jurisdiction (p. 95, Rollo).

In PSBA vs. Leao (127 SCRA 778), this Court, confronted with a similar controversy, ruled that the SEC, not the NLRC, has jurisdiction:
This is not a case of dismissal. The situation is that of a corporate office having been declared vacant, and of Tan's not having been elected
thereafter. The matter of whom to elect is a prerogative that belongs to the Board, and involves the exercise of deliberate choice and the
faculty of discriminative selection. Generally speaking, the relationship of a person to a corporation, whether as officer or as agent or
employee is not determined by the nature of the services performed, but by the incidents of the relationship as they actually exist.

Lagdameo claims that his dismissal was wrongful, illegal, and arbitrary, because the "irregularities" charged against him were not
investigated (p. 85, Rollo); that the case of PSBA vs. Leao (supra) cited by the Labor Arbiter finds no application to his case because it is
not a matter of corporate office having been declared vacant but one where a corporate officer was dismissed without legal and factual basis
and without due process; that the power of dismissal should not be confused with the manner of exercising the same; that even a corporate
officer enjoys security of tenure regardless of his rank (p. 97, Rollo); and that the SEC is without power to grant the reliefs prayed for in his
complaint (p. 106, Rollo).

The issue of the SEC's power or jurisdiction is decisive and renders unnecessary a consideration of the other questions raised by Lagdameo.
Thus did this Court rule in the case of Dy vs. National Labor Relations Commission(145 SCRA 211) which involved a similar situation:

It is of no moment that Vailoces, in his amended complaint, seeks other reliefs which would seemingly fall under the jurisdiction of the Labor
Arbiter, because a closer look at these underpayment of salary and non-payment of living allowance shows that they are actually part
of the perquisites of his elective position, hence, intimately linked with his relations with the corporation.1wphi1 The question of
remuneration, involving as it does, a person who is not a mere employee but a stockholder and officer, an integral part, it might be said, of
the corporation, is not a simple labor problem but a matter that comes within the area of corporate affairs and management, and is in fact a
corporate controversy in contemplation of the Corporation Code. (Emphasis ours.)

WHEREFORE, the questioned Resolution of the NLRC reversing the decision of the Labor Arbiter, having been rendered without
jurisdiction, is hereby reversed and set aside. The decision of the Labor Arbiter dated December 3, 1985 dismissing NLRC-NCR Case No. 1-
228-85 is affirmed, without prejudice to private respondent Antonio M. Lagdameo's seeking recourse in the appropriate forum. No costs.

SO ORDERED.
G.R. No. L-30211 October 5, 1976

GOODRICH EMPLOYEES ASSOCIATION, petitioner,


vs.
THE HONORABLE DELFIN B. FLORES, JUDGE OF THE COURT OF FIRST INSTANCE OF RIZAL, PASIG BRANCH XI and
B. F. GOODRICH PHILIPPINES, INC., respondents.

J.C. Espinas B.C. Pineda & Associates for petitioner.

Manuel O. Chan for private respondent.

FERNANDO, J.:

The crucial question raised by petitioner B. F. Goodrich Employees Association in this certiorari and prohibition proceeding is whether
respondent Judge Delfin B. Flores, since deceased, could entertain a suit for damages filed by private respondent . B. F. Goodrich
Philippines, Inc., the employer, because of a strike by such union characterized by management as an unfair labor practice. Previously there
was instituted by it the very same unfair labor practice charge with now defunct Court of Industrial Relations. The answer supplied in
categorical language both by Associated Labor Union v. Gomez 1 and Progressive Labor Association v. Atlas Consolidated Mining and
Development Corporation, 2 is that a court of first instance is devoid of jurisdiction, the matter being appropriately for the Court of Industrial
Relations. It is true that the Gomez decision was not promulgated until February 9, 1967, while the suit for damages by private respondent
based on an unfair labor practice was filed with respondent Judge as early as October 12, 1965, as noted during the pendency of an unfair
labor practice complaint based on the same strike in the Court of Industrial Relations. 3 It could be said that respondent Judge, when he
assumed jurisdiction in 1965, could not have known any better. No such excuse could be relied upon, however, as of June 5, 1967 when the
motion to dismiss precisely on the ground of lack of jurisdiction was presented to him. For the Gomez ruling had in the meanwhile, on
February 9, 1967, to be exact, made its appearance. That circumstance ought to have prompted him to grant such motion and thus terminate
the civil suit for damages allegedly arising from the unfair labor practice, Instead, he denied it. 4

That was to act not in accordance with but contrary to our controlling decisions. It ought not to have been the case. Since jurisdiction was
lacking, a case for certiorari and prohibition has been made out.

1. This is the doctrine announced by this Court through Justice Sanchez with such clarity in Gomez: "Nor will Sugecos averment below that
it suffers damages by reason of the strike, work to defeat the CIR's jurisdiction to hear the unfair labor practice charge, Reason for this is that
the right to damages "would still to depend on the evidence in the unfair labor practice case"in the CIR. To hold otherwise is to sanction
split jurisdictionwhich is obnoxious to the orderly administration of justice. 5 Justice J.B.L. Reyes in Progressive Labor Association
decision was equally explicit: "In its effort to sustain the jurisdiction of the lower court over the present case, appellants also advance the
argument that their demand for damages anyway cannot be entertained by the Industrial Court. This does not improve the situation at all. As
already held b this Court, mere allegation that the plaintiff suffered damages because of the complained acts does not work to divest the
Court of Industrial Relations of jurisdiction to hear the unfair labor practice charge. For it must be realized that the right to damages would
still have to depend on the evidence to be presented in the unfair labor case. To hold that the demand for damages is to be passed upon by the
regular courts independently or separately from the unfair labor practice accusation would be to sanction split jurisdiction, which is
prejudicial to the orderly administration of justice. 6 Thereafter the same jurist had occasion to reiterate the doctrine in the two subsequent
decisions of Leoquenio v. Dry Bottling Co. 7 and Associated Labor Union v. Cruz. 8

2. Associated Labor Union v. Gomez 9 is also notable for this categorical pronouncement concerning the exclusive jurisdiction of the Court of
Industrial Relations over unfair labor practice controversies. To quote from Justice Sanchez anew: "A rule buttressed upon statute and reason
that is frequently reiterated in jurisprudence is that labor cases involving unfair labor practice are within the exclusive jurisdiction of the CIR.
By now, this rule has ripened into dogma. It thus commands adherence, not breach. 10 This excerpt was referred to with approval by Justice
Teehankee, speaking for this Court in Veteran Security Free Workers Union v. Cloribel, 11 thus: "It has long been accepted as dogma that
cases involving unfair labor practice fall within the exclusive jurisdiction of the Court of Industrial Relations, by virtue of the explicit
provision of Section 5(a) of the Industrial Peace Act ... . 12 As was further clarified by the ponencia of Justice Dizon in Meralco Workers
Union v. Gaerlan, 13 where the subject matter is within the competence of the CIR, it "must be deemed to have jurisdiction of all incidental
matters connected with the main issue ... ." 14 So it was repeated in Lakas ng Manggagawang Makabayan v. Abiera. 15 There has been since
then no deviation from such a controlling doctrine in accordance with the express terms of the Industrial Peace Act. 16
3. Rightfully, the able counsel for petitioner, Attorney J. C. Espinas, concentrated on the crucial and decisive aspect of lack of jurisdiction.
Understandably, the knowledgeable Attorney Manuel Chan for private respondent sought refuge in the minute resolution of this Court of
October 28, 1968 dismissing a case of similar nature by the same parties "without prejudice to asking suspension of proceedings in the Court
of First Instance. 17 That is hardly relevant to the disposition of this present petition. There is no res judicata. The principle underlying Social
Security System v. Court of Appeals 18 cautions against such an approach. The very resolution, in the traditional language of the law, can
rightfully be interpreted as evincing respect for the well-settled doctrine of ripeness for appellate review. With respondent Judge apparently
unable to perceive the clear and manifest import of authoritative decisions, this Court, in its resolution of March 4, 1969, left no doubt that
the question raised in this petition was of such moment, indicative as it was of the failure of the lower court to abide by the controlling
doctrines, that it forthwith required respondents "to file an answer to the petition for certiorari and prohibition. 19 This it did notwithstanding
the investment in the petition that there was a previous proceeding filed b the same union against the same judge, and the same employer
which resulted in the aforesaid resolution of October 25, 1968. 20 It cannot be doubted, therefore, that this Court took into consideration that
particular defense raised and found it lacking in merit.

4. The conclusion reached by this Court to nullify on jurisdictional ground the challenged order gains added reinforcement from their
draconian Character. On August 31, 1968, the dispositive portion of the decision reached by respondent Judge was amended to read as
follows: "[Wherefore], judgment is hereby rendered in favor of the plaintiff B. F. Goodrich Philippines, Incorporated, and against the
defendants Goodrich Employees Association (PLUM) Celedonio Francisco, Melencio Bautista, Luis V. Mendez, Loreto R. Sotto, Gabino
Magdamit, Jose Porcuna, Igm . Idio Tayag, Teofilo Malicdem Leonardo Pilande, Leonardo Calimotan, Eleuterio Alvarez, August Lopez, and
L. de los Reyes, directing the said defendants to pay the plaintiff the amount of Six Hundred Eighty-Six

Thousand Seven Hundred (P686,700.00) Pesos plus interest at the rate of 1% per month from January 1, 1966 until the said amount is fully
paid; P25,000.00 as moral damages; P25,000.00 as exemplary damages; P50,000.00 as attorney's fees and to pay the costs of this
suit." 21 Then came on January 20, 1969 an order that could deal a death-blow to petitioner union: "Let a writ of execution issue in favor of
the plaintiff B. F. Goodrich Philippines, Inc., and against the defendants Goodrich Employees Association (PLUM), Celedonio Francisco,
Melencio Bautista, Luis V. Mendez, Loreto R. Sotto, Gabino Magdamit, Jose Porcuna, Igmidio Tayag, Teofilo Malicdem Leonardo Pilande,
Leonardo Calimotan, Eleuterio Alvarez, August Lopez. and L. de los Reyes for the full satisfaction of its claims." 22Thus there is the sad
spectacle of a court acting without jurisdiction, guided solely by its own unaided appraisal of a matter clearly beyond its competence,
inflicting what in the apt phrase of Justice Laurel could very well be a "mortal wound" to the labor movement. There is no better illustration
of the wisdom of the view of Justice J.B.L. Reyes that labor controversies should be left for disposition not to an ordinary court but to an
agency better equipped by training, experience and background to handle them. This observation was made by him as far back as
1957. 23 The regular courts, as he pointed out, "have not intervened in labor cases [since 1936] and are therefore illprepared to apply labor
laws and policies. And the frequency with which this Court has had to upset their labor injunctions attest to the fact. 24 What is more, that is
not protect labor as required by the 1935 Constitution that was in force when this litigation arose. 25 That is to make a mockery of the
fundamental principle of social justice, again as therein enshrined. 26 If there is one case then where the vivid rhetoric of Justice Street
in Banco Espanol-Filipino v. Palanca 27 finds application, this is it: "Where a judgment or judicial order is void in this sense it may be said to
be a lawless thing, which can be treated as an outlaw and slain at sight or ignored wherever and whenever it exhibits its head. 28Only thus
may there be fidelity to the even greater concern shown by the present Constitution for the workers as evidenced by the expanded and more
generous scope to both concepts of protection to labor 29 and social justice. 30Thereby the goal of what in the inspired language of the First
Lady is, "a compassionate society" 31 may be truly achieved.

WHEREFORE, the writ of prohibition is granted and the successor of respondent Judge Delfin B. Flores in Branch XI of the Court of First
Instance of Rizal is hereby perpetually restrained from taking any further action in Civil Case No. 8962 entitled B. F. Goodrich Philippines,
Inc. v. Philippine Labor Unity Movement, Goodrich Employees Association, et al., except for the purpose of dismissing the same. The writ
of certiorari is likewise granted setting aside, nullifying and declaring without any force or effect respondent Judge's decision of August 31,
1968 and his order of January 20, 1969, for having been issued without jurisdiction. No costs.

Barredo, Antonio, Aquino, and Concepcion Jr. JJ., concur.


G.R. No. 85750 September 28, 1990

INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION, petitioner


vs
HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR RELATIONS AND TRADE
UNIONS OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS) WFTU respondents.

G.R. No. 89331 September 28, 1990

KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-ORGANIZED LABOR ASSOCIATION IN LINE INDUSTRIES AND


AGRICULTURE, petitioner,
vs
SECRETARY OF LABOR AND EMPLOYMENT AND INTERNATIONAL RICE RESEARCH INSTITUTE, INC., respondents.

Araullo, Zambrano, Gruba, Chua Law Firm for petitioner in 85750.

Dominguez, Armamento, Cabana & Associates for petitioner in G.R. No. 89331.

Jimenez & Associates for IRRI.

Alfredo L. Bentulan for private respondent in 85750.

MELENCIO-HERRERA, J.:

Consolidated on 11 December 1989, these two cases involve the validity of the claim of immunity by the International Catholic Migration
Commission (ICMC) and the International Rice Research Institute, Inc. (IRRI) from the application of Philippine labor laws.

Facts and Issues

A. G.R. No. 85750 the International Catholic Migration Commission (ICMC) Case.

As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South Vietnam's communist rule confronted the
international community.

In response to this crisis, on 23 February 1981, an Agreement was forged between the Philippine Government and the United Nations High
Commissioner for Refugees whereby an operating center for processing Indo-Chinese refugees for eventual resettlement to other countries
was to be established in Bataan (Annex "A", Rollo, pp. 22-32).

ICMC was one of those accredited by the Philippine Government to operate the refugee processing center in Morong, Bataan. It was
incorporated in New York, USA, at the request of the Holy See, as a non-profit agency involved in international humanitarian and voluntary
work. It is duly registered with the United Nations Economic and Social Council (ECOSOC) and enjoys Consultative Status, Category II. As
an international organization rendering voluntary and humanitarian services in the Philippines, its activities are parallel to those of the
International Committee for Migration (ICM) and the International Committee of the Red Cross (ICRC) [DOLE Records of BLR Case No.
A-2-62-87, ICMC v. Calleja, Vol. 1].

On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then Ministry of Labor and Employment a
Petition for Certification Election among the rank and file members employed by ICMC The latter opposed the petition on the ground that it
is an international organization registered with the United Nations and, hence, enjoys diplomatic immunity.

On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the petition for lack of jurisdiction.

On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed the Med-Arbiter's Decision and ordered the
immediate conduct of a certification election. At that time, ICMC's request for recognition as a specialized agency was still pending with the
Department of Foreign Affairs (DEFORAF).
Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF, granted ICMC the status of a specialized
agency with corresponding diplomatic privileges and immunities, as evidenced by a Memorandum of Agreement between the Government
and ICMC (Annex "E", Petition, Rollo, pp. 41-43), infra.

ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election invoking the immunity expressly granted but the
same was denied by respondent BLR Director who, again, ordered the immediate conduct of a pre-election conference. ICMC's two Motions
for Reconsideration were denied despite an opinion rendered by DEFORAF on 17 October 1988 that said BLR Order violated ICMC's
diplomatic immunity.

Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with Preliminary Injunction assailing the BLR Order.

On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the holding of the certification election.

On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C. Coquia of the Court of Appeals, filed a Motion for
Intervention alleging that, as the highest executive department with the competence and authority to act on matters involving diplomatic
immunity and privileges, and tasked with the conduct of Philippine diplomatic and consular relations with foreign governments and UN
organizations, it has a legal interest in the outcome of this case.

Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention.

On 12 July 1989, the Second Division gave due course to the ICMC Petition and required the submittal of memoranda by the parties, which
has been complied with.

As initially stated, the issue is whether or not the grant of diplomatic privileges and immunites to ICMC extends to immunity from the
application of Philippine labor laws.

ICMC sustains the affirmative of the proposition citing (1) its Memorandum of Agreement with the Philippine Government giving it the
status of a specialized agency, (infra); (2) the Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN
General Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 91 on 17 May 1949 (the
Philippine Instrument of Ratification was signed by the President on 30 August 1949 and deposited with the UN on 20 March 1950) infra;
and (3) Article II, Section 2 of the 1987 Constitution, which declares that the Philippines adopts the generally accepted principles of
international law as part of the law of the land.

Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity and seeks an affirmance of the DEFORAF determination that the BLR
Order for a certification election among the ICMC employees is violative of the diplomatic immunity of said organization.

Respondent BLR Director, on the other hand, with whom the Solicitor General agrees, cites State policy and Philippine labor laws to justify
its assailed Order, particularly, Article II, Section 18 and Article III, Section 8 of the 1987 Constitution, infra; and Articles 243 and 246 of the
Labor Code, as amended, ibid. In addition, she contends that a certification election is not a litigation but a mere investigation of a non-
adversary, fact-finding character. It is not a suit against ICMC its property, funds or assets, but is the sole concern of the workers themselves.

B. G.R. No. 89331 (The International Rice Research Institute [IRRI] Case).

Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December 1989, resolved to consolidate G.R. No. 89331
pending before it with G.R. No. 85750, the lower-numbered case pending with the Second Division, upon manifestation by the Solicitor
General that both cases involve similar issues.

The facts disclose that on 9 December 1959, the Philippine Government and the Ford and Rockefeller Foundations signed a Memorandum of
Understanding establishing the International Rice Research Institute (IRRI) at Los Baos, Laguna. It was intended to be an autonomous,
philanthropic, tax-free, non-profit, non-stock organization designed to carry out the principal objective of conducting "basic research on the
rice plant, on all phases of rice production, management, distribution and utilization with a view to attaining nutritive and economic
advantage or benefit for the people of Asia and other major rice-growing areas through improvement in quality and quantity of rice."

Initially, IRRI was organized and registered with the Securities and Exchange Commission as a private corporation subject to all laws and
regulations. However, by virtue of Pres. Decree No. 1620, promulgated on 19 April 1979, IRRI was granted the status, prerogatives,
privileges and immunities of an international organization.

The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate labor organization with an existing local
union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, for short) in respondent IRRI.
On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV, Regional Office of the Department of
Labor and Employment (DOLE).

IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an international organization and granting it
immunity from all civil, criminal and administrative proceedings under Philippine laws.

On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres. Decree No. 1620 and dismissed the Petition
for Direct Certification.

On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside the Med-Arbiter's Order and authorized the calling of
a certification election among the rank-and-file employees of IRRI. Said Director relied on Article 243 of the Labor Code, as
amended, infra and Article XIII, Section 3 of the 1987 Constitution, 1 and held that "the immunities and privileges granted to IRRI do not
include exemption from coverage of our Labor Laws." Reconsideration sought by IRRI was denied.

On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR Director's Order, dismissed the Petition for Certification
Election, and held that the grant of specialized agency status by the Philippine Government to the IRRI bars DOLE from assuming and
exercising jurisdiction over IRRI Said Resolution reads in part as follows:

Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives, privileges and immunities of an international organization is
clear and explicit. It provides in categorical terms that:

Art. 3 The Institute shall enjoy immunity from any penal, civil and administrative proceedings, except insofar as immunity has been
expressly waived by the Director-General of the Institution or his authorized representative.

Verily, unless and until the Institute expressly waives its immunity, no summons, subpoena, orders, decisions or proceedings ordered by any
court or administrative or quasi-judicial agency are enforceable as against the Institute. In the case at bar there was no such waiver made by
the Director-General of the Institute. Indeed, the Institute, at the very first opportunity already vehemently questioned the jurisdiction of this
Department by filing an ex-parte motion to dismiss the case.

Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of discretion by respondent Secretary of Labor in
upholding IRRI's diplomatic immunity.

The Third Division, to which the case was originally assigned, required the respondents to comment on the petition. In a Manifestation filed
on 4 August 1990, the Secretary of Labor declared that it was "not adopting as his own" the decision of the BLR Director in the ICMC Case
as well as the Comment of the Solicitor General sustaining said Director. The last pleading was filed by IRRI on 14 August 1990.

Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying that he be excused from filing a comment "it
appearing that in the earlier case of International Catholic Migration Commission v. Hon. Pura Calleja, G.R. No. 85750. the Office of the
Solicitor General had sustained the stand of Director Calleja on the very same issue now before it, which position has been superseded by
respondent Secretary of Labor in G.R. No. 89331," the present case. The Court acceded to the Solicitor General's prayer.

The Court is now asked to rule upon whether or not the Secretary of Labor committed grave abuse of discretion in dismissing the Petition for
Certification Election filed by Kapisanan.

Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status, privileges, prerogatives and immunities of an
international organization, invoked by the Secretary of Labor, is unconstitutional in so far as it deprives the Filipino workers of their
fundamental and constitutional right to form trade unions for the purpose of collective bargaining as enshrined in the 1987 Constitution.

A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for entertaining IRRI'S appeal from the Order of the
Director of the Bureau of Labor Relations directing the holding of a certification election. Kapisanan contends that pursuant to Sections 7, 8,
9 and 10 of Rule V 2 of the Omnibus Rules Implementing the Labor Code, the Order of the BLR Director had become final and unappeable
and that, therefore, the Secretary of Labor had no more jurisdiction over the said appeal.

On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section 25 of Rep. Act. No. 6715, which took effect on 21
March 1989, providing for the direct filing of appeal from the Med-Arbiter to the Office of the Secretary of Labor and Employment instead
of to the Director of the Bureau of Labor Relations in cases involving certification election orders.

III

Findings in Both Cases.


There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI.

Article II of the Memorandum of Agreement between the Philippine Government and ICMC provides that ICMC shall have a status "similar
to that of a specialized agency." Article III, Sections 4 and 5 of the Convention on the Privileges and Immunities of Specialized Agencies,
adopted by the UN General Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 19 on 17
May 1949, explicitly provides:

Art. III, Section 4. The specialized agencies, their property and assets, wherever located and by whomsoever held, shall enjoy immunity from
every form of legal process except insofar as in any particular case they have expressly waived their immunity. It is, however, understood that
no waiver of immunity shall extend to any measure of execution.

Sec. 5. The premises of the specialized agencies shall be inviolable. The property and assets of the specialized agencies, wherever located
and by whomsoever held shall be immune from search, requisition, confiscation, expropriation and any other form of interference, whether
by executive, administrative, judicial or legislative action. (Emphasis supplied).

IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is explicit in its grant of immunity, thus:

Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any penal, civil and administrative proceedings, except
insofar as that immunity has been expressly waived by the Director-General of the Institute or his authorized representatives.

Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC'S invocation of immunity when in a Memorandum, dated 17
October 1988, it expressed the view that "the Order of the Director of the Bureau of Labor Relations dated 21 September 1988 for the
conduct of Certification Election within ICMC violates the diplomatic immunity of the organization." Similarly, in respect of IRRI, the
DEFORAF speaking through The Acting Secretary of Foreign Affairs, Jose D. Ingles, in a letter, dated 17 June 1987, to the Secretary of
Labor, maintained that "IRRI enjoys immunity from the jurisdiction of DOLE in this particular instance."

The foregoing opinions constitute a categorical recognition by the Executive Branch of the Government that ICMC and IRRI enjoy
immunities accorded to international organizations, which determination has been held to be a political question conclusive upon the Courts
in order not to embarrass a political department of Government.

It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is essentially a
political question and courts should refuse to look beyond a determination by the executive branch of the government, and where the plea of
diplomatic immunity is recognized and affirmed by the executive branch of the government as in the case at bar, it is then the duty of the
courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of the government . . . or other officer acting
under his direction. Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction . . . as to embarrass the
executive arm of the government in conducting foreign relations, it is accepted doctrine that in such cases the judicial department of (this)
government follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdiction. 3

A brief look into the nature of international organizations and specialized agencies is in order. The term "international organization" is
generally used to describe an organization set up by agreement between two or more states. 4 Under contemporary international law, such
organizations are endowed with some degree of international legal personality 5 such that they are capable of exercising specific rights, duties
and powers. 6 They are organized mainly as a means for conducting general international business in which the member states have an
interest. 7 The United Nations, for instance, is an international organization dedicated to the propagation of world peace.

"Specialized agencies" are international organizations having functions in particular fields. The term appears in Articles 57 8 and 63 9 of the
Charter of the United Nations:

The Charter, while it invests the United Nations with the general task of promoting progress and international cooperation in economic,
social, health, cultural, educational and related matters, contemplates that these tasks will be mainly fulfilled not by organs of the United
Nations itself but by autonomous international organizations established by inter-governmental agreements outside the United Nations. There
are now many such international agencies having functions in many different fields, e.g. in posts, telecommunications, railways, canals,
rivers, sea transport, civil aviation, meteorology, atomic energy, finance, trade, education and culture, health and refugees. Some are virtually
world-wide in their membership, some are regional or otherwise limited in their membership. The Charter provides that those agencies which
have "wide international responsibilities" are to be brought into relationship with the United Nations by agreements entered into between
them and the Economic and Social Council, are then to be known as "specialized agencies." 10

The rapid growth of international organizations under contemporary international law has paved the way for the development of the concept
of international immunities.
It is now usual for the constitutions of international organizations to contain provisions conferring certain immunities on the organizations
themselves, representatives of their member states and persons acting on behalf of the organizations. A series of conventions, agreements and
protocols defining the immunities of various international organizations in relation to their members generally are now widely in force; . . . 11

There are basically three propositions underlying the grant of international immunities to international organizations. These principles,
contained in the ILO Memorandum are stated thus: 1) international institutions should have a status which protects them against control or
interference by any one government in the performance of functions for the effective discharge of which they are responsible to
democratically constituted international bodies in which all the nations concerned are represented; 2) no country should derive any national
financial advantage by levying fiscal charges on common international funds; and 3) the international organization should, as a collectivity of
States members, be accorded the facilities for the conduct of its official business customarily extended to each other by its individual member
States. 12 The theory behind all three propositions is said to be essentially institutional in character. "It is not concerned with the status,
dignity or privileges of individuals, but with the elements of functional independence necessary to free international institutions from
national control and to enable them to discharge their responsibilities impartially on behalf of all their members. 13 The raison d'etre for these
immunities is the assurance of unimpeded performance of their functions by the agencies concerned.

The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their international character and respective
purposes. The objective is to avoid the danger of partiality and interference by the host country in their internal workings. The exercise of
jurisdiction by the Department of Labor in these instances would defeat the very purpose of immunity, which is to shield the affairs of
international organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice of
member States of the organization, and to ensure the unhampered performance of their functions.

ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic rights, which are guaranteed by Article II,
Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3 (supra), of the 1987 Constitution; and implemented by Articles 243 and 246
of the Labor Code, 16 relied on by the BLR Director and by Kapisanan.

For, ICMC employees are not without recourse whenever there are disputes to be settled. Section 31 of the Convention on the Privileges and
Immunities of the Specialized Agencies of the United Nations 17 provides that "each specialized agency shall make provision for appropriate
modes of settlement of: (a) disputes arising out of contracts or other disputes of private character to which the specialized agency is a party."
Moreover, pursuant to Article IV of the Memorandum of Agreement between ICMC the the Philippine Government, whenever there is any
abuse of privilege by ICMC, the Government is free to withdraw the privileges and immunities accorded. Thus:

Art. IV. Cooperation with Government Authorities. 1. The Commission shall cooperate at all times with the appropriate authorities of the
Government to ensure the observance of Philippine laws, rules and regulations, facilitate the proper administration of justice and prevent the
occurrences of any abuse of the privileges and immunities granted its officials and alien employees in Article III of this Agreement to the
Commission.

2. In the event that the Government determines that there has been an abuse of the privileges and immunities granted under this Agreement,
consultations shall be held between the Government and the Commission to determine whether any such abuse has occurred and, if so, the
Government shall withdraw the privileges and immunities granted the Commission and its officials.

Neither are the employees of IRRI without remedy in case of dispute with management as, in fact, there had been organized a forum for
better management-employee relationship as evidenced by the formation of the Council of IRRI Employees and Management (CIEM)
wherein "both management and employees were and still are represented for purposes of maintaining mutual and beneficial cooperation
between IRRI and its employees." The existence of this Union factually and tellingly belies the argument that Pres. Decree No. 1620, which
grants to IRRI the status, privileges and immunities of an international organization, deprives its employees of the right to self-organization.

The immunity granted being "from every form of legal process except in so far as in any particular case they have expressly waived their
immunity," it is inaccurate to state that a certification election is beyond the scope of that immunity for the reason that it is not a suit against
ICMC. A certification election cannot be viewed as an independent or isolated process. It could tugger off a series of events in the collective
bargaining process together with related incidents and/or concerted activities, which could inevitably involve ICMC in the "legal process,"
which includes "any penal, civil and administrative proceedings." The eventuality of Court litigation is neither remote and from which
international organizations are precisely shielded to safeguard them from the disruption of their functions. Clauses on jurisdictional immunity
are said to be standard provisions in the constitutions of international Organizations. "The immunity covers the organization concerned, its
property and its assets. It is equally applicable to proceedings in personam and proceedings in rem." 18

We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161, Rollo), wherein TUPAS calls attention to the case
entitled "International Catholic Migration Commission v. NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims that,
having taken cognizance of that dispute (on the issue of payment of salary for the unexpired portion of a six-month probationary
employment), the Court is now estopped from passing upon the question of DOLE jurisdiction petition over ICMC.
We find no merit to said submission. Not only did the facts of said controversy occur between 1983-1985, or before the grant to ICMC on 15
July 1988 of the status of a specialized agency with corresponding immunities, but also because ICMC in that case did not invoke its
immunity and, therefore, may be deemed to have waived it, assuming that during that period (1983-1985) it was tacitly recognized as
enjoying such immunity.

Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision of the BLR Director, dated 15 February 1989, had not
become final because of a Motion for Reconsideration filed by IRRI Said Motion was acted upon only on 30 March 1989 when Rep. Act No.
6715, which provides for direct appeals from the Orders of the Med-Arbiter to the Secretary of Labor in certification election cases either
from the order or the results of the election itself, was already in effect, specifically since 21 March 1989. Hence, no grave abuse of
discretion may be imputed to respondent Secretary of Labor in his assumption of appellate jurisdiction, contrary to Kapisanan's allegations.
The pertinent portion of that law provides:

Art. 259. Any party to an election may appeal the order or results of the election as determined by the Med-Arbiter directly to the
Secretary of Labor and Employment on the ground that the rules and regulations or parts thereof established by the Secretary of Labor and
Employment for the conduct of the election have been violated. Such appeal shall be decided within 15 calendar days (Emphasis supplied).

En passant, the Court is gratified to note that the heretofore antagonistic positions assumed by two departments of the executive branch of
government have been rectified and the resultant embarrassment to the Philippine Government in the eyes of the international community
now, hopefully, effaced.

WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is GRANTED, the Order of the Bureau of Labor Relations for certification
election is SET ASIDE, and the Temporary Restraining Order earlier issued is made PERMANENT.

In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave abuse of discretion having been committed by the Secretary of Labor
and Employment in dismissing the Petition for Certification Election.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 108813 December 15, 1994

JUSMAG PHILIPPINES, petitioner,


vs.
THE NATIONAL LABOR RELATIONS COMMISSION (Second Division) and FLORENCIO SACRAMENTO, Union President,
JPFCEA, respondents.

Juan, Luces, Luna and Associates for petitioner.

Galutera & Aguilar Law Offices for private respondent.

PUNO, J.:

The immunity from suit of the Joint United States Military Assistance Group to the Republic of the Philippines (JUSMAG-Philippines) is the
pivotal issue in the case at bench.

JUSMAG assails the January 29, 1993 Resolution of the NATIONAL LABOR RELATIONS COMMISSION (public respondent), in NLRC
NCR CASE NO. 00-03-02092-92, reversing the July 30, 1991 Order of the Labor Arbiter, and ordering the latter to assume jurisdiction over
the complaint for illegal dismissal filed by FLORENCIO SACRAMENTO (private respondent) against petitioner.

First, the undisputed facts.

Private respondent was one of the seventy-four (74) security assistance support personnel (SASP) working at JUSMAG-Philippines. 1 He
had been with JUSMAG from December 18, 1969, until his dismissal on April 27, 1992. When dismissed, he held the position of Illustrator 2
and was the incumbent President of JUSMAG PHILIPPINES-FILIPINO CIVILIAN EMPLOYEES ASSOCIATION (JPFCEA), a labor
organization duly registered with the Department of Labor and Employment. His services were terminated allegedly due to the abolition of
his position.2He was also advised that he was under administrative leave until April 27, 1992, although the same was not charged against his
leave.

On March 31, 1992, private respondent filed a complaint with the Department of Labor and Employment on the ground that he was illegally
suspended and dismissed from service by JUSMAG. 3 He asked for his reinstatement.

JUSMAG then filed a Motion to Dismiss invoking its immunity from suit as an agency of the United States. It further alleged lack of
employer-employee relationship and that it has no juridical personality to sue and be sued.4

In an Order dated July 30, 1991, Labor Arbiter Daniel C. Cueto dismissed the subject complaint " for want of jurisdiction."5 Private
respondent appealed6 to the National Labor Relations Commission (public respondent), assailing the ruling that petitioner is immune from
suit for alleged violation of our labor laws. JUSMAG filed its Opposition, 7 reiterating its immunity from suit for its non-contractual,
governmental and/or public acts.

In a Resolution, dated January 29, 1993, the NLRC8 reversed the ruling of the Labor Arbiter as it held that petitioner had lost its right not to
be sued. The resolution was predicated on two grounds: (1) the principle of estoppel that JUSMAG failed to refute the existence of
employer-employee relationship under the "control test"; and (2) JUSMAG has waived its right to immunity from suit when it hired the
services of private respondent on December 18, 1969.

The NLRC relied on the case of Harry Lyons vs. United States of America,9 where the "United States Government (was considered to have)
waived its immunity from suit by entering into (a) contract of stevedoring services, and thus, it submitted itself to the jurisdiction of the local
courts."

Accordingly, the case was remanded to the labor arbiter for reception of evidence as to the issue on illegal dismissal.

Hence, this petition, JUSMAG contends:

THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION
A. IN REVERSING THE DECISION OF THE LABOR ARBITER AND IN NOT AFFIRMING THE DISMISSAL OF THE COMPLAINT
IT BEING A SUIT AGAINST THE UNITED STATES OF AMERICA WHICH HAD NOT GIVEN ITS CONSENT TO BE SUED; AND

B. IN FINDING WAIVER BY JUSMAG OF IMMUNITY FROM SUIT;

II

THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION

A. WHEN IT FOUND AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN JUSMAG AND PRIVATE RESPONDENT; AND

B. WHEN IT CONSIDERED JUSMAG ESTOPPED FROM DENYING THAT PRIVATE RESPONDENT IS ITS EMPLOYEE FOR
FAILURE TO PRESENT PROOF TO THE CONTRARY.

We find the petition impressed with merit.

It is meet to discuss the historical background of the JUSMAG to determine its immunity from suit.

JUSMAG was created pursuant to the Military Assistance Agreement 10 dated March 21, 1947, between the Government of the Republic of
the Philippines and the Government of the United States of America. As agreed upon, JUSMAG shall consist of Air, Naval and Army group,
and its primary task was to advise and assist the Philippines, on air force, army and naval matters. 11

Article 14 of the 1947 Agreement provides, inter alia, that "the cost of all services required by the Group, including compensation of locally
employed interpreters, clerks, laborers, and other personnel, except personal servants, shall be borne by the Republic of the Philippines."

This set-up was to change in 1991. In Note No 22, addressed to the Department of Foreign Affairs (DFA) of the Philippines, dated January
23, 1991, the United States Government, thru its Embassy, manifested its preparedness "to provide funds to cover the salaries of security
assistance support personnel" and security guards, the rent of JUSMAG occupied buildings and housing, and the cost of utilities. 12 This
offer was accepted by our Government, thru the DFA, in Note No. 911725, dated April 18, 1991.13

Consequently, a Memorandum of Agreement 14 was forged between the Armed Forces of the Philippines and JUSMAG-Philippines, thru
General Lisandro C. Abadia and U.S. Brigadier General Robert G. Sausser. The Agreement delineated the terms of the assistance-in-kind of
JUSMAG for 1991, the relevant parts of which read:

a. The term salaries as used in this agreement include those for the security guards currently contracted between JUSMAG and A' Prime
Security Services Inc., and the Security Assistance Support Personnel (SASP). . . . .

b. The term Security Assistance Support Personnel (SASP) does not include active duty uniformed members of the Armed Forces of the
Philippines performing duty at JUSMAG.

c. It is understood that SASP are employees of the Armed Forces of the Philippines (AFP). Therefore, the AFP agrees to appoint, for service
with JUSMAG, no more than 74 personnel to designated positions with JUSMAG.

d. SASP are under the total operational control of the Chief, JUSMAG-Philippines. The term "Operational Control" includes, but is not
limited to, all personnel administrative actions, such as: hiring recommendations; firing recommendations; position classification; discipline;
nomination and approval of incentive awards; and payroll computation. Personnel administration will be guided by Annex E of JUSMAG-
Philippines Memo 10-2. For the period of time that there is an exceptional funding agreement between the government of the Philippines
and the United States Government (USG), JUSMAG will pay the total payroll costs for the SASP employees. Payroll costs include only
regular salary; approved overtime, costs of living allowance; medical insurance; regular contributions to the Philippine Social Security
System, PAG-IBIG Fund and Personnel Economic Relief Allowance (PERA); and the thirteenth-month bonus. Payroll costs do not include
gifts or other bonus payments in addition to those previously defined above. Entitlements not considered payroll costs under this agreement
will be funded and paid by the AFP.

e. All SASP employed as of July 1, 1990 will continue their service with JUSMAG at their current rate of pay and benefits up to 30 June
1991, with an annual renewal of employment thereafter subject to renewal of their appointment with the AFP (employees and rates of pay are
indicated at Enclosure 3). No promotion or transfer internal to JUSMAG of the listed personnel will result in the reduction of their pay and
benefits.
f. All SASP will, after proper classification, be paid salaries and benefits at established AFP civilian rates. Rules for computation of pay and
allowances will be made available to the Comptroller, JUSMAG, by the Comptroller, GHQ, AFP. Additionally, any legally mandated changes
in salary levels or methods of computation shall be transmitted within 48 hours of receipt by Comptroller, GHQ to Comptroller, JUSMAG.

g. The AFP agrees not to terminate SASP without 60 days prior written notice to Chief, JUSMAG-Philippines. Any termination of these
personnel thought to be necessary because of budgetary restrictions or manpower ceiling will be subject to consultations between AFP and
JUSMAG to ensure that JUSMAG's mission of dedicated support to the AFP will not be degraded or harmed in any way.

h. The AFP agrees to assume the severance pay/retirement pay liability for all appointed SASP. (Enclosure 3 lists the severance pay liability
date for current SASP). Any termination of services, other than voluntary resignations or termination for cause, will result in immediate
payments of AFP of all termination pay to the entitled employee. Vouchers for severance/retirement pay and accrued bonuses and annual
leave will be presented to the Comptroller, GHQ, AFP, not later than 14 calendar days prior to required date of payment.

i. All SASP listed in Enclosure 3 will continue to participate in the Philippine Social Security System.

A year later, or in 1992, the United States Embassy sent another note of similar import to the Department of Foreign Affairs (No. 227, dated
April 8, 1992), extending the funding agreement for the salaries of SASP and security guards until December 31, 1992.

From the foregoing, it is apparent that when JUSMAG took the services of private respondent, it was performing a governmental function on
behalf of the United States pursuant to the Military Assistance Agreement dated March 21, 1947. Hence, we agree with petitioner that the suit
is, in effect, one against the United States Government, albeit it was not impleaded in the complaint. Considering that the United States has
not waived or consented to the suit, the complaint against JUSMAG cannot not prosper.

In this jurisdiction, we recognize and adopt the generally accepted principles of international law as part of the law of the land. 15 Immunity of
State from suit is one of these universally recognized principles. In international law, "immunity" is commonly understood as an exemption
of the state and its organs from the judicial jurisdiction of another state. 16 This is anchored on the principle of the sovereign equality of states
under which one state cannot assert jurisdiction over another in violation of the maxim par in parem non habet imperium (an equal has no
power over an equal).17

Under the traditional rule of State immunity, a state cannot be sued in the courts of another State, without its consent or waiver. However,
in Santos, et al., vs. Santos, et al., 18 we recognized an exception to the doctrine of immunity from suit by a state, thus:

. . . . Nevertheless, if, where and when the state or its government enters into a contract, through its officers or agents, in furtherance of a
legitimate aim and purpose and pursuant to constitutional legislative authority, whereby mutual or reciprocal benefits accrue and rights and
obligations arise therefrom, and if the law granting the authority to enter into such contract does not provide for or name the officer against
whom action may be brought in the event of a breach thereof, the state itself may be sued, even without its consent, because by entering into
a contract, the sovereign state has descended to the level of the citizen and its consent to be sued is implied from the very act of entering into
such contract. . . . . (emphasis ours)

It was in this light that the state immunity issue in Harry Lyons, Inc., vs. United States of America 19 was decided.

In the case of Harry Lyons, Inc., the petitioner entered into a contract with the United States Government for stevedoring services at the U.S.
Naval Base, Subic Bay, Philippines. It then sought to collect from the US government sums of money arising from the contract. One of the
issues posed in the case was whether or not the defunct Court of First Instance had jurisdiction over the defendant United States, a sovereign
state which cannot be sued without its consent. This Court upheld the contention of Harry Lyons, Inc., that "when a sovereign state enters
into a contract with a private person, the state can be sued upon the theory that it has descended to the level of an individual from which it
can be implied that it has given its consent to be sued under the contract."

The doctrine of state immunity from suit has undergone further metamorphosis. The view evolved that the existence of a contract does
not, per se, mean that sovereign states may, at all times, be sued in local courts. The complexity of relationships between sovereign states,
brought about by their increasing commercial activities, mothered a more restrictive application of the doctrine. 20 Thus, in United States of
America vs. Ruiz, 21 we clarified that our pronouncement in Harry Lyons, supra, with respect to the waiver of State immunity, was obiter and
"has no value as an imperative authority."

As it stands now, the application of the doctrine of immunity from suit has been restricted to sovereign or governmental activities ( jure
imperii). 22 The mantle of state immunity cannot be extended to commercial, private and proprietary acts ( jure gestionis). As aptly stated by
this Court (En banc) in US vs. Ruiz, supra:

The restrictive application of State immunity is proper when the proceedings arise out of commercial transactions of the foreign sovereign,
its commercial activities or economic affairs. Stated differently, a State may be said to have descended to the level of an individual and thus
can be deemed to have tacitly given its consent to be used only when it enters into business contracts. It does not apply where the contract
relates to the exercise of its sovereign functions. (emphasis ours)

We held further, that the application of the doctrine of state immunity depends on the legal nature of the act. Ergo, since a governmental
function was involved the transaction dealt with the improvement of the wharves in the naval installation at Subic Bay it was held that
the United States was not deemed to have waived its immunity from suit.

Then came the case of United States vs. Hon. Rodrigo, et al. 23 In said case, Genove was employed as a cook in the Main Club located at U.S.
Air Force Recreation Center, John Hay Air Station. He was dismissed from service after he was found to have polluted the stock of soup with
urine. Genove countered with a complaint for damages. Apparently, the restaurant services offered at the John Hay Air Station partake of the
nature of a business enterprise undertaken by the United States government in its proprietary capacity. The Court then noted that the
restaurant is well known and available to the general public, thus, the services are operated for profit, as a commercial and not a
governmental activity. Speaking through Associate Justice Isagani Cruz, the Court (En Banc) said:

The consequence of this finding is that the petitioners cannot invoke the doctrine of state immunity to justify the dismissal of the damage suit
against them by Genove. Such defense will not prosper even if it be established that they were acting as agents of the United States when
they investigated and later dismissed Genove. For the matter, not even the United States government itself can claim such immunity. The
reason is that by entering into the employment contract with Genove in the discharge of its proprietary functions, it impliedly divested itself
of its sovereign immunity from suit. (emphasis ours)

Conversely, if the contract was entered into in the discharge of its governmental functions, the sovereign state cannot be deemed to have
waived its immunity from suit. 24 Such is the case at bench. Prescinding from this premise, we need not determine whether JUSMAG
controls the employment conditions of the private respondent.

We also hold that there appears to be no basis for public respondent to rule that JUSMAG is stopped from denying the existence of employer-
employee relationship with private respondent. On the contrary, in its Opposition before the public respondent, JUSMAG consistently
contended that the (74) SASP, including private respondent, working in JUSMAG, are employees of the Armed Forces of the Philippines.
This can be gleaned from: (1) the Military Assistance Agreement, supra, (2) the exchange of notes between our Government, thru
Department of Foreign Affairs, and the United States, thru the US Embassy to the Philippines, and (3) the Agreement on May 21,
1991, supra between the Armed Forces of the Philippines and JUSMAG.

We symphatize with the plight of private respondent who had served JUSMAG for more than twenty (20) years. Considering his length of
service with JUSMAG, he deserves a more compassionate treatment. Unfortunately, JUSMAG is beyond the jurisdiction of this Court.
Nonetheless, the Executive branch, through the Department of Foreign Affairs and the Armed Forces of the Philippines, can take the cudgel
for private respondent and the other SASP working for JUSMAG, pursuant to the aforestated Military Assistance Agreement.

IN VIEW OF THE FOREGOING, the petition for certiorari is GRANTED. Accordingly, the impugned Resolution dated January 29, 1993 of
the National Labor Relations Commission is REVERSED and SET ASIDE. No costs.

SO ORDERED.
G.R. No. 107660 January 2, 1995

RAMON C. LOZON, petitioner,


vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and PHILIPPINE AIRLINES, INC., respondents.

VITUG, J.:

Petitioner Ramon C. Lozon, a certified public accountant, was a Senior


Vice-President-Finance of Private respondent Philippine Airlines, Inc. ("PAL"), when his services were terminated on 19 December 1990 in
the aftermath of the much-publicized "two-billion-peso PALscam." Lozon started to work for the national carrier on 23 August 1967 and, for
twenty-three years, steadily climbed the corporate ladder until he became one of its vice-presidents. 1

His termination from the service was spawned by a letter sent some time in June 1990 by a member of PAL's board of directors, then
Solicitor General Francisco Chavez, to PAL President Dante Santos. Chavez demanded an investigation of twenty-three irregularities
allegedly committed by twenty-two high-ranking PAL officials. Among these officials was petitioner; he had been administratively charged
by Romeo David, Senior Vice-President for Corporate Services and Logistics Group, for his (Lozon) purported involvement in four cases,
labeled "Goldair," "Autographics," "Big Bang of 1983" and "Middle
East."2 Pending the investigation of these cases by a panel3 constituted by then President Corazon C. Aquino, petitioner was placed under
preventive suspension.

In the organizational meeting of the PAL board of directors on 19 October 1990 which occasion Feliciano R. Belmonte, Jr., was elected
chairman of the board while Dante G. Santos was designated president and chief executive officer, 4 the board deferred action on the election
or appointment of some senior officers of the company who, like petitioner, had been charged with various offenses.

On 18 January 1991, the PAL board of directors issued two resolutions relative to the investigation conducted by the presidential
investigating panel in the "Autographics" and "Goldair" cases. In "Autographics," petitioner was charged, along with three other
officials,5 with "gross inefficiency, negligence, imprudence, mismanagement, dereliction of duty, failure to observe and/or implement
administrative and executive policies" and with the "concealment, or cover-up and prevention of the seasonal discovery of the anomalous
transactions" had with Autographics, Inc., resulting in, among other things, an overpayment by PAL to Autographics in the amount of around
P12 million. Petitioner was forthwith considered "resigned from the service . . . for loss of confidence and for acts inimical to the interests of
the company."6 A similar conclusion was arrived at by the PAL board of directors with regard to petitioner in the "Goldair" case where he,
together with six other PAL officials,7 were charged with like "offenses" that had caused PAL's defraudation by Goldair, PAL's general sales
agent in Australia, of 14.6 million Australian dollars.8

Aggrieved by the action taken by the PAL board of directors, petitioner, on 26 June 1991 filed with the National Labor Relations
Commission ("NLRC") in Manila a complaint (docketed NLRC-NCR Case No. 00-06-03684-91) for illegal dismissal and for reinstatement,
with backwages and "fringe benefits such as Vacation leave, Sick leave, 13th month pay, Christmas Bonus, Medical Expenses, car expenses,
trip pass entitlement, etc., plus moral damages of P40 Million, exemplary damages of P10 Million and reasonable attorney's fees." 9

On 09 August 1991, 10 the PAL board of directors also held petitioner as "resigned from the company" for loss of confidence and for acts
inimical to the interests of the company in the "Big Bang of 1983" case for his alleged role in the irregularities that had precipitated the write-
down (write-off) of assets amounting to P553 million from the books and financial statements of PAL. 11 In the "Middle East" case, the PAL
board of directors, on the anomalous administration of commercial marketing arrangements in which PAL had lost an estimated P120
million. 12

PAL defended the validity of petitioner's dismissal before the Labor Arbiter. It questioned at the same time the jurisdiction of the NLRC,
positing the theory that since the investigating panel was constituted by then President Aquino, said panel, along with the PAL board of
directors, became "a parallel arbitration unit" which, in legal contemplation, should be deemed to have substituted for the NLRC. Thus, PAL
averred, petitioner's recourse should have been to appeal his case to the Office of the President. 13 On the other hand, petitioner questioned
the authority of the panel to conduct the investigation, asseverating that the charges leveled against him were purely administrative in nature
that could have well been ventilated under the grievance procedure outline in PAL's Code of Discipline.

On 17 March 1992, Labor Arbiter Jose G. de Vera rendered a decision ruling for petitioner. 14 The decretal portion of the decision read:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering the respondent Philippine Airlines, Inc.,
to reinstate the complainant to his former position with all the rights, privileges, and benefits appertaining thereto plus backwages, which as
of March 15, 1992 already amounted to P2,632,500.00, exclusive of fringes. Further, the respondent company is ordered to pay complainant
as follows: P5,000.00 as moral damages; P1,000,000.00 as exemplary damages, and attorney's fees equivalent to ten percent (10%) of all of
the foregoing awards.

SO ORDERED. 15

A day after promulgating the decision, the labor arbiter issued a writ of execution. PAL filed a motion to quash the writ petitioner promptly
opposed. After the labor arbiter had denied the motion to quash, PAL filed a petition for injunction with the NLRC (docketed NLRC IC Case
No. 00261-92). No decision was rendered by NLRC on this petition. 16

Meanwhile, PAL appealed the decision of the labor arbiter by filing a memorandum on appeal, 17 assailing, once again, the jurisdiction of the
NLRC but this time on the ground that the issue pertaining to the removal or dismissal of petitioner, a corporate officer, was within the
exclusive and original jurisdiction of the Securities and Exchange Commission ("SEC"). Petitioner interposed a partial appeal praying for an
increase in the amount of moral and exemplary damages awarded by the labor arbiter. 18

On 24 July 1992, the NLRC rendered a decision (in NLRC NCR Case No. 00-06-03684-91) 19 dismissing the case on the strength of PAL's
new argument on the issue of jurisdiction. 20 Petitioner's motion for reconsideration was denied by the NLRC.

The instant petition for certiorari filed with this Court raises these issues: (a) Whether or not the NLRC has jurisdiction over the illegal
dismissal case, and (b) on the assumption that the SEC has that jurisdiction, whether or not private respondent is estopped from raising
NLRC's lack of jurisdiction over the controversy.

We sustain NLRC's dismissal of the case.

Presidential Decree No. 902-A confers on the SEC original and exclusive jurisdiction to hear and decide controversies and cases involving

a. Intra-corporate and partnership relations between or among the corporation, officers and stockholders and partners, including their
elections or appointments;

b. State and corporate affairs in relation to the legal existence of corporations, partnerships and associations or to their franchises; and

c. Investors and corporate affairs, particularly in respect of devices and schemes, such as fraudulent practices, employed by directors,
officers, business associates, and/or other stockholders, partners, or members of registered firms; as well as

d. Petitions for suspension of payments filed by corporations, partnerships or associations possessing sufficient property to cover all their
debts but which foresee the impossibility of meeting them when they respectively fall due, or possessing insufficient assets to cover their
liabilities and said entities are upon petition or motu propio, placed under the management of a Rehabilitation Receiver or Management
Committee.

Specifically, in intra-corporate matters concerning the election or appointment of officers of a corporation, the decree provides:

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships
and other forms of association registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive
jurisdiction to hear and decide cases involving:

xxx xxx xxx

(c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or association.

Petitioner himself admits that vice presidents are senior members of


management, 21 whose designations are no longer than just by means of ordinary promotions. In his own case, petitioner has been elected to
the position of Senior Vice-President Finance Group by PAL's board of directors at its organizational meeting held on 20 October 1989
pursuant to the By-laws, 22 under which, he would serve for a term of one year and until his successor shall have been elected and
qualified. 23 Petitioner, for reasons already mentioned, did not get to be re-elected thereafter. 24

In Fortune Cement Corporation v. NLRC, 25 the Court has quoted with approval the Solicitor General's contention that "a corporate officer's
dismissal is always a corporate act and/or intra-corporate controversy and that nature is not altered by the reason or wisdom which the Board
of Directors may have in taking such action." Not the least insignificant in the case at bench is that petitioner's dismissal is intertwined with
still another intra-corporate affair, earlier so ascribed as the "two-billion-peso PALscam," that inevitably places the case under the specialized
competence of the SEC and well beyond the ambit of a labor arbiter's normal jurisdiction under the general provisions of Article 217 of the
Labor Code. 26

Petitioner contends that the jurisdiction of the SEC excludes its cognizance over claims for vacation and sick leaves, 13th month pay,
Christmas bonus, medical expenses, car expenses, and other benefits, as well as for moral damages and attorney's fees. 27 Dy
v. NLRC28 categorically states that the question of remuneration being asserted by an officer of a corporation is "not a simple labor problem
but a matter that comes within the area of corporate affairs and management, and is in fact, a corporate controversy in contemplation of the
Corporation Code." With regard to the matter of damages, in Andaya v.
Abadia 29 where, in a complaint filed before the Regional Trial Court, the president and general manager of the Armed Forces and Police
Savings and Loan Association ("AFPSLAI") questioned his ouster from the stewardship of the association, this Court, in dismissing the
petition assailing the order of the trial court which ruled that SEC, not the regular courts, had jurisdiction over the case, has said:

The allegations against herein respondents in the amended complaint unquestionably reveal intra-corporate controversies cleverly conceals,
although unsuccessfully, by use of civil law terms and phrases. The amended complaint impleads herein respondents who, in their capacity as
directors of AFPSLAI, allegedly convened an illegal meeting and voted for the reorganization of management resulting in petitioner's ouster
as corporate officer. While it may be said that the same corporate acts also give rise to civil liability for damages, it does not follow that the
case is necessarily taken out of the jurisdiction of the SEC as it may award damages which can be considered consequential in the exercise
of its adjudicative powers. Besides, incidental issues that properly fall within the authority of a tribunal may also be considered by it to avoid
multiplicity of actions. Consequently, in intra-corporate matters such as those affecting the corporation, its directors, trustees, officers,
shareholders, the issue of consequential damages may just as well be resolved and adjudicated by the SEC. (Emphasis supplied.)

We here reiterate the above holdings for, indeed, controversies within the purview of Section 5 of P.D. No. 902-A must not be so constricted
as to deny to the SEC the sound exercise of its expertise and competence in resolving all closely related aspects of such corporate disputes.

Petitioner maintains that PAL is estopped, nevertheless, from questioning the jurisdiction of the NLRC considering that PAL did not hold the
dispute to be intra-corporate until after the case had already been brought on appeal to the NLRC.

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

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

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

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

Petitioner points to "PAL's scandalous duplicity" in questioning the jurisdiction of the NLRC in this particular controversy while upholding it
(NLRC's jurisdiction) in "Robin Dui v. Philippine Airlines" (Case No. 00-4-20267) pending before the Commission. We need not delve into
whether or not PAL's conduct does indeed smack of opportunities; suffice it to say that Robin Dui is entirely an independent and separate
case and, more than that, it is not before us in this instance.

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

SO ORDERED.
G.R. No. L-61236 January 31, 1984

NATIONAL FEDERATION OF LABOR and ZAMBOWOOD MONTHLY EMPLOYEES UNION, ITS OFFICERS AND
MEMBERS, petitioners,
vs.
THE HONORABLE CARLITO A. EISMA, LT. COL. JACOB CARUNCHO, COMMANDING OFFICER, ZAMBOANGA
DISTRICT COMMAND, PC, AFP, and ZAMBOANGA WOOD PRODUCTS, respondents.

FERNANDO, C.J.:

This Court is confronted once again with the question of whether or not it is a court or a labor arbiter that can pass on a suit for damages filed
by the employer, here private respondent Zamboanga Wood Products. Respondent Judge Carlito A. Eisma 1 then of the Court of First
Instance, now of the Regional Trial Court of Zamboanga City, was of the view that it is a court and denied a motion to dismiss filed by
petitioners National Federation of labor and Zambowood Monthly Employees Union, its officers and members. It was such an order dated
July 20, 1982 that led to the filing of this certiorari and prohibition proceeding. In the order assailed, it was required that the officers and
members of petitioner union appear before the court to show cause why a writ of preliminary injunction should not be issued against them
and in the meanwhile such persons as well as any other persons acting under their command and on their behalf were "temporarily restrained
and ordered to desist and refrain from further obstructing, impeding and impairing plaintiff's use of its property and free ingress to or egress
from plaintiff's Manufacturing Division facilities at Lumbayao, Zamboanga City and on its road right of way leading to and from said
plaintiff's facilities, pending the determination of the litigation, and unless a contrary order is issued by this Court." 2

The record discloses that petitioner National Federation of Labor, on March 5, 1982, filed with the Ministry of Labor and Employment,
Labor Relations Division, Zamboanga City, a petition for direct certification as the sole exclusive collective bargaining representative of the
monthly paid employees of the respondent Zamboanga Wood Products, Inc. at its manufacturing plant in Lumbayao, Zamboanga City. 3 Such
employees, on April 17, 1982 charged respondent firm before the same office of the Ministry of Labor for underpayment of monthly living
allowances. 4Then came, on May 3, 1982, from petitioner union, a notice of strike against private respondent, alleging illegal termination of
Dionisio Estioca, president of the said local union; unfair labor practice, non-payment of living allowances; and "employment of oppressive
alien management personnel without proper permit. 5 It was followed by the union submitting the minutes of the declaration of strike,
"including the ninety (90) ballots, of which 79 voted for yes and three voted for no." 6 The strike began on May 23, 1982. 7 On July 9, 1982,
private respondent Zambowood filed a complaint with respondent Judge against the officers and members of petitioners union, for "damages
for obstruction of private property with prayer for preliminary injunction and/or restraining order." 8 It was alleged that defendants, now
petitioners, blockaded the road leading to its manufacturing division, thus preventing customers and suppliers free ingress to or egress from
such premises. 9 Six days later, there was a motion for the dismissal and for the dissolution of the restraining order and opposition to the
issuance of the writ of preliminary injunction filed by petitioners. It was contended that the acts complained of were incidents of picketing by
defendants then on strike against private respondent, and that therefore the exclusive jurisdiction belongs to the Labor Arbiter pursuant to
Batas Pambansa Blg. 227, not to a court of first instance.10 There was, as noted earlier, a motion to dismiss, which was denied. Hence this
petition for certiorari.

Four days after such petition was filed, on August 3, 1982, this Court required respondents to answer and set the plea for a preliminary
injunction to be heard on Thursday, August 5, 1982. 11 After such hearing, a temporary restraining order was issued, "directing respondent
Judge and the commanding officer in Zamboanga and his agents from enforcing the ex-parte order of injunction dated July 20, 1982; and to
restrain the respondent Judge from proceeding with the hearing of the until otherwise case effective as of [that] date and continuing ordered
by [the] Court. In the exercise of the right to peaceful picketing, petitioner unions must abide strictly with Batas Pambansa Blg. 227,
specifically Section 6 thereof, amending Article 265 of the Labor Code, which now reads: '(e) No person engaged in picketing shall commit
any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer's premises for lawful purposes, or
obstruct public thoroughfares.' " 12

On August 13, 1982, the answer of private respondent was filed sustaining the original jurisdiction of respondent Judge and maintaining that
the order complained of was not in excess of such jurisdiction, or issued with grave abuse of discretion. Solicitor General Estelito P.
Mendoza, 13 on the other hand, instead of filing an answer, submitted a Manifestation in lieu thereof. He met squarely the issue of whether
or not respondent Judge had jurisdiction, and answered in the negative. He (i)ncluded that "the instant petition has merit and should be given
due course."

He traced the changes undergone by the Labor Code, citing at the same time the decisions issued by this Court after each of such changes. As
pointed out, the original wording of Article 217 vested the labor arbiters with jurisdictional. 14 So it was applied by this Court in Garcia v.
Martinez 15 and in Bengzon v. Inciong. 16 On May 1, 1978, however, Presidential Decree No. 1367 was issued, amending Article 217, and
provided "that the Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral and other forms of
damages." 17 The ordinary courts were thus vested with jurisdiction to award actual and moral damages in the case of illegal dismissal of
employees. 18 That is not, as pointed out by the Solicitor General, the end of the story, for on May 1, 1980, Presidential Decree No. 1691
was issued, further amending Article 217, returning the original jurisdiction to the labor arbiters, thus enabling them to decide "3. All money
claims of workers, including those based on non-payment or underpayment of wages, overtime compensation, separation pay and other
benefits provided by law or appropriate agreement, except claims for employees compensation, social security, medicare and maternity
benefits; [and] (5) All other claims arising from employer-employee relations unless expressly excluded by tills Code." 19 An equally
conclusive manifestation of the lack of jurisdiction of a court of first instance then, a regional trial court now, is Batas Pambansa Blg. 130,
amending Article 217 of the Labor Code. It took effect on August 21, 1981. Subparagraph 2, paragraph (a) is now worded thus: "(2) those
that involve wages, hours of work and other terms and conditions of employment." 20 This is to be compared with the former phraseology
"(2) unresolved issue in collective bargaining, including those that involve wages, hours of work and other terms and conditions of
employment." 21 It is to be noted that Batas Pambansa Blg. 130 made no change with respect to the original and exclusive jurisdiction of
Labor Arbiters with respect to money claims of workers or claims for damages arising from employer-employee relations.

Nothing becomes clearer, therefore, than the meritorious character of this petition. certiorari and prohibition lie, respondent Judge being
devoid of jurisdiction to act on the matter.

1. Article 217 is to be applied the way it is worded. The exclusive original jurisdiction of a labor arbiter is therein provided for explicitly. It
means, it can only mean, that a court of first instance judge then, a regional trial court judge now, certainly acts beyond the scope of the
authority conferred on him by law when he entertained the suit for damages, arising from picketing that accompanied a strike. That was
squarely within the express terms of the law. Any deviation cannot therefore be tolerated. So it has been the constant ruling of this Court even
prior to Lizarraga Hermanos v. Yap Tico, 22 a 1913 decision. The ringing words of the ponencia of Justice Moreland still call for obedience.
Thus, "The first and fundamental duty of courts, in our judgment, is to apply the law. Construction and interpretation come only after it has
been demonstrated that application is impossible or inadequate without them." 23 It is so even after the lapse of sixty years. 24

2. On the precise question at issue under the law as it now stands, this Court has spoken in three decisions. They all reflect the utmost fidelity
to the plain command of the law that it is a labor arbiter, not a court, that ossesses original and exclusive jurisdiction to decide a claim for
damages arising from picketing or a strike. In Pepsi-Cola Bottling Co. v. Martinez, 25 the issue was set forth in the opening paragraph, in the
ponencia of Justice Escolin: "This petition for certiorari, prohibition and mandamus raises anew the legal question often brought to this
Court: Which tribunal has exclusive jurisdiction over an action filed by an employee against his employer for recovery of unpaid salaries,
separation benefits and damages the court of general jurisdiction or the Labor Arbiter of the National Labor Relations Commission
[NLRC]?" 26 It was categorically held: "We rule that the Labor Arbiter has exclusive jurisdiction over the case." 27 Then came this portion of
the opinion: "Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which organizes the court;
and it is given only by law. Jurisdiction is never presumed; it must be conferred by law in words that do not admit of doubt. Since the
jurisdiction of courts and judicial tribunals is derived exclusively from the statutes of the forum, the issue before us should be resolved on the
basis of the law or statute now in force. We find that law in presidential Decree 1691 which took effect on May 1, 1980, Section 3 of which
reads as follows: ... Article 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have the original and
exclusive jurisdiction to hear and decide the following cases involving all workers, whether agricultural or non-agricultural: ... 3. All money
claims of workers, including those based on nonpayment or underpayment of wages, overtime compensation, separation pay and other
benefits provided by law or appropriate agreement, except claims for employees' compensation, social security, medicare and maternity
benefits; 4. Cases involving household services; and 5. All other claims arising from employer-employee relations, unless expressly excluded
by this Code." 28 That same month, two other cases were similarly decided, Ebon v. De Guzman 29 and Aguda v. Vallejos. 30

3. It is regrettable that the ruling in the above three decisions, decided in March of 1982, was not followed by private respondent when it
filed the complaint for damages on July 9, 1982, more than four months later. 31 On this point, reference may be made to our decision
in National Federation of Labor, et al. v. The Honorable Minister of Labor and Employment, 32 promulgated on September 15, 1983. In that
case, the question involved was the failure of the same private respondent, Zamboanga Wood Products, Inc., to admit the striking petitioners,
eighty-one in number, back to work after an order of Minister Blas F. Ople certifying to the National Labor Relations Commission the labor
dispute for compulsory arbitration pursuant to Article 264 (g) of the Labor Code of the Philippines. It was noted in the first paragraph of our
opinion in that case: "On the face of it, it seems difficult to explain why private respondent would not comply with such order considering
that the request for compulsory arbitration came from it. It ignored this notification by the presidents of the labor unions involved to its
resident manager that the striking employees would lift their picket line and start returning to work on August 20, 1982. Then, too, Minister
Ople denied a partial motion for reconsideration insofar as the return-to-work aspect is concerned which reads: 'We find no merit in the said
Motion for Reconsideration. The Labor code, as amended, specifically Article 264 (g), mandates that whenever a labor dispute is certified by
the Minister of Labor and Employment to the National Labor Relations Commission for compulsory arbitration and a strike has already
taken place at the time of certification, "all striking employees shall immediately return to work and the employees shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing before the strike." ' " 33 No valid distinction can be made
between the exercise of compulsory arbitration vested in the Ministry of Labor and the jurisdiction of a labor arbiter to pass over claims for
damages in the light of the express provision of the Labor Code as set forth in Article 217. In both cases, it is the Ministry, not a court of
justice, that is vested by law with competence to act on the matter.

4. The issuance of Presidential Decree No. 1691 and the enactment of Batas Pambansa Blg. 130, made clear that the exclusive and original
jurisdiction for damages would once again be vested in labor arbiters. It can be affirmed that even if they were not that explicit, history has
vindicated the view that in the appraisal of what was referred to by Philippine American Management & Financing Co., Inc. v. Management
& Supervisors Association of the Philippine-American Management & Financing Co., Inc. 34 as "the rather thorny question as to where in
labor matters the dividing line is to be drawn"35 between the power lodged in an administrative body and a court, the unmistakable trend has
been to refer it to the former. Thus: "Increasingly, this Court has been committed to the view that unless the law speaks clearly and
unequivocally, the choice should fall on [an administrative agency]." 36 Certainly, the present Labor Code is even more committed to the view
that on policy grounds, and equally so in the interest of greater promptness in the disposition of labor matters, a court is spared the often
onerous task of determining what essentially is a factual matter, namely, the damages that may be incurred by either labor or management as
a result of disputes or controversies arising from employer-employee relations.

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

Teehankee, Makasiar, Aquino, Guerrero, Melencio-Herrera, Plana, Escolin Relova and Gutierrez, Jr., JJ., concur.

Separate Opinions

ABAD SANTOS, J., concurring:

I concur and express the hope that Art. 217 should not undergo repeated amendments.
G.R. No. 80774 May 31, 1988

SAN MIGUEL CORPORATION, petitioner,


vs.
NATIONAL LABOR RELATIONS COMMISSION and RUSTICO VEGA, respondents.

Siguion Reyna, Montecillo & Ongsiako Law Offices for petitioner.

The Solicitor General for public respondent.

FELICIANO, J.:

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

Title of Proposal

Modified Grande Pasteurization Process

Present Condition or Procedure

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

Proposed lnnovation (Attach necessary information)

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

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

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

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

In an Order 4 dated 30 April 1986, the Labor Arbiter, noting that the money claim of complainant Vega in this case is "not a necessary
incident of his employment" and that said claim is not among those mentioned in Article 217 of the Labor Code, dismissed the complaint for
lack of jurisdiction. However, in a gesture of "compassion and to show the government's concern for the workingman," the Labor Arbiter
also directed petitioner to pay Mr. Vega the sum of P2,000.00 as "financial assistance."
The Labor Arbiter's order was subsequently appealed by both parties, private respondent Vega assailing the dismissal of his complaint for
lack of jurisdiction and petitioner Corporation questioning the propriety of the award of "financial assistance" to Mr. Vega. Acting on the
appeals, the public respondent National Labor Relations Commission, on 4 September 1987, rendered a Decision, 5 the dispositive portion of
which reads:

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

SO ORDERED.

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

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

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

1. Unfair labor practice cases;

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

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

4. Cases involving household services; and

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

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

While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe of money claims that
might be asserted by workers against their employers has been absorbed into the original and exclusive jurisdiction of Labor Arbiters. In the
first place, paragraph 3 should be read not in isolation from but rather within the context formed by paragraph 1 related to unfair labor
practices), paragraph 2 (relating to claims concerning terms and conditions of employment), paragraph 4 (claims relating to household
services, a particular species of employer-employee relations), and paragraph 5 (relating to certain activities prohibited to employees or to
employers).<re||an1w> 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. Pao, 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. Pao, 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.
G.R. No. L-58877 March 15, 1982

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


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

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

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

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

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

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

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

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

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

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

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

1. Unfair labor practice cases;

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

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

4. Cases involving household services; and

5. All other claims arising from employer-employee relations, unless expressly excluded by this Code.
Under paragraphs 3 and 5 of the above Presidential Decree, the case is exclusively cognizable by the Labor Arbiters of the National Labor
Relations Commission.

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

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

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

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

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

1] Unfair labor practice cases;

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

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

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

It will be noted that paragraphs 3 and 5 of Article 217 were deleted from the text of the above decree and a new provision incorporated
therein, to wit: "Provided that the Regional Directors shall not indorse and Labor Arbiters shall not en certain claims for moral or other forms
of damages." This amendatory act thus divested the Labor Arbiters of their competence to pass upon claims for damages by employees
against their employers.

However, on May 1, 1980, Article 217, as amended by P.D. 1367, was amended anew by P.D. 1691. This last decree, which is a verbatim
reproduction of the original test of Article 217 of the Labor Code, restored to the Labor Arbiters of the NLRC exclusive jurisdiction over
claims, money or otherwise, arising from employer-employee relations, except those expressly excluded therefrom.

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 prizethe alleged fraudulent manipulations committed by Tumala in connection with his
duties as salesman of the companyinvolves 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.
G.R. No. L-39084 February 23, 1988

PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU), petitioner,


vs.
EMILIO V. SALAS, Judge of the Court of First Instance of Rizal, Seventh Judicial District, Branch I, Pasig, Rizal and WONG
KING YUEN, respondents.

GANCAYCO, J.:

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

The record of the case discloses that the herein petitioner Philippine Association of Free Labor Unions (PAFLU) is a labor organization
registered with the Department of Labor and Employment. Sometime in 1963, the petitioner filed a Complaint for unfair labor practice with
the then Court of Industrial Relations (CIR) against the Northwest manufacturing Corporation and a certain Gan Hun. The suit was docketed
as Case No. 3901-ULP.

On September 25, 1972, the CIR rendered a Decision in favor of the petitioner labor organization. Pursuant to a writ of execution issued by
the CIR, the provincial sheriff of Rizal commenced levying the personal properties of the said Gan Hun, particularly the properties found in
his residential apartment unit in San Juan, then a town of Rizal province.

The herein private respondent Wong King Yuen however, claims that Gan Hun is his boarder in the apartment unit mentioned earlier and that
the properties inside the apartment unit levied by the provincial sheriff belong to him and not to Gan Hun.

Thus, on October 18, 1973, the private respondent filed a Complaint for damages with the then Court of First Instance (CFI) of Rizal against
the provincial sheriff. The suit was docketed as Civil Case No. 18460. The amount of money involved in the said case is about P24,680.00.

As sought by the private respondent, the CFI, with the herein respondent Judge Emilio V. Salas presiding therein, issued an injunctive writ
restraining the provincial sheriff from proceeding with the sale of the properties in question.

After having been allowed by the CFI to intervene in Civil Case No. 18460, the petitioner labor organization sought to dismiss the Complaint
on the ground that the said court had no jurisdiction over the case filed by the private respondent. 1 The petitioner argued that Civil Case No.
18460 relates to an existing labor dispute and as such the proper forum for the same is the industrial court.

In an Order dated July 9, 1974, the CFI denied the Motion to Dismiss filed by the petitioner. 2 The petitioner sought a reconsideration of the
said case but did not succeed in doing so. 3

On August 8, 1974, the petitioner elevated the case to this Court by way of the instant Petition.4 The petitioner maintains its stand that the
CFI has no jurisdiction over Civil Case No. 18460.

In an Answer filed with this Court on August 29, 1974, the private respondent contends that Civil Case No. 18460 is not a labor dispute
recognizable by the industrial court. The private respondent points out that Civil Case No. 18460 is an ordinary civil action for damages
against the provincial sheriff and directed against the sheriffs bond required under Section 17, Rule 39 of the Rules of Court. The private
respondent adds that it is an entirely separate proceeding distinct from the labor case filed with the CIR and that, accordingly, it is the Court
of First Instance which has jurisdiction over the same.5

After a careful examination of the entire record of the case, We find that instant Petition to be devoid of merit.

The sole issue in this case is whether or not the CFI has the jurisdiction to issue the injunctive relief questioned by the petitioner. We rule in
the affirmative.

It is clear that Civil Case No. 18460 is an ordinary civil action for damages, not a labor dispute. The case is directed against the provincial
sheriff and the recovery of damages is sought against the bond provided for Section 17, Rule 39 of the Rules of Court governing execution
and satisfaction of judgments.

Even if the act complained of by the private respondent arose from a labor dispute between the petitioner and another party, the inevitable
conclusion remains the same there is no labor dispute between the petitioner and the private respondent. Civil Case No. 18460 has no
direct bearing with the case flied with the industrial court. The civil case remains distinct from the labor dispute pending with the CIR.
Under Commonwealth Act No. 103, the law creating the Court of Industrial Relations, the jurisdiction of the industrial court is limited to
labor disputes. i.e., problems and controversies pertaining to the relationship between employer and employee. Section I thereof provides as
follows

Sec. 1. Jurisdiction. There is created a Court of Industrial Relations hereinafter called the court, which shall have jurisdiction over the
entire Philippines to consider, investigate, decide and settle all questions, matters, controversies, or disputes arising between, and/or affecting
employers and employees or laborers, and regulate the relations between them, . . . . (Emphasis supplied.)

From the foregoing, it is clear that the jurisdiction of the CIR can be invoked only when there is a dispute arising between or affecting
employers and employees, or when an employer-employee relationship exists between the parties.

There being no labor dispute between the petitioner and the private respondent, the Court of First Instance 6 has the jurisdiction to issue the
injunctive relief sought by the private respondent in Civil Case No. 18460.7 The latter case can proceed independently of the case pending in
the Court of Industrial Relations. 8

Accordingly, the writ of certiorari sought by the petitioner cannot issue.

WHEREFORE, in view of the foregoing, the instant Petition for certiorari is hereby DISMISSED for lack of merit. We make no
pronouncement as to costs:

SO ORDERED.
G.R. No. 72644 December 14, 1987

ALFREDO F. PRIMERO, petitioner,


vs.
INTERMEDIATE APPELLATE COURT and DM TRANSIT, respondents.

NARVASA, J.:

The question on which the petitioner's success in the instant appeal depends, and to which he would have us give an affirmative answer, is
whether or not, having recovered separation pay by judgment of the Labor Arbiter which held that he had been fired by respondent DM
Transit Corporation without just cause he may subsequently recover moral damages by action in a regular court, upon the theory that the
manner of his dismissal from employment was tortious and therefore his cause of action was intrinsically civil in nature.

Petitioner Primero was discharged from his employment as bus driver of DM Transit Corporation (hereafter, simply DM) in August, 1974
after having been employed therein for over 6 years. The circumstances attendant upon that dismissal are recounted by the Court of
Appeals 1 as follows:

Undisputably, since August 1, 1974, appellee's bus dispatcher did not assign any bus to be driven by appellant Primero. No reason or cause
was given by the dispatcher to appellant for not assigning a bus to the latter for 23 days (pp. 6-14, 21-22, tsn, May 15, 1979).

Also, for 23 days, appellant was given a run-around from one management official to another, pleading that he be allowed to work as his
family was in dire need of money and at the same time inquiring (why) he was not allowed to work or drive a bus of the company. Poor
appellant did not only get negative results but was given cold treatment, oftentimes evaded and given confusing information, or ridiculed,
humiliated, or sometimes made to wait in the offices of some management personnel of the appellee (pp. 2-29, tsn, May 15, 1979).

(The) General Manager and (the) Vice-President and Treasurer ... wilfully and maliciously made said appellant ... seesaw or ... go back and
forth between them for not less than ten (10) times within a period of 23 days ... but (he) got negative results from both corporate officials.
Worse, on the 23rd day of his ordeal appellant was suddenly told by General Manager Briones to seek employment with other bus companies
because he was already dismissed from his job with appellee (without having been) told of the cause of his hasty and capricious dismissal ...
(pp. 8, 11-13, 25, tsn, May 15, 1979).

Impelled to face the harsh necessities of life as a jobless person and worried by his immediate need for money, appellant pleaded with
Corporate President Demetrio Munoz, Jr. for his reinstatement and also asked P300.00 as financial assistance, but the latter told the former
that he (Munoz, Jr.) will not give him even one centavo and that should appellant sue him in court, then that will be the time President
Munoz, Jr. will pay him, if Munoz, Jr. loses the case x x (pp. 21-22, tsn, May 15, 1979).

Appellant also advised (the) President of the oppressive, anti-social and inhumane acts of subordinate officers ... (but) Munoz, Jr. did nothing
to resolve appellant's predicament and ... just told the latter to go back ... to ... Briones, who insisted that appellant seek employment with
other bus firms in Metro Manila ... (but) admitted that the appellant has not violated any company rule or regulation ... (pp. 23-26, tsn, May
15, 1979).

... In pursuance (of) defendant's determination to oppress plaintiff and cause further loss, irreparable injury, prejudice and damage, (D.M.
Transit) in bad faith and with malice persuaded other firms (California Transit, Pascual Lines, De Dios Transit, Negrita Corporation, and MD
Transit) not to employ (appellant) in any capacity after he was already unjustly dismissed by said defendant ... (paragraph 8 of plaintiff's
complaint).

These companies with whom appellant applied for a job called up the D.M. Transit Office (which) ... told them ... that they should not accept
(appellant) because (he) was dismissed from that Office.

Primero instituted proceedings against DM with the Labor Arbiters of the Department of Labor, for illegal dismissal, and for recovery of
back wages and reinstatement. It is not clear from the record whether these proceedings consisted of one or two actions separately filed.
What is certain is that he withdrew his claims for back wages and reinstatement, "with the end in view of filing a damage suit" "in a civil
court which has exclusive jurisdiction over his complaint for damages on causes of action founded on tortious acts, breach of employment
contract ... and consequent effects (thereof ). 2
In any case, after due investigation, the Labor Arbiter rendered judgment dated January 24, 1977 ordering DM to pay complainant Primero
P2,000.00 as separation pay in accordance with the Termination Pay Law. 3 The judgment was affirmed by the National Labor Relations
Commission and later by the Secretary of Labor, the case having been concluded at this level on March 3, 1978. 4

Under the provisions of the Labor Code in force at that time, Labor Arbiters had jurisdiction inter alia over

1) claims involving non-payment or underpayment of wages, overtime compensation, social security and medicare benefits, and

2) all other cases or matters arising from employer-employee relations, unless otherwise expressly excluded. 5

And we have since held that under these "broad and comprehensive" terms of the law, Labor Arbiters possessed original jurisdiction over
claims for moral and other forms of damages in labor disputes. 6

The jurisdiction of Labor Arbiters over such claims was however removed by PD 1367, effective May 1, 1978, which explicitly provided that
"Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages." 7

Some three months afterwards, Primero brought suit against DM in the Court of First Instance of Rizal seeking recovery of damages caused
not only by the breach of his employment contract, but also by the oppressive and inhuman, and consequently tortious, acts of his employer
and its officers antecedent and subsequent to his dismissal from employment without just cause. 8

While this action was pending in the CFI, the law governing the Labor Arbiters' jurisdiction was once again revised. The amending act was
PD 1691, effective May 1, 1980. It eliminated the restrictive clause placed by PD 1367, that Regional Directors shall not indorse and Labor
Arbiters entertain claims for moral or other forms of damages. And, as we have had occasion to declare in several cases, it restored the
principle that "exclusive and original jurisdiction for damages would once again be vested in labor arbiters;" eliminated "the rather thorny
question as to where in labor matters the dividing line is to be drawn between the power lodged in an administrative body and a court;' " and,
"in the interest of greater promptness in the disposition of labor matters, ... spared (courts of) the often onerous task of determining what
essentially is a factual matter, namely, the damages that may be incurred by either labor or management as a result of disputes or
controversies arising from employer-employee relations." 9 Parenthetically, there was still another amendment of the provision in question
which, however, has no application to the case at bar. The amendment was embodied in B.P. Blg. 227, effective June 1, 1982. 10

On August 11, 1980 the Trial Court rendered judgment dismissing the complaint on the ground of lack of jurisdiction, for the reason that at
the time that the complaint was filed. on August 17, 1978, the law the Labor Code as amended by PD 1367, eff. May 1, 1978 conferred
exclusive, original jurisdiction over claims for moral or other damages, not on ordinary courts, but on Labor Arbiters.

This judgment was affirmed by the Intermediate Appellate Court, by Decision rendered on June 29, 1984. This is the judgment now subject
of the present petition for review on certiorari. The decision was reached by a vote of 3 to 2. The dissenters, placing reliance on certain of
our pronouncements, opined that Primero's causes of action were cognizable by the courts, that existence of employment relations was not
alone decisive of the issue of jurisdiction, and that such relations may indeed give rise to "civil" as distinguished from purely labor disputes,
as where an employer's right to dismiss his employee is exercised tortiously, in a manner oppressive to labor, contrary to morals, good
customs or public policy. 11

Primero has appealed to us from this judgment of the IAC praying that we overturn the majority view and sustain the dissent.

Going by the literal terms of the law, it would seem clear that at the time that Primero filed his complaints for illegal dismissal and recovery
of backwages, etc. with the Labor Arbiter, the latter possessed original and exclusive jurisdiction also over claims for moral and other forms
of damages; this, in virtue of Article 265 12 of PD 442, otherwise known as the Labor Code, effective from May 1, 1974. In other words, in
the proceedings before the Labor Arbiter, Primero plainly had the right to plead and prosecute a claim not only for the reliefs specified by
the Labor Code itself for unlawful termination of employment, but also for moral or other damages under the Civil Code arising from or
connected with that termination of employment. And this was the state of the law when he moved for the dismissal of his claims before the
Labor Arbiter, for reinstatement and recovery of back wages, so that he might later file a damage suit "in a civil court which has exclusive
jurisdiction over his complaint ... founded on tortious acts, breach of employment contract ... and consequent effects (thereof)." 13

The legislative intent appears clear to allow recovery in proceedings before Labor Arbiters of moral and other forms of damages, in all cases
or matters arising from employer-employee relations. This would no doubt include, particularly, instances where an employee has been
unlawfully dismissed. In such a case the Labor Arbiter has jurisdiction to award to the dismissed employee not only the reliefs specifically
provided by labor laws, but also moral and other forms of damages governed by the Civil Code. Moral damages would be recoverable, for
example, where the dismissal of the employee was not only effected without authorized cause and/or due process for which relief is granted
by the Labor Code but was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to
morals, good customs or public policy 14 for which the obtainable relief is determined by the Civil Code 15 (not the Labor Code). Stated
otherwise, if the evidence adduced by the employee before the Labor Arbiter should establish that the employer did indeed terminate the
employee's services without just cause or without according him due process, the Labor Arbiter's judgment shall be for the employer to
reinstate the employee and pay him his back wages or, exceptionally, for the employee simply to receive separation pay. These are reliefs
explicitly prescribed by the Labor Code. 16 But any award of moral damages by the Labor Arbiter obviously cannot be based on the Labor
Code but should be grounded on the Civil Code. Such an award cannot be justified solely upon the premise (otherwise sufficient for redress
under the Labor Code) that the employer fired his employee without just cause or due process. Additional facts must be pleaded and proven
to warrant the grant of moral damages under the Civil Code, these being, to repeat, that the act of dismissal was attended by bad faith or
fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy; and, of course, that social
humiliation, wounded feelings, grave anxiety, etc., resulted therefrom. 17

It is clear that the question of the legality of the act of dismissal is intimately related to the issue of the legality of the manner by which that
act of dismissal was performed. But while the Labor Code treats of the nature of, and the remedy available as regards the first the
employee's separation from employment it does not at all deal with the second the manner of that separation which is governed
exclusively by the Civil Code. In addressing the first issue, the Labor Arbiter applies the Labor Code; in addressing the second, the Civil
Code. And this appears to be the plain and patent intendment of the law. For apart from the reliefs expressly set out in the Labor Code
flowing from illegal dismissal from employment, no other damages may be awarded to an illegally dismissed employee other than those
specified by the Civil Code. Hence, the fact that the issue-of whether or not moral or other damages were suffered by an employee and in the
affirmative, the amount that should properly be awarded to him in the circumstances-is determined under the provisions of the Civil Code
and not the Labor Code, obviously was not meant to create a cause of action independent of that for illegal dismissal and thus place the
matter beyond the Labor Arbiter's jurisdiction.

Thus, an employee who has been illegally dismissed (i.e., discharged without just cause or being accorded due process), in such a manner as
to cause him to suffer moral damages (as determined by the Civil Code), has a cause of action for reinstatement and recovery of back
wages and damages. When he institutes proceedings before the Labor Arbiter, he should make a claim for all said reliefs. He cannot, to be
sure, be permitted to prosecute his claims piecemeal. He cannot institute proceedings separately and contemporaneously in a court of justice
upon the same cause of action or a part thereof. He cannot and should not be allowed to sue in two forums: one, before the Labor Arbiter for
reinstatement and recovery of back wages, or for separation pay, upon the theory that his dismissal was illegal; and two, before a court of
justice for recovery of moral and other damages, upon the theory that the manner of his dismissal was unduly injurious, or tortious. This is
what in procedural law is known as splitting causes of action, engendering multiplicity of actions. It is against such mischiefs that the Labor
Code amendments just discussed are evidently directed, and it is such duplicity which the Rules of Court regard as ground for abatement or
dismissal of actions, constituting either litis pendentia (auter action pendant) or res adjudicata, as the case may be. 18 But this was precisely
what Primero's counsel did. He split Primero's cause of action; and he made one of the split parts the subject of a cause of action before a
court of justice. Consequently, the judgment of the Labor Arbiter granting Primero separation pay operated as a bar to his subsequent action
for the recovery of damages before the Court of First Instance under the doctrine of res judicata, The rule is that the prior "judgment or order
is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between
the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the
same thing and under the same title and in the same capacity. 19

We are not unmindful of our previous rulings on the matter cited in the dissent to the decision of the Court of Appeals subject of the instant
petition, 20 notably, Quisaba v. Sta Ines-Melale Veneer & Plywood Inc., where a distinction was drawn between the right of the employer to
dismiss an employee, which was declared to be within the competence of labor agencies to pass upon, and the "manner in which the right
was exercised and the effects flowing therefrom," declared to be a matter cognizable only by the regular courts because "intrinsically
civil." 21 We opine that it is this very distinction which the law has sought to eradicate as being so tenuous and so difficult to observe, 22 and,
of course, as herein pointed out, as giving rise to split jurisdiction, or to multiplicity of actions, "a situation obnoxious to the orderly
administration of justice. 23 Actually we merely reiterate in this decision the doctrine already laid down in other cases (Garcia v. Martinez, 84
SCRA 577; Ebon v. de Guzman, 13 SCRA 52; Bengzon v. Inciong, 91 SCRA 248; Pepsi-Cola Bottling Co. v. Martinez, 112 SCRA 578;
Aguda v. Vallejos, 113 SCRA 69; Getz v. C.A., 116 SCRA 86; Cardinal Industries v. Vallejos, 114 SCRA 471; Sagmit v. Sibulo, 133 SCRA
359) to the effect that the grant of jurisdiction to the Labor Arbiter by Article 217 of the Labor Code is sufficiently comprehensive to include
claims for moral and exemplary damages sought to be recovered from an employer by an employee upon the theory of his illegal dismissal.
Rulings to the contrary are deemed abandoned or modified accordingly.

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


G.R. No. 85840 April 26, 1990

SERVANDO'S INCORPORATED, petitioner,


vs.
THE SECRETARY OF LABOR AND EMPLOYMENT AND THE REGIONAL DIRECTOR, REGION VI, DEPARTMENT OF
LABOR AND EMPLOYMENT, respondents.

PADILLA, J.:

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

On 28 April 1987, the Labor Standards and Welfare Office conducted a routine inspection of petitioner's establishment. On that same date,
petitioner was furnished copy of a Notice of Inspection Result and apprised of its violations of the labor standards/occupational health and
safety measures, that were discovered in the course of the inspection, namely:

LABOR STANDARDS LAWS:

1. Some of the employees are underpaid under Wage Order No. 4, covering the period from May 1, 1984 to June 15, 1984 averaging from
P6.00 below for salary and P9.00 below for living allowance.

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

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

OCCUPATIONAL HEALTH AND SAFETY:

1. There were some obstacles in the passageway of the bodega as the waste materials are being scattered in the aisle.

2. The fire extinguisher is not being displayed inside the bodega. 2

On 22 May 1987, the Regional Office issued a subpoena duces tecum requiting petitioner to submit its payrolls and daily time records, with a
warning that failure to comply with the same will be deemed a waiver of its right to present evidence. Petitioner ignored said warning.

On 17 June 1987, the Labor Standards and Welfare Officer submitted his report to the Regional Director, recommending the issuance of an
order to require petitioner to pay fifty four (54) of its employees the amount of P964,952.50, based on the computation made by the Labor
Standards and Welfare Office, representing the deficiencies in wages and allowances of said employees. 3

Adopting the recommendation made by the Labor Standards and Welfare Office, the Regional Director issued the 2 July 1987
Order, 4 requiring petitioner to pay its employees the total amount of P964.952.50 as differentials, summarized as follows:

1. Noel Cadiao P36,208.49

2. Tranquilino Villaruel 18,132.64

3. Edwin Cabaluna 27,572.99

4. Herdiolyn Garcia 27,572.99

5. Eunice Dela Torre 22,041.67

6. Alfredo Canabe 22,041.67

7. Julie Salon Cabaluna 22,041.67


8. Asuncion Zamora 31,966.54

9. Marilou Loceno 31,814.99

10. Sandra Cadiao 31,814.99

11. Menchie Ygonia 31,814.99

12. Imelda Perlin 31,814.99

13. Julianita Salucio 10,491.37

14. Rene Zarcino 10,491.37

15. Gertrudes V. Besana 3,218.36

16. Gilda Pahilanga 10,491.37

17. Denia Pacheco 10,491.37

18. Susan Gonzaga 10,491.37

19. Flor Gardo 10,491.37

20. Emma Tortusa 13,218.36

21. Salvador Moleta, Jr. 10,491.37

22. Ditto Fernandez 10,491.37

23. Ma. Fe Termil 13,218.36

24. Ma. Helen P. Yap 13,218.36

25. Tito Dalaorao 16,248.36

26. Lorenda Dimaala 10,480.75

27. Nena Makilan 10,491.37

28. Nenita Sumagaysay 10,491.37

29. Felecidad Baticados 10,491.37

30. Julie Baylon 10,491.37

31. Dorina Leonidas 22,199.00

32. Marlene Espinosa 22,199.00

33. Daisy Anoche 19,221.55

34. Bernadette Chavez 19,221.55


35. Monica Tejedo 19,221.55

36. Melanie Guancia 19,221.55

37. Merlinda Poblete 19,221.55

38. Edna Delas Marias 19,221.55

39. Angelica Salon 10,491.37

40. Teresa Narvas 10,491.37

41. Rogelia Guinabo 10,491.37

42. Elizabeth Cuadra 10,491.37

43. Liza Encabo 19,221.55

44. Jovita Milleno 16,248.36

45. Oscar Gonzaga 10,642.87

46. Doris Tabaculde 22,062.17

47. Johnny Delgado 13,521.37

48. Lolita Noble 18,483.00

49. Tarcila Dimamay 20,604.00

50. Anita Gravino 24,391.53

51. Ely Blancia 18,483.00

52. Estela Cerna 6,703.87

53. Laila Yee 19,506.12

54. Eulalio Agnes 33,357.27

GRAND TOTAL P964,952.505

Petitioner was likewise ordered to clear the passageway of its warehouse of waste materials, and to put up fire extinguishers in their proper
places pursuant to the occupational safety and health rules.

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

The sole issue raised in this case is whether or not the Regional Director has the jurisdiction to hear and decide cases involving recovery of
wages and other monetary claims and benefits of workers and employees.

The jurisdiction of the Regional Director to adjudicate money claims of workers and employees is governed by Articles 129 and 217 of the
Labor Code, as amended by Secs. 2 and 9, respectively, of RA 6715, which provide that:

Sec. 2. Article 129 of the Labor Code of the Philippines, as amended, is hereby further amended to read as follows:
Art. 129. Recovery of wages, simple money claims and other benefits. Upon complaint of any interested party, the Regional Director of the
Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through summary
proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits,
including legal interest, owing to an employee or person employed in domestic or household service or househelper under this Code, arising
from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement: Provided, further, That the
aggregate money claims of each employee or househelper do not exceed Five thousand pesos (P5,000.00) . . . (emphasis supplied)

Sec. 9. Article 217 of the same Code, as amended, is hereby further amended to read as follows:

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

xxx xxx xxx

(6) Except claims for employees compensation, social security medicare and maternity benefits, all other claims arising from employer-
employee relations, including those of persons in domestic or household service, involving an amount exceeding Five thousand pesos
(P5,000.00), whether or not accompanied with a claim for reinstatement.

xxx xxx xxx

In order to fully appreciate the previous rulings of the Court on the power of the Regional Directors to adjudicate money claims of workers
and employees, there is a need to trace back the grant of said power by legislation. Prior to the enactment of RA 6715, Art. 217 of the Labor
Code, as amended, conferred on the Labor Arbiters the originaland exclusive jurisdiction to hear and decide all cases involving household
services, and all money claims of workers, including those based on non-payment or underpayment of wages, overtime compensation,
separation pay and other benefits provided by law or appropriate agreement, except claims for employees' compensation, social security,
medicare and maternity benefits. The Regional Director was not empowered to share in that original and exclusive jurisdiction conferred on
Labor Arbiters by Art. 217. 7

Subsequently, Executive Order (EO) 111 was promulgated on 24 December 1986, Section 2 8 of which amended Article 128 par. (b) of the
Labor Code, as amended, by granting the Minister of Labor or his duly authorized representative the power to order and administer
compliance with standards and other labor legislations.

In the case of Briad Agro Development Corp. vs. de la Cerna and Camus Engineering Corp. v. Sec. of Labor, 9applying (EO) 111, the Court
recognized the concurrent jurisdiction of the Secretary of Labor (or Regional Directors) and the Labor Arbiters to pass on employees' money
claims, including those cases over which the Labor Arbiters had previously exercised exclusive jurisdiction. However, in a subsequent
modificatory resolution in the Briad Agro case, dated 9 November 1989, the Court modified its original decision in view of the enactment of
RA 6715, and upheld the power of the Regional Directors to adjudicate employees' money claims subject to the conditions set forth in
Section 2 of said law (RA 6715).

The power then of the Regional Director (under the present state of the law) to adjudicate employees' money claims is subject to the
concurrence of all the requisites provided under Sec. 2 of RA 6715, to wit: (1) the claim is presented by an employee or person employed in
domestic or household service, or househelper; (2) the claim arises from employer-employee relations; (3) the claimant does not seek
reinstatement; and (4) the aggregate money claim of each employee or househelper does not exceed P5,000.00.

Going over the records of this case, we note that the aggregate claims of each of the fifty four (54) employees of herein petitioner are over
and above the amount of P5,000.00. Under the circumstances, the power to adjudicate such claims belongs to the Labor Arbiter who has the
exclusive jurisdiction over employees' claims where the aggregate amount of the claim for each employee exceeds P5,000.00.

WHEREFORE, the petition is GRANTED. The order of respondent Secretary of Labor dated 23 August 1988 and the order of respondent
Regional Director dated 2 July 1987 are SET ASIDE. The case is REFERRED to the appropriate Labor Arbiter for proper determination. No
costs.

SO ORDERED.

G.R. No. L-47739 June 22, 1983

SINGAPORE AIRLINES LIMITED, petitioner,


vs.
HON. ERNANI CRUZ PAO as Presiding Judge of Branch XVIII, Court of First Instance of Rizal, CARLOS E. CRUZ and B. E.
VILLANUEVA, respondents.

Bengzon, Zarraga, Narciso, Cudala Pecson, Azucena & Bengzon Law Offices for petitioner.

Celso P. Mariano Law Office for private respondent Carlos Cruz.

Romeo Comia for private respondent B. E. Villanueva.

MELENCIO-HERRERA, J.:

On the basic issue of lack of jurisdiction, petitioner company has elevated to us for review the two Orders of respondent Judge dated October
28, 1977 and January 24, 1978 dismissing petitioner's complaint for damages in the first Order, and denying its Motion for Reconsideration
in the second.

On August 21, 1974, private respondent Carlos E. Cruz was offered employment by petitioner as Engineer Officer with the opportunity to
undergo a B-707 I conversion training course," which he accepted on August 30, 1974. An express stipulation in the letter-offer read:

3. BONDING. As you win be provided with conversion training you are required to enter into a bond with SIA for a period of 5 years. For
this purpose, please inform me of the names and addresses of your sureties as soon as possible.

Twenty six days thereafter, or on October 26, 1974, Cruz entered into an "Agreement for a Course of Conversion Training at the Expense of
Singapore Airlines Limited" wherein it was stipulated among others:

4. The Engineer Officer shall agree to remain in the service of the Company for a period of five years from the date of commencement of
such aforesaid conversion training if so required by the Company.

5. In the event of the Engineer Officer:

1. Leaving the service of the company during the period of five years referred to in Clause 4 above, or

2. Being dismissed or having his services terminated by the company for misconduct,

the Engineer Officer and the Sureties hereby bind themselves jointly and severally to pay to the Company as liquidated damages such sums
of money as are set out hereunder:

(a) during the first year of the period of five years referred to in Clause 4 above ...................................................................................... $
67,460/

(b) during the second year of the period of five years referred to in Clause 4 above ................................................................................. $
53,968/

(c) during the third year of the period of five years referred to in Clause 4 above ...................................................................................... $
40,476/

(d) during the fourth year of the period of five years referred to in Clause 4 above .................................................................................. $
26,984/

(e) during the fifth year of the period of five years referred to in Clause 4 above ....................................................................................... $
13,492/

6. The provisions of Clause 5 above shall not apply in a case where an Engineer Officer has his training terminated by the Company for
reasons other than misconduct or where, subsequent to the completion of training, he -

1. loses his license to operate as a Flight Engineer due to medical reasons which can in no way be attributable to any act or omission on his
part;

2. is unable to continue in employment with the Company because his employment pass or work permit, as the case may be, has been
withdrawn or has not been renewed due to no act or omission on his part;
3. has his services terminated by the Company as a result of being replaced by a national Flight Engineer;

4. has to leave the service of the Company on valid compassionate grounds stated to and accepted by the Company in writing. 1

Cruz signed the Agreement with his co-respondent, B. E. Villanueva, as surety.

Claiming that Cruz had applied for "leave without pay" and had gone on leave without approval of the application during the second year of
the Period of five years, petitioner filed suit for damages against Cruz and his surety, Villanueva, for violation of the terms and conditions of
the aforesaid Agreement. Petitioner sought the payment of the following sums: liquidated damages of $53,968.00 or its equivalent of
P161,904.00 (lst cause of action); $883.91 or about P2,651.73 as overpayment in salary (2nd clause of action); $61.00 or about P183.00 for
cost of uniforms and accessories supplied by the company plus $230.00, or roughly P690.00, for the cost of a flight manual (3rd cause of
action); and $1,533.71, or approximately P4,601.13 corresponding to the vacation leave he had availed of but to which he was no longer
entitled (4th cause Of action); exemplary damages attorney's fees; and costs.

In his Answer, Cruz denied any breach of contract contending that at no time had he been required by petitioner to agree to a straight service
of five years under Clause 4 of the Agreement (supra) and that he left the service on "valid compassionate grounds stated to and accepted by
the company so that no damages may be awarded against him. And because of petitioner-plaintiff's alleged ungrounded causes of action,
Cruz counterclaimed for attorney's fees of P7,000.00.

The surety, Villanueva, in his own Answer, contended that his undertaking was merely that of one of two guarantors not that of surety and
claimed the benefit of excussion, if at an found liable. He then filed a cross-claim against Cruz for damages and for whatever amount he may
be held liable to petitioner-plaintiff, and a counterclaim for actual, exemplary, moral and other damages plus attorney's fees and litigation
expenses against petitioner-plaintiff.

The issue of jurisdiction having been raised at the pre-trial conference, the parties were directed to submit their respective memoranda on that
question, which they complied with in due time. On October 28, 1977, respondent Judge issued the assailed Order dismissing the complaint,
counterclaim and cross-claim for lack of jurisdiction stating.

2. The present case therefore involves a money claim arising from an employer-employee relation or at the very least a case arising from
employer-employee relations, which under Art. 216 of the Labor Code is vested exclusively with the Labor Arbiters of the National Labor
Relations Commission. 2

Reconsideration thereof having been denied in the Order of January 24, 1978, petitioner availed of the present recourse. We gave due course.

We are here confronted with the issue of whether or not this case is properly cognizable by Courts of justice or by the Labor Arbiters of the
National Labor Relations Commission.

Upon the facts and issues involved, jurisdiction over the present controversy must be held to belong to the civil Courts. While seemingly
petitioner's claim for damages arises from employer-employee relations, and the latest amendment to Article 217 of the Labor Code under
PD No. 1691 and BP Blg. 130 provides that all other claims arising from employer-employee relationship are cognizable by Labor
Arbiters, 3 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 se by private respondent Cruz of his job as the latter was not required in the
Complaint to report back to work but on the manner and consequent effects of such abandonment of work translated in terms of the damages
which petitioner had to suffer.

Squarely in point is the ruling enunciated in the case of Quisaba vs. Sta. Ines Melale Veneer & Plywood, Inc.4 the pertinent portion of which
reads:

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

Civil law consists of that 'mass of precepts that determine or regulate the relations ... that exist between members of a society for the
protection of private interest (1 Sanchez Roman 3).
The "right" of the respondents to dismiss Quisaba should not be confused with the manner in which the right was exercised and the effects
flowing therefrom. If the dismiss was done anti-socially or oppressively, as the complaint alleges, then the respondents violated article 1701
of the Civil Code which prohibits acts of oppression by either capital or labor against the other, and article 21, which makers a person liable
for damages if he wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy, the sanction
for which, by way of moral damages, is provided in article 2219, No. 10 (Cf, Philippine Refining Co. vs. Garcia, L-21962, Sept. 27, 1966, 18
SCRA 107).

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

Additionally, there is a secondary issue involved that is outside the pale of competence of Labor Arbiters. Is the liability of Villanueva one of
suretyship or one of guaranty? Unquestionably, this question is beyond the field of specialization of Labor Arbiters.

WHEREFORE, the assailed Orders of respondent Judge are hereby set aside. The records are hereby ordered remanded to the proper Branch
of the Regional Trial Court of Quezon City, to which this case belongs, for further proceedings. No costs.

SO ORDERED.
G.R. No. 82211-12 March 21, 1989

TERESITA MONTOYA, petitioner,


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

Rolando N. Medalla and Segundo Y Chua for petitioner.

The Solicitor General for public respondent.

Archie S. Baribar for private respondents.

SARMIENTO, J.:

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

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

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

Acting favorably on the petitioner's motion, Labor Arbiter Ethelwoldo R. Ovejera, on September 27, 1985, ordered the dismissal of the
complaints. The private respondents sought the reversal of the Labor Arbiter's order before the respondent NLRC. On August 20, 1987, the
public respondent rendered the assailed resolution reversing the order of Ovejera, and remanded the case to the Labor Arbiter for further
proceedings. A motion for reconsideration was filed by the petitioner but this was denied for lack of merit on October 28, 1987. Hence, this
petition.

It is the petitioner's contention that the provisions of the Katarungang Pambarangay Law (P.D. No. 1508) relative to the prior amicable
settlement proceedings before the Lupong Tagapayapa as a jurisdictional requirement at the trial level apply to labor cases. More particularly,
the petitioner insists that the failure of the private respondents to first submit their complaints for possible conciliation and amicable
settlement in the proper barangay court in Bacolod City and to secure a certification from the Lupon Chairman prior to their filing with the
Labor Arbiter, divests the Labor Arbiter, as well as the respondent Commission itself, of jurisdiction over these labor controversies and
renders their judgments thereon null and void.

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

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

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

For a better understanding of the issue in this case, the provisions of P.D. No. 1508 invoked by the petitioner are quoted:
SEC. 6. Conciliation pre-condition to filing of complaint. No complaint, petition, action or proceeding involving any matter within the
authority of the Lupon as provided in Section 2 hereof shall be filed or instituted in court or any other government office for adjudication
unless there has been a confrontation of the parties before the Lupon Chairman or the Pangkat and no conciliation or settlement has been
reached as certified by the Lupon Secretary or the Pangkat Secretary, attested by the Lupon or Pangkat Chairman, or unless the settlement
has been repudiated. However, the parties may go directly to court in the following cases:

(1) Where the accused is under detention;

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

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

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

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

These "WHEREAS" clauses state:

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

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

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

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

Nor can we accept the petitioner's contention that the "other government office" referred to in Section 6 of P.D. No. 1508 includes the Office
of the Labor Arbiter and the Med-Arbiter. The declared concern of the Katarungan Pambarangay Law is "to help relieve the courts of such
docket congestion and thereby enhance the quality of justice dispensed by the courts." Thus, the" other government office" mentioned in
Section 6 of P.D. No. 1508 refers only to such offices as the Fiscal's Office or, in localities where there is no fiscal, the Municipal Trial
Courts, where complaints for crimes (such as those punishable by imprisonment of not more than 30 days or a, fine of not more than P
200.00) falling under the jurisdiction of the barangay court but which are not amicably settled, are subsequently filed for proper disposition.

But, the opinion of the Honorable Minister of Justice (Opinion No. 59, s. 1983) to the contrary notwithstanding, all doubts on this score are
dispelled by The Labor Code Of The Philippines (Presidential Decree No. 442, as amended) itself. Article 226 thereof grants original and
exclusive jurisdiction over the conciliation and mediation of disputes, grievances, or problems in the regional offices of the Department of
Labor and Employ- ment. It is the said Bureau and its divisions, and not the barangay Lupong Tagapayapa, which are vested by law
with original and exclusive authority to conduct conciliation and mediation proceedings on labor controversies before their endorsement to
the appropriate Labor Arbiter for adjudication. Article 226, previously adverted to is clear on this regard. It provides:

ART. 226. Bureau of Labor Relations.- The Bureau of Labor Relations and the Labor relations divisions in the regional officer of the
Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all
inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all
workplaces whether agricultural or non-agricultural, except those arising from the implementation or interpretation of collective bargaining
agreements which shall be the subject of grievance procedure and/or voluntary arbitration.

The Bureau shall have fifteen (15) working days to act on all labor cases, subject to extension by agreement of the parties, after which the
Bureau shall certify the cases to the appropriate Labor Arbiters. The 15-working day deadline, however, shall not apply to cases involving
deadlocks in collective bargaining which the Bureau shall certify to the appropriate Labor Arbiters only after all possibilities of voluntary
settlement shall have been tried.

Requiring conciliation of labor disputes before the barangay courts would defeat the very salutary purposes of the law. Instead of simplifying
labor proceedings designed at expeditious settlement or referral to the proper court or office to decide it finally, the position taken by the
petitioner would only duplicate the conciliation proceedings and unduly delay the disposition of the labor case. The fallacy of the petitioner's
submission can readily be seen by following it to its logical conclusion. For then, if the procedure suggested is complied with, the private
respondent would have to lodge first their complaint with the barangay court, and then if not settled there, they would have to go to the labor
relations division at the Regional Office of Region VI of the Department of Labor and Employment, in Bacolod City, for another round of
conciliation proceedings. Failing there, their long travail would continue to the Office of the Labor Arbiter, then to the NLRC, and finally to
us. This suggested procedure would destroy the salutary purposes of P.D. 1508 and of The Labor Code Of The Philippines. And labor would
then be given another unnecessary obstacle to hurdle. We reject the petitioner's submission. It does violence to the constitutionally mandated
policy of the State to afford full protection to labor. 2

Finally, it is already well-settled that the ordinary rules on procedure are merely suppletory in character vis-a-vis labor disputes which are
primarily governed by labor laws. 3 And "(A)ll doubts in the implementation and interpretation of this Code (Labor), including its
implementing rules and regulations, shall be resolved in favor of labor. 4

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

SO ORDERED.
G.R. Nos. 117442-43 January 11, 1995

FEM'S ELEGANCE LODGING HOUSE, FENITHA SAAVEDRA and IRIES ANTHONY SAAVEDRA, petitioners,
vs.
The Honorable LEON P. MURILLO, Labor Arbiter, Regional Arbitration Branch, Region X, National Labor Relations Commission,
Cagayan de Oro City, ALFONSO GALLETO, GEORGE VEDAD, ROLAND PANTONIAL, REYNALDO DELAORAO,
FELICISIMO BAQUILID, CECILIO SAJOL, ANNABEL CASTRO, BENJAMIN CABRERA, RHONDEL PADERANGA,
ZENAIDA GUTIB, AIDA IMBAT and MARIA GRACE ATUEL, respondents.

RESOLUTION

QUIASON, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of court with temporary restraining order to reverse and set aside the
Order dated September 21, 1994 of the Labor Arbiter in the NLRC RAB X Cases Nos. 10-04-00232 (-00233)-94.

Petitioner FEM's elegance Lodging House is a business enterprise engaged in providing lodging accommodations. It is owned by petitioner
Fenitha Saavedra and managed by petitioner Iries Anthony Saavedra. Private respondents are former employees of petitioners whose services
were terminated between March and April, 1994.

Sometime after their dismissal from the employment of petitioners, private respondents separately filed two cases against petitioners before
the National Labor Relations Commission (NLRC), Regional Arbitration Branch No. X, Cagayan de Oro City, docketed as NLRC RAB X
Cases Nos. 10-04-00232-(0023)-94. Private respondents sought for unpaid benefits such as minimum wage, overtime pay, rest day pay,
holiday pay, full thirteenth-month pay and separation pay (Rollo, pp. 40-42).

On May 31, 1994, a pre-arbitration conference of the cases took place before the Labor Arbiter. It was agreed therein: (1) that both labor
cases should be consolidated; and (2) that the parties would file their respective position papers within thirty days from said date or until June
30, 1994, after which the cases would be deemed submitted for resolution (Rollo, p. 14).

On June 29, petitioners filed their position paper. On July 7, they inquired from the NLRC whether private respondents had filed their
position paper. The receiving clerk of the NLRC confirmed that as of said date private respondents had not yet filed their position paper.

The following events then transpired: on July 8, petitioners filed a Motion to dismiss for failure of private respondents to file their position
paper within the agreed period (Rollo, p. 38); on July 15, private respondents belatedly filed their position paper; on July 18, petitioners filed
a Motion to Expunge [private respondents'] Position Paper from the records of the case (Rollo, p. 45); and on August 23, the Labor Arbiter
issued a notice of clarificatory hearing, which was set for September 7 (Rollo, p. 47). Prior to the hearing, petitioners filed a Motion to
Resolve [petitioners'] Motion to dismiss and Motion to Expunge [private respondent'] Position Paper from the Records of the Case (Rollo, p.
48).

On September 21, the Labor Arbiter issued the order denying the motions filed by petitioners. He held that a fifteen-day delay in filing the
position paper was not unreasonable considering that the substantive rights of litigants should not be sacrificed by technicality. He cited
Article 4 of the Labor Code of the Philippines, which provides that all doubts in the interpretation thereof shall be resolved in favor of labor.
He said that even under Section 15, Rule 5 of the Revised Rules of Court, a delay in the filing of a position paper is not a ground for a motion
to dismiss under the principle of exclusio unius est excludio alterius (Rollo, pp. 51-52).

Hence, the present petition where petitioners charged the Labor Arbiter with grave abuse of discretion for issuing the order in contravention
of Section 3, Rule V of The New Rules of Procedure of the NLRC, Said section provides:

Submission of Position Papers/Memorandum. . . . Unless otherwise requested in writing by both parties, the Labor Arbiter shall direct
both parties to submit simultaneously their position papers/memorandum with the supporting documents and affidavits within fifteen (15)
calendar days from the date of the last conference, with proof of having furnished each other with copies thereof (Emphasis supplied).

Petitioners claimed that they were denied due process and that the Labor Arbiter should have cited private respondents in contempt for their
failure to comply with their agreement in the pre-arbitration conference.

We dismiss the petition for failure of petitioners to exhaust their remedies, particularly in seeking redress from the NLRC prior to the filing
of the instant petition. Article 223 of the Labor code of the Philippines provides that decisions, awards or orders of the Labor Arbiter are
appealable to the NLRC. Thus, petitioners should have first appealed the questioned order of the Labor Arbiter to the NLRC, and not to this
court. their omission is fatal to their cause.

However, even if the petition was given due course, we see no merit in petitioners' arguments. The delay of private respondents in the
submission of their position paper is a procedural flaw, and the admission thereof is within the discretion of the Labor Arbiter.

Well-settled is the rule that technical rules of procedure are not binding in labor cases, for procedural lapses may be disregarded in the
interest of substantial justice, particularly where labor matters are concerned (Ranara v. National Labor Relations commission, 212 SCRA
631 [1992]).

The failure to submit a position paper on time is not on of the grounds for the dismissal of a complaint in labor cases (The New Rules of
procedure of the NLRC, Rule V, Section 15). It cannot therefore be invoked by petitioners to declare private respondents as non-suited. This
stance is in accord with Article 4 of the Labor Code of the Philippines, which resolves that all doubts in the interpretation of the law and its
implementing rules and regulations shall be construed in favor of labor. Needless to state, our jurisprudence is rich with decisions adhering to
the State's basic policy of extending protection to Labor where conflicting interests between labor and management exist (Aquino v. National
Labor Relations Commission, 206 SCRA 118 [1992]).

Petitioners cannot claim that they were denied due process inasmuch as they were able to file their position paper. The proper party to invoke
due process would have been private respondents, had their position paper been expunged from the records for mere technicality. Since
petitioners assert that their defense is meritorious, it is to their best interest that the cases be resolved on the merits. In this manner, the
righteousness of their cause can be vindicated.

IN VIEW OF THE FOREGOING, the Court Resolved to DISMISS the petition for lack of merit.

SO ORDERED.

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

Separate Opinions

PADILLA, J., concurring:

The petition in this case should be dismissed because petitioners did not exhaust their remedies in the National Labor Relations Commission
(NLRC) before coming to this Court.

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

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

Separate Opinions

PADILLA, J., concurring:

The petition in this case should be dismissed because petitioners did not exhaust their remedies in the National Labor Relations Commission
(NLRC) before coming to this Court.

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

If this Court were to entertain appeals from orders of labor arbiters, even in the form of a petition for certiorari for alleged grave abuse of
discretion under Rule 65 of the Rules of Court, we will be opening the flood gates to petitions for certiorari against orders (including
interlocutory ones) of labor arbiters when the clear intent of the law is to subject the decisions, awards and orders of labor arbiters to review
by the NLRC before they are brought to this Court.
G.R. No. 70544 November 5, 1987

GELMART INDUSTRIES (PHILS.), INC., petitioner,


vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of Labor and Employment, FRANCISCO ESTRELLA, as
the then Regional Director of MOLE Region No. IV, and JENNY P. JUANILLO, respondents.

CORTES, J.:

In this special civil action for certiorari the petitioner Gelmart Industries (Phils. Is.), Inc. GELMART seeks a reversal of the order of public
respondent Director Francisco L. Estrella of the Regional Office No. 4, Ministry of Labor and Employment (MOLE), dated June 15, 1979
requiring the immediate reinstatement of Jenny Juanillo to her former position with full backwages reckoned from August 8, 1977 to the date
on actual reinstatement without loss of seniority rights as affirmed by Deputy Minister Vicente Leogardo, Jr. who dismissed petitioner's
appeal and motion for reconsideration.

The following antecedent facts are undisputed: GELMART is a labor-intensive, export-oriented entity registered and operating under
Philippine law. It had a collective bargaining agreement with the National Union of Garment, Textile Cordage and Allied Workers of the
Philippine (GATCORD) for the period January 25, 1976 to January 27, 1979 covering petitioner's 8,000 rank-and-file workers among whom
is the private respondent Juanillo. On August 1, 1977 GATCORD went on strike. After two return to work orders were issued by the Ministry
of Labor, the second one on August 2, 1977 giving a 48-hour deadline "or face the danger of losing employment status," all workers
complied except 334. Juanillo was not among those who reported back to work within the period. GELMART gave these workers notice and
applied for clearance to terminate their employment. Public respondent Vicente Leogardo, Jr., Deputy Minister of Labor and Employment by
order of October 5, 1977 sustained the preventive suspension imposed by GELMART but certified the case for compulsory arbitration on the
issue of termination. The NLRC docketed the case as "National Union of Garment, Textile, Cordage and Allied Workers of the Philippines
(GATCORD) v. GELMART Industries, Philippines, Inc., NLRC RB- IV-13275-77 It took eleven months before the labor arbiter issued a
decision dated September 13, 1978 granting clearance for dismissal, but with specific provision to exclude those who did not participate in
the strike because they were absent before and during the same for justifiable causes such as illness or "validated absences." [Rollo, p. 26]. In
the decision was a list of those ordered to be reinstated. Juanilo was not in the list.

Juanillo filed a complaint for illegal dismissal on February 15, 1979 docketed as Case No. R4-STF-2-1189-79 alleging that she was
employed by GELMART for the last seven (7) years as sewer with a daily wage of P12.40, excluding allowance and other fringe benefits,
that on July 31, 1977 through a letter sent to the respondent company, she applied for vacation leave effective August 1, 1977 to August 7,
1977; that she went home to Laguna to take care of her child who was then sick and stayed till August 7, 1977; that when she reported back
for work on August 8, 1977 she was refused admittance and was served a copy of preventive suspension for alleged participation in the mass
walk-out by workers of the company on August 1, 1977; that while a substantial number of workers who had participated in the mass walk-
out had already been reinstated, despite repeated representations the company refused to reinstate her; and that her dismissal in the guise of
preventive suspension was without just cause and prior clearance from the Ministry of Labor. The complainant prayed for reinstatement with
full backwages, for damages in the amount of P10,000 and attorneys fees.

The respondent, traversing Juanillo's complaint, asserted that the subject of the complaint was barred by prior judgement citing the decision
of September 13, 1978, and the list in said decision of 63 workers who were excluded from the clearance to terminate. Juanillo's name not
appearing in said list.

On June 15, 1979, the public respondent Francisco L. Estrella, then Regional Director of the Ministry of Labor and Employment (MOLE)
Region No. IV issued an order finding for petitioner Juanillo, thus:

We find respondent's contentions untenable.

Firstly, at the time when the strike was staged by the workers of respondent, complainant was already in the province. In fact, before she
went to the province, she even notified respondent and applied for vacation leave of absence. Consequently, respondent could not deny that
she was on vacation and in the province and, therefore, could not possibly join the strike. Furthermore, it appears that complainant was
dismissed without the required clearance in violation of the mandatory provision of Art. 278 (b) of the Labor Code, as amended. For these
reasons therefore, we find and so hold that the dismissal of complainant is illegal and without just cause.

WHEREFORE, premises considered, respondent is hereby ordered to immediately reinstate complainant to her former position with fun
backwages reckoned from August 8, 1977 up to the date of actual reinstatement without loss of seniority rights [Rollo, p. 40].
This order was affirmed on November 17, 1982 by respondent Leogardo as Deputy Minister of MOLE. Petitioner's motion for
reconsideration dated March 11, 1985 having been denied, the present petition was filed on April 18, 1985, assigning on the part of public
respondents the following errors:

1. IN GRAVE ABUSE OF DISCRETION, FAULTED GELMART FOR THE ABSENCE OF RESPONDENTS' CLEARANCE IN
DISMISSING MS. JUANILLO, WHEN DEPUTY MOLE MINISTER LEOGARDO HAD, IN FACT, PERSONALLY SUSTAINED AND
APPROVED GELMART'S CLEARANCE SINCE OCTOBER 5,1977;

2. PUBLIC RESPONDENT LEOGARDO, IN GRAVE ABUSE OF DISCRETION, DISREGARDED HIS OCTOBER 5, 1977 ORDER
TRANSMITTING MS. JUANILLO'S CASE TO THE NLRC FOR COMPULSORY ARBITRATION WHICH, WITH GATCORD'S
OPPOSITION, WERE HEARD/DECIDED ON SEPTEMBER 13,1978 IN NLRC CASE NO. RB-IV-13275-77, WHEREAT MS.
JUANILLO'S TERMINATION WAS UPHELD IN A DECISION CONCLUSIVE AND BINDING ON ALL THE RESPONDENTS;

3. RESPONDENT JUANILLO'S COMPLAINT OF FEBRUARY 15, 1979, WAS FILED SEVEN (7) MONTHS AFTER THE NLRC
DECISION ON HER CASE OF SEPTEMBER 13, 1978: IT IS, THEREFORE, BARRED BY FINALITY OF JUDGMENT, ESTOPPEL
AND RES JUDICATA;

4. PUBLIC RESPONDENTS' SUMMARY AND CAVALIER VALIDATION OF A GRATUITOUS AND EVIDENTIARILY


UNSUPPORTED REQUEST FOR AN ALLEGED LEAVE OF ABSENCE WHICH, IF, TRUE, MS. JUANILLO PERVERSELY AND
WILLFULLY KEPT IN SECRET UNTIL AFTER SHE LOST HER CASE AT THE NLRC, IS CONTRARY TO THE NORMS OF
JUSTICE, EQUITY AND MORALITY; THAT THEY UNDULY PROCRASTINATED IN RESOLVING THE CASE TO GELMART'S
PREJUDICE AGGRAVATES THEIR ABUSE OF DISCRETION. [Rollo, pp. 13-14].

The first three assigned errors charging the public respondents of having disregarded the clearance obtained by GELMART to dismiss
workers who had staged a mass walkout and disobeyed the return to work order and the decision in the NLRC Case No. RR-IV-13275-77
upholding the dismissals are well taken. The strike was staged by GATCORD members, the return to work orders were directed to them and
the decision on the Legal strike is binding on them. In this particular case, the application for clearance with preventive suspension and
compulsory arbitration on the issue of termination involved GATCORD members who had not returned to work. Of these there were 334 and
Juanilo was among them. However, she has taken the position that since at the time of the Legal mass walk-out she was already in the
province on leave, she was not covered by NLRC Case No. RB-IV-13275-77. The compulsory arbitration precisely covered her case. All she
needed to do was prove "validated absences," during the proceeding and she would have been in the list of those to be reinstated. But she did
not choose to present her proof in the arbitration proceeding. Instead, she waited seven months after the decision became final before
bringing a separate case. If every member of a striking union not satisfied with a decision in an arbitration case resolving the issues involved
in a labor dispute arising from the strike were to be accorded the right to bring a separate individual action on an issue covered by that
decision, there can be no end or solution to the controversy. The dismissal of Juanillo was an incident of the GATCORD strike against
GELMART. Her action is not distinct from the issues dealt with in the compulsory arbitration case.

But even if the Court were to grant that she could bring this separate action, Juanillo would have to prove her case. The only basis of her
action is the alleged leave of absence she had filed. The public respondents decided in her favor. Was there substantial evidence presented to
support the decision under review?

The public respondents found as a fact Chat Juanillo had not participated in the mass walk-out because at the time it took place she was in
the province taking care of a sick child: that before she left she had by letter filed a leave of absence. The petitioner GELMART denied
having received any letter from Juanilo requesting leave and assailed the letter offered as selfserving evidence. Public respondents, however,
found that leave was obtained, that GELMART failed to prove that Juanilo was among the workers who staged the mass walk out and that
therefore her dismissal without previous clearance was illegal.

This Court will not ordinarily disturb findings of fact of administrative agencies like the public respondents. It is axiomatic that in their
exercise of adjudicative functions they are not bound by strict rules of evidence and of procedure. When confronted with conflicting versions
of factual matters, it is for them in the exercise of discretion to determine which party deserves credence on the basis of evidence received.
[Halili v. Floro, 90 Phil. 245 (1951); Estate of Florencio Buan v. Pampanga Bus Co. and La Mallorca, 99 Phil. 373 (1956); Luzon Brokerage
Co. v. Luzon Labor Union, 117 Phil. 118 (1963). 7 SCRA 116].

However, as the landmark case of Ang Tibay v. Court of Industrial Relations [69 Phil. 635 (1940)] has pointed out there are "cardinal primary
rights which must be respected" in such proceedings. Not the least among them are those which refer to the evidence required to support a
decision:
(3) "While the duty to deliberate does not impose the obligation to decide right, it does imply a necessity which cannot be disregarded,
namely, that of having something to support the decision. A decision with absolutely nothing to support it is a nullity, at least, when directly
attacked.". . .

4. Not only must there be some evidence to support a finding or conclusion, but evidence must be "substantial." "Substantial evidence is
more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.". . (at p.
642).

The Court finds merit in the respondents' fourth assignment of error. A careful review of the basis on which the decision of the labor arbiter
as affirmed by the respondent Leogardo as deputy minister of MOLE reveals that not only is there no substantial evidence to support
Juanillo's claim but also that the respondents' evidence to the contrary contravenes it.

Juanillo asserts that at the time of the strike she was on leave, to prove which she presented a letter purportedly requesting leave dated
Sunday, July 31, 1977, the day before the illegal strike began. There is no proof that it was filed with or received by the company. She asserts
that she was denied admission upon her return on August 8, 1977 and was served notice of "Termination with Preventive Suspension" on
August 10, 1977. In the case between GELMART and GATCORD of which she is a member, the respondent Leogardo sustained the
preventive suspension of those who failed to return to work but referred this case for compulsory arbitration on the issue of termination on
October 5, 1977. The arbitral proceedings lasted eleven months, the decision became final and executory on September 13, 1978. In the
decision, specific provision was made to exclude from termination.

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

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

WHEREFORE, the petition is hereby GRANTED and the order of the public respondents REVERSED.

SO ORDERED
G.R. No. 100969 August 14, 1992

CARLO RANARA, petitioner,


vs.
NATIONAL LABOR RELATIONS COMMISSION, ORO UNION CONSTRUCTION SUPPLY AND/OR JIMMY TING CHANG,
GENERAL MANAGER/OWNER, respondents.

Public Attorney's Office for petitioner.

Eduardo P. Cuenca for private respondents.

CRUZ, J.:

Petitioner Carlos Ranara had been working as a driver with Oro Union Construction Supply, one of the herein private respondents, when he
was told by Fe Leonar, secretary of the other private respondent, Jimmy Ting Chang, not to come back the following day. Thinking that she
was only joking, be reported for work as usual on November 11, 1989, but was surprised to find some other person handling the vehicle
previously assigned to him. It was only then that Ranara realized that he had really been separated. When he approached Leonar to ask why
his services were being terminated, she replied crossly:

You are hard-headed. I told you last night when you turned over the key not to report for work because Mr. Jimmy Ting Chang does not like
your services, yet you, come back.

Three days later, Ranara filed a complaint with the Department of Labor and Employment for illegal dismissal, reinstatement with full back
wages, underpayment of wages, overtime pay, non-payment of 13th month pay, service incentive leave, separation pay and moral damages.

The private respondents denied the charges, contending that the petitioner had not been illegally dismissed. Chang said he was in a hospital
in Manila on November 11, 1989, and that he had not authorized Leonar, or even his mother who was the officer-in-charge during his
absence, to terminate Ranara's employment. The truth was that it was Ranara who abandoned his work when he stopped reporting from
November 11, 1989. Chang also introduced documentary evidence, consisting of payroll and other records, to refute the petitioner's monetary
claims.

On May 2, 1990, the Labor Arbiter held that Ranara had not been illegally dismissed. 1 The decision stressed that at the hearing of December
28, 1989, Chang offered to re-employ the petitioner as he was needed in the store but the latter demurred, saying he was no longer interested.
This attitude, according to the Labor Arbiter, showed that it was the petitioner who chose to stop working for Chang and not the latter who
terminated his employment.

On the monetary claims, however, the decision ordered the respondents to pay the complainant P375.00 as wage differentials, 13th month
pay for 1989 of P1,110.00 minus his outstanding obligation to respondents. The rest of the claims were dismissed for lack of merit. 2

The decision was affirmed on appeal, by the NLRC, 3 prompting the petitioner to seek relief from this Court.

Required to comment, the Solicitor General disagreed with the NLRC on the legality of the petitioner's dismissal. He said that the challenged
decision was based on an event subsequent to the illegal dismissal, to wit, the offer of reinstatement, and that such offer did not validate the
dismissal. He also disputed the contention that the petitioner had voluntarily abandoned his work, saying this was unlikely because of the
difficulty of the times and the high unemployment rate.

In view of this stance of the Solicitor General, and at his suggestion, the Court required the NLRC to file its own comment.

The NLRC argued in its Comment that the offer to re-employ the petitioner should not be disregarded in assessing the motives of the parties
as it was a genuine effort on the part of the private respondents to settle the controversy. There was no reason for the petitioner's refusal to
return to work after he had been invited back to the store. Moreover, the petitioner had not filed a motion for reconsideration of its decision
and should therefore not be allowed to file his petition for certiorari with this Court. The NLRC also argued that it was not necessary to
require the private respondents to submit the original copies of their documentary evidence because their due execution and genuineness had
not been denied under oath and were therefore deemed admitted.

The Court has carefully considered the arguments of the parties and finds for the petitioner.
We reject as a rank falsity the private respondents' claim that the petitioner had not been illegally dismissed and in fact abandoned his work.
The secretary would not have presumed to dismiss him if she had not been authorized to do so, considering the seriousness of this act. It is
worth noting that neither Chang's mother, who was the officer-in-charge do his absence, nor Chang himself upon his return, reversed her act
and reinstated the petitioner.

The private respondents themselves claim they have a staff of less than ten persons, and Chang or his mother could not have failed to notice
Ranara's absence after November 1, 1989. Yet they took no steps to rectify the secretary's act if it was really unauthorized and, on the
contrary, accepted Ranara's replacement without question. Evidently, that person had been employed earlier, in advance of Ranara's
dismissal.

The charge of abandonment does not square with the recorded fact that three days after Ranara's alleged dismissal, he filed a complaint with
the labor authorities. The two acts are plainly inconsistent. Neither can Ranara's rejection of Chang's offer to reinstate him be legally
regarded as an abandonment because the petitioner had been placed in an untenable situation that left him with no other choice. Given again
the smallness of the private respondents' staff, Ranara would have found it uncomfortable to continue working under the hostile eyes of the
employer who had been forced to reinstate him.

It was not as if Ranara were only one among many other complainants ordered reinstated in a big company, for whatever enmity the
employer might harbor against them would be diluted and less personalized, so to speak. There would be a certain degree of anonymity, and
a resultant immunity from retaliation, in the number alone of the reinstated personnel. Moreover, it is not unlikely that there would be a labor
union in such a company to protect and assure the returning workers against possible reprisals from the employer.

In the petitioner's case, he was only one among ten employees in a small store, and that made a great deal of difference to him. He had reason
to fear that if he accepted the private respondents' offer, their watchful eyes would thereafter be focused on him, to detect every small
shortcoming of his as a ground for vindictive disciplinary action. In our own view, this was a case of strained relations between the employer
and the employee that justified Ranara's refusal of the private respondents' offer to return him to his former employment.

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

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

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

We sustain the findings of fact of the Labor Arbiter regarding the petitioner's monetary claims on the basis of the documentary evidence
submitted by the private respondents. We also agree that it was not necessary for the NLRC to require the production of the originals thereof
in the absence of any challenge to their genuineness and due execution from the petitioner.

The petitioner in this case was an ordinary driver in the private respondents' employ. He had no special abilities to make him indispensable to
his employer. He did not belong to a powerful labor union vigilant of the rights of its members. The employer thought his services were
disposable at will and so arbitrarily dismissed him. They miscalculated, for the petitioner was not really that vulnerable. The fact is that.
alone though he was, or so it appeared, he had behind him, even as a lowly worker, the benevolence of the law and the protection of this
Court.

WHEREFORE, the challenged decision of the NLRC is AFFIRMED, with the modification that in addition to the monetary awards therein
specified, the petitioner shall be entitled to separation pay and three years' back wages in lieu of reinstatement. No costs.

SO ORDERED.
G.R. No. L-23467 March 27, 1968

AMALGAMATED LABORERS' ASSOCIATION and/or FELISBERTO M. JAVIER for himself and as General President,
ATTY. JOSEUR. CARBONELL, ET AL., petitioners,
vs.
HON. COURT OF INDUSTRIAL RELATIONS AND ATTY. LEONARDO C. FERNANDEZ, respondents.

Jose Ur. Carbonell for and in his own behalf as petitioner.


Leonardo C. Fernandez for and in his own behalf as respondent.

SANCHEZ, J.:

Controversy over attorneys' fees for legal services rendered in CIR Case No. 70-ULP-Cebu.

The background facts are as follows:

On May 30, 1956, Florentino Arceo and 47 others together with their union, Amalgamated Laborers' Association, and/or Felisberto
Javier, general president of said union, lodged a complaint 1 in the Court of Industrial Relations (CIR), for unfair labor practices specified in
Sec. 4(a) 1, 2, 3 and 4 of the Industrial Peace Act. Made respondents were their former employer, Binalbagan Sugar Central Company, Inc.
(Biscom), Rafael Jalandoni, its president and general manager; Gonzalo Guillen, its chief engineer and general factory superintendent; and
Fraternal Labor Organization and/or Roberto Poli, its president.

Failing in their attempts to dismiss the complaint (motions to dismiss dated June 30, 1956 and July 6, 1956), 2respondents Biscom,
Jalandoni, and Guillen, on July 9, 1957, answered and counterclaimed. Respondents Fraternal Labor Union and Poli also filed their answer
dated July 12, 1957.

With the issues joined, the case on the merits was heard before a trial commissioner.

At the hearings, only ten of the forty-eight complainant laborers appeared and testified. Two of these ten were permanent (regular)
employees of respondent company; the remaining eight were seasonal workers. The regular employees were Arsenio Reyes and Fidel
Magtubo. Seasonal workers were Catalino Bangoy, Juan Fernandez, Jose Garlitos, Dionisio Pido, Santiago Talagtag, Dominador Tangente,
Felimon Villaluna and Brigido Casas.

On November 13, 1962, CIR, thru Associate Judge Arsenio I. Martinez, rendered judgment, which provides, inter alia, that the two
regular employees (Reyes and Magtubo) be reinstated "to their former positions, without loss of seniority and other benefits which should
have accrued to them had they not been illegally dismissed, with full back wages from the time of their said dismissals up to the time of their
actual reinstatements, minus what they have earned elsewhere in the meantime" and that the eight seasonal workers "be readmitted to their
positions as seasonal workers of respondent company (Biscom), with back wages as seasonal workers from the time they were not rehired at
the start of the 1955-1956 milling season on October 1, 1955 up to the time they are actually reinstated, less the amount earned elsewhere
during the period of their lay-off."

Respondents Biscom, Jalandoni and Guillen appealed direct to this Court. 3 On March 28, 1963, this Court dismissed the appeal,
without costs. Ground: Petitioners therein did not seek reconsideration of CIR's decision of November 13, 1962. The judgment became final.

Upon the ten complainants' motion to name an official computer to determine the actual money due them, CIR, on June 4, 1963,
directed the Chief Examiner of its Examining Division to go to the premises of Biscom and compute the back wages due the ten
complainants.

On August 9, 1963, the Chief Examiner reported that the total net back wages due the ten complainants were P79,755.22. Biscom and
the complainants moved for reconsideration: Biscom on August 17, 1963; complainants on September 24, 1963.

In the interim, Atty. Leonardo C. Fernandez (a respondent herein) filed on July 15, 1963 in the same case CIR Case No. 70-ULP-
Cebu a "Notice of Attorney's Lien." He alleged therein that he had been the attorney of record for the laborers in CIR Case No. 70-ULP-
Cebu "since the inception of the preliminary hearings of said case up to the Supreme Court on appeal, as chief counsel thereof"; that he "had
actually rendered legal services to the laborers who are subject of this present litigation [CIR Case No. 70-ULP-Cebu] since the year 1956,
more or less"; that the laborers "have voluntarily agreed to give [him], representing his attorney's fees on contingent basis such amounts
equivalent to 25% thereof which agreement is evidenced by a Note"; and that the 25% attorney's fee so contracted is "reasonable and proper
taking into consideration the length of services he rendered and the nature of the work actually performed by him."
On September 25, 1963, Atty. Fernandez filed an "Amended Notice of Attorney's Lien," which in part reads:

3. That the laborers, subject of this present litigation, sometime on February 3, 1956, had initially voluntarily agreed to give Undersigned
Counsel herein, representing his Attorney's fees on contingent basis, such amounts as equivalent to Thirty Per Cent (30%) of whatever
money claims that may be adjudicated by this Honorable Court, copy of said Agreement, in the local Visayan dialect and a translation of the
same in the English language are hereto attached as annexes "A" "A-1" hereof;

4. That subsequently thereafter, when the above-entitled Case was already decided in their favor, Arsenio Reyes, in behalf of his co-laborers
who are also Complainants in this Case begged from the Undersigned Counsel herein that he reduce his attorney's fees to Twenty-Five Per
Cent (25%) only for the reason that they have to share and satisfy also Atty. Jose Ur. Carbonell in the equivalent amount of Five Per Cent
(5%) although the latter's actual services rendered was so insignificant thereof;

5. That because of the pleadings of said Arsenio Reyes, who is the President of said Union, the Undersigned Counsel herein finally agreed
and consented that his attorney's fees be reduced to only Twenty-Five Per Cent (25%) instead of Thirty Per Cent (30%) as originally agreed
upon in 1956.

On October 7, 1963, Atty. Jose Ur. Carbonell (a petitioner herein) filed in court a document labelled "Discharge" informing CIR of the
discharge, release and dismissal thru a union board resolution (attached thereto as Annex A thereof) of Atty. Leonardo C. Fernandez as
one of the lawyers of the complainants in CIR Case No. 70-ULP-Cebu, effective February 28, 1963.

On October 14, 1963, Atty. Fernandez replied. He averred that the grounds for his discharge specified in the board resolution were
"malicious and motivated by greed and ungratefulness" and that the unjustifiable discharge did not affect the already stipulated contract for
attorneys' fees.

On March 19, 1964, CIR Judge Arsenio I. Martinez resolved Biscom's and complainants' motions for resonsideration objecting to the
Chief Examiner's Report and also respondent Fernandez' Amended Notice of Attorney's Lien. Judge Martinez' order reads in part:

(b) Respondent company is further directed to deposit the amount representing 25% of P79,755.22 with the Cashier of this Court, as
attorney's fees;

xxx xxx xxx

(d) The amount representing attorney's fees to be deposited by the respondent company is hereby awarded and granted to Atty.
Leonardo C. Fernandez, and he may collect the same from the Cashier of the Court upon the finality of this order, subject to existing auditing
procedures; ....

Biscom complied with the order of deposit. 4

On April 10, 1964, Atty. Carbonell moved to reconsider the March 19, 1964 order with respect to the award of attorneys' fees. Amongst
his grounds are that CIR has no jurisdiction to determine the matter in question, and that the award of 25% as attorneys' fees to Atty.
Fernandez is excessive, unfair and illegal. This motion was denied on April 28, 1964 by CIR en banc.

On June 9, 1964, a motion for reconsideration of the April 28, 1964 resolution was filed by Atty. Carbonell. This was amplified by a
similar motion filed on June 11, 1964.

On June 25, 1964, two things happened: First. CIR en banc denied the motion of June 11, 1964. Second. On Atty. Fernandez' motion,
Judge Martinez authorized the Cashier of the court to disburse to Fernandez the amount of P19,938.81 representing attorneys' fees and
deducting therefrom all legal fees incident to such deposit.

Petitioners herein, Atty. Carbonell, Amalgamated Laborers' Association, and the ten employees, appealed from the June 25, 1964
resolution of CIR, direct to this Court.

1. Petitioners press upon this Court the view that CIR is bereft of authority to adjudicate contractual disputes over attorneys' fees. Their
reasons: (1) a dispute arising from contracts for attorneys' fees is not a labor dispute and is not one among the cases ruled to be within CIR's
authority; and (2) to consider such a dispute to be a mere incident to a case over which CIR may validly assume jurisdiction is to disregard
the special and limited nature of said court's jurisdiction.

These arguments are devoid of merit.

The present controversy over attorneys' fees is but an epilogue or a tail-end feature of the main case, CIR No. 70-ULP-Cebu, which
undoubtedly is within CIR's jurisdiction. And, it has been held that "once the Court of Industrial Relations has acquired jurisdiction over a
case under the law of its creation, it retains that jurisdiction until the case is completely decided, including all the incidents related
thereto." 5 Expressive of the rule on this point is this

4. It is well settled that:

A grant of jurisdiction implies the necessary and usual incidental powers essential to effectuate it, and every regularly constituted court
has power to do all things reasonably necessary for the administration of justice within the scope of its jurisdiction, and for the enforcement
of its judgments and mandates, even though the court may thus be called upon to decide matters which would not be within its cognizance as
original causes of action.

While a court may be expressly granted the incidental powers necessary to effectuate its jurisdiction, a grant of jurisdiction, in the
absence of prohibitive legislation, implies the necessary and usual incidental powers essential to effectuate it (In re Stinger's Estate, 201 P.
693), and, subject to existing laws and constitutional provisions, every regularly constituted court has power to do all things that are
reasonably necessary for the administration of justice within the scope of its jurisdiction, and for the enforcement of its judgments and
mandates. So demands, matters, or questions ancillary or incidental to, or growing out of, the main action, and coming within the above
principles, may be taken cognizance of by the court and determined, since such jurisdiction is in aid of its authority over the principal matter,
even though the Court may thus be, called on to consider and decide matters, which as original causes of action, would not be within its
cognizance (Bartholomew vs. Shipe, 251 S.W. 1031), (21 C.J.S. pp. 136-138.)

Thus, in Gomez vs. North Camarines Lumber Co., L-11945, August 18, 1958, and Serrano vs. Serrano, L-19562, May 23, 1964, we
held that the court having jurisdiction over the main cause of action, may grant the relief incidental thereto, even if they would otherwise, be
outside its competence. 6

To direct that the present dispute be lodged in another court as petitioners advocate would only result in multiplicity of suits, 7 a
situation abhorred by the rules. Thus it is, that usually the application to fix the attorneys' fees is made before the court which renders the
judgment. 8 And, it has been observed that "[a]n approved procedure, where a charging lien has attached to a judgment or where money has
been paid into court, is for the attorney to file an intervening petition and have the amount and extent of his lien judicially
determined." 9 Appropriately to be recalled at this point, is the recent ruling in Martinez vs. Union de Maquinistas, 1967A Phild. 142, 144,
January 30, 1967, where, speaking thru Mr. Justice Arsenio P. Dizon, explicit pronouncement was made by this Court that: "We are of the
opinion that since the Court of Industrial Relations obviously had jurisdiction over the main cases, ... it likewise had full jurisdiction to
consider and decide all matters collateral thereto, such as claims for attorney's fees made by the members of the bar who appeared therein." 10

2. The parties herein join hands in one point - the ten (10) successful complainants in C.I.R Case No. 70-ULP-Cebu should pay as
attorneys' fees 30% of the amount adjudicated by the court in the latter's favor (P79,755.22).

They are at odds, however, on how to split the fees.

Respondent Atty. Fernandez claims twenty-five per cent (25%) of the 30% attorneys' fees. He explains that upon the plea of Arsenio
Reyes, union president and one of the 10 successful complainants, he had to reduce his fees to 25% since "they have to share and satisfy also
Atty. Jose Ur. Carbonell in the equivalent amount of Five Per Cent (5%)." Atty. Fernandez exhibited a contract purportedly dated February 3,
1956 before the 48 employees have even filed their complaint in CIR. The stipulated fee is 30% of whatever amount the ten might
recover. Strange enough, this contract was signed only by 8 of the 10 winning claimants. What happened to the others? Why did not the
union intervene in the signing of this contract? Petitioners dispute said contract. They say that Atty. Fernandez required the ten to sign the
contract only after the receipt of the decision.

Petitioners, on the other hand, contend that the verbal agreement entered into by the union and its officers thru its President Javier and
said two lawyers, Atty. Carbonell and Atty. Fernandez, is that the 30% attorneys' fees, shall be divided equally ("share and share alike")
amongst Atty. Carbonell, Atty. Fernandez and Felisberto Javier, the union president.

After hearing, CIR Associate Judge Arsenio I. Martinez awarded 25% attorneys' fees to respondent Atty. Fernandez. CIR noted that
"the active conduct and prosecution of the above-entitled case was done by Atty. Fernandez up to the appeal in the Supreme Court," and that
petitioner Atty. Carbonell manifested that "Atty. Leonardo C. Fernandez was the counsel mainly responsible for the conduct of the case." It
noted, too, that petitioner Atty. Carbonell did not file any notice of Attorney's Lien.

3. We strike down the alleged oral agreement that the union president should share in the attorneys' fees. Canon 34 of Legal Ethics
condemns this arrangement in terms clear and explicit. It says: "No division of fees for legal services is proper, except with another lawyer,
based upon a division of service or responsibility." The union president is not the attorney for the laborers. He may seek compensation only
as such president. An agreement whereby a union president is allowed to share in attorneys' fees is immoral. Such a contract we emphatically
reject. It cannot be justified.
4. A contingent fee contract specifying the percentage of recovery an attorney is to receive in a suit "should be reasonable under all the
circumstances of the case, including the risk and uncertainty of the compensation, but should always be subject to the supervision of a court,
as to its reasonableness." 11

Lately, we said: 12

The principle that courts should reduce stipulated attorney's fees whenever it is found under the circumstances of the case that the same
is unreasonable, is now deeply rooted in this jurisdiction....

xxx xxx xxx

Since then this Court has invariably fixed counsel fees on a quantum meruit basis whenever the fees stipulated appear excessive,
unconscionable, or unreasonable, because a lawyer is primarily a court officer charged with the duty of assisting the court in administering
impartial justice between the parties, and hence, the fees should be subject to judicial control. Nor should it be ignored that sound public
policy demands that courts disregard stipulations for counsel fees, whenever they appear to be a source of speculative profit at the expense of
the debtor or mortgagor. See, Gorospe, et al. v. Gochangco, L-12735, October 30, 1959. And it is not material that the present action is
between the debtor and the creditor, and not between attorney and client. As courts have power to fix the fee as between attorney and client,
it must necessarily have the right to say whether a stipulation like this, inserted in a mortgage contract, is valid. Bachrach v. Golingco, 39
Phil. 138.

In the instant case, the stipulated 30% attorneys' fee is excessive and unconscionable. With the exception of Arsenio Reyes who
receives a monthly salary of P175, the other successful complainants were mere wage earners paid a daily rate of P4.20 to
P5.00. 13 Considering the long period of time that they were illegally and arbitrarily deprived of their just pay, these laborers looked up to the
favorable money judgment as a serum to their pitiful economic malaise. A thirty per cent (30%) slice therefrom immensely dilutes the
palliative ingredient of this judicial antidote.

The ten complainants involved herein are mere laborers. It is not far-fetched to assume that they have not reached an educational
attainment comparable to that of petitioner Carbonell or respondent Fernandez who, on the other hand, are lawyers. Because of the inequality
of the situation between laborers and lawyers, courts should go slow in awarding huge sums by way of attorneys' fees based solely on
contracts. 14 For, as in the present case, the real objective of the CIR judgment in CIR Case No. 70-ULP-Cebu is to benefit the complaint
laborers who were unjustifiedly dismissed from the service. While it is true that laborers should not be allowed to develop that atavistic
proclivity to bite the hands that fed them, still lawyers should not be permitted to get a lion's share of the benefits due by reason of a worker's
labor. What is to be paid to the laborers is not windfall but a product of the sweat of their brow. Contracts for legal services between laborer
and attorney should then be zealously scrutinized to the end that a fair share of the benefits be not denied the former.

5. An examination of the record of the case will readily show that an award of twenty-five per cent (25%) attorneys' fees reasonably
compensates the whole of the legal services rendered in CIR Case No. 70-ULP-Cebu. This fee must be shared by petitioner Atty. Carbonell
and respondent Atty. Fernandez. For, after all, they are the counsel of record of the complainants. Respondent Atty. Fernandez cannot deny
this fact. The pleadings filed even at the early stages of the proceedings reveal the existence of an association between said attorneys. The
pleadings were filed under the name of "Fernandez & Carbonell." This imports a common effort of the two. It cannot be denied though that
most of those pleadings up to judgment were signed for Fernandez & Carbonell by respondent Fernandez.

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

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

On September 16, 1963, an "Opposition to respondent Biscom's Motion for Reconsideration" was filed by petitioner Atty. Carbonell.
On September 24, 1963, he filed a "Motion for Clarification" of the November 13, 1962 judgment of CIR regarding the basic pay of Arsenio
Reyes and Fidel Magtubo. On September 24, 1963, he also filed a "Motion to Reconsider Report of Chief Examiner." These, and other
pleadings that were filed later were signed solely by petitioner Atty. Carbonell, not in the name of "Carbonell & Fernandez." While it was
correctly observed by CIR that a good portion of the court battle was fought by respondent Atty. Fernandez, yet CIR cannot close its eyes to
the legal services also rendered by Atty. Carbonell. For, important and numerous, too, were his services. And, they are not negligible. The
conclusion is inevitable that petitioner Atty. Carbonell must have a share in the twenty-five per cent (25%) attorneys' fees awarded herein. As
to how much, this is a function pertaining to CIR.

6. We note that CIR's cashier was authorized on June 25, 1964 to disburse to Atty. Leonardo C. Fernandez the sum of P19,938.81
which is 25% of the amount recovered. In the event payment actually was made, he should be required to return whatever is in excess of the
amount to which he is entitled in line with the opinion expressed herein. 15

IN VIEW OF THE FOREGOING, the award of twenty five per cent (25%) attorneys' fees solely to respondent Atty. Fernandez
contained in CIR's order of March 19, 1964 and affirmed by said court's en banc resolutions of April 28, 1964 and June 25, 1964, is hereby
set aside; and the case is hereby remanded to the Court of Industrial Relations with instructions to conduct a hearing on, and determine, the
respective shares of Attorney Leonardo C. Fernandez and Attorney Jose Ur. Carbonell in the amount of P19,938.81 herein awarded as
attorneys' fees or both. No costs. So ordered.

Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Castro, Angeles and Fernando, JJ., concur.
Concepcion, C.J., is on leave.

Footnotes
G.R. No. L-33493 August 18, 1988

KAPISANAN NG MANGGAGAWA SA MANILA RAILROAD CO., petitioner,


vs.
ATTY. GREGORIO FAJARDO & THE COURT OF INDUSTRIAL RELATIONS, respondents.

J.C. Espinas & Associates for petitioner.

Gregorio E. Fajardo for and in his own behalf and for respondent Rafael Hernandez.

GRIO-AQUINO, J.:

This is a petition for review of the order dated January 4, 1971 of the Court of Industrial Relations in Case No. 2585-ULP (CIR-Manila)
directing the Kapisanan ng Manggagawa (herein petitioner) to pay attomey's fees to Attorney Gregorio E. Fajardo, in the sum of P83,905.82
representing 25% of P335,623.26, the amount which the Kapisanan ng Manggagawa collected from its members from July 1960 up to
December 1962 and which the union was ordered to refund to them pursuant to the decision of the Supreme Court in G.R. No. L-19791 dated
August 14, 1968. Said award of attorney's fees was entered upon the records of this case as a lien on the judgment and/or execution pursuant
thereof.

The pertinent part of the aforesaid order reads as follows:

As to the claim of Attorney Gregorio E. Fajardo for his attorney's fee or lien of P83,905.65 representing twenty-five per centum (25%) of the
total refundable amount of P335,622.61, respondent Kapisanan Ng Mga Manggagawa sa Manila Railroad Company claims that said fee or
lien is based only upon the amount that may be due to the four hundred (400) complainants and not upon the amount that may be due to the
entire membership of respondent Kapisanan which is not represented by Atty. Gregorio E. Fajardo in the instant case. We find no merit in
this pretense.

It cannot be disputed and/or denied that all members of respondent Kapisanan who were collected and/or assessed in five pesos (P5.00)
monthly for gratuities of retired and deceased members from July, 1960 through 1962 without their consent and in violation of their
constitution and by-laws were benefited by the decision or award requiring said respondent Kapisanan to refund to its members the
additional fees it had been collecting from them since the increased dues were made effective until stoppage. Hence, Atty. Gregorio E.
Fajardo who represented the struggling members of respondent Kapisanan to secure the refund of said additional collection of five pesos
(P5.00) monthly should be paid the corresponding fee by all members who were favored and/or benefited by the decision or award secured
by said four hundred (400) complainants in the instant case (see Rufino Martinez, et al. vs. Union de Maquinistas, Fogoneros y Motormen, et
al., G.R. Nos. L-19455-56, January 30, 1967). And considering the efforts exerted by Attorney Gregorio E. Fajardo in the success of this
litigation in securing the abovementioned decision or award not only in this Court but also in the Supreme Court, an attorney's fee or lien of
twenty-five per centum (25%) of the total refundable amount to the members of respondent Kapisanan is, to our mind, fair and reasonable.

The record of the instant case discloses that the total special collection of five pesos (P5.00) monthly per Kapisanan member for 1960, 1961
and 1962 amounted to P335,623.26 [see respondents' Motion for New Trial and Opposition to Amend Portion of Resolution En Banc dated
June 30, 1962, Folios 236-238; Statement of Receipts and Expenditures of the Kapisanan from January I to December 31, 1962 (Exhibits "C"
in 2 pages, "C-l" and "l-A Case No. 2585- ULP")], which amount, pursuant to the decision or award of the Supreme Court in Kapisanan Ng
Mga Manggagawa sa Manila Railroad Companv vs. Rafael S. Hernandez, et al., G.R. No. L- 19791, August 14, 1968, should be refunded to
the said Kapisanan members. As a fair and reasonable attorney's fee or lien, Attorney Gregorio E. Fajardo is, therefore, entitled to P83,905.82
which represents twenty-five per centum (25%) of P335,623.26." (Annex C, pp. 32-34, Rollo.)

Respondent Kapisanan Ng Manggagawa filed a Motion for Partial Reconsideration of the order dated January 4, 1971 on the ground that
Attorney Fajardo is entitled to claim attorney's fees from the 400 complainants only who signed the complaint but not from the other union
members who did not sign the complaint, because there was no lawyer-client relationship between them and Attorney Fajardo.

Attorney Fajardo opposed the motion for reconsideration. He argued that all members of the respondent union who will benefit from the
decision in G.R. No. 19791, regardless of whether they signed the complaint or not, should pay his attorney's fees. No distinction should be
made between those who signed the petition and those who did not because under Section 17 of Republic Act 875, a complaint against the
union by its members has to be signed by only 10% of the membership.
There is no gainsaying Attorney Fajardo's right to be paid reasonable fees by all the members of the union who benefitted from his services.
The rule was enunciated in Union de Empleados de Trenes vs. Kapisanan Ng Mga Manggagawa sa MRRCO L-14762, Dec. 20, 1961 that
lawyers who represent members of the Union to secure benefits for all the employees, should be paid corresponding fees by all those favored
or benefitted by the award secured by them.

However, We hold that the 25% fee fixed by the Court of Industrial Relations was excessive. Section 11, Rule VIII, Book III of the Omnibus
Rules Implementing the Labor Code fixes the attorney's fees in judicial and administrative proceedings at 10% of the amount awarded
(Galvadores vs. Trajano, 144 SCRA 138; Halili vs. CIR, 136 SCRA 112; Pacific Banking Corporation vs. Clave, 128 SCRA 110). This is the
same percentage allowed by law to lawyers prosecuting workmen's compensation cases that reach the appellate court. Moreover, considering
the low economic status of their clientele, the slice that labor lawyers should take from the avails of their clients' suit should not be too large
as to leave the latter with only a pittance for themselves.

WHEREFORE, the order dated January 4, 1971, under review, is modified by ordering the petitioner Kapisanan Ng Manggagawa to pay out
of the sum of P335,623.26, refundable by the union to its members under the decision of this Court in "Kapisanan Ng Manggagawa sa
Manila Railroad Company vs. Rafael S. Hernandez, et al.," G.R. No. L-19791, August 14, 1968, Attorney Fajardo's fees in the sum of
P33,562.32 which is equivalent to 10% of the award. This decision is immediately executory, hence, no motion for extension of time to file a
motion for reconsideration will be granted.

SO ORDERED.
G.R. No. 77042-43 February 28, 1990

RADIOWEALTH FINANCE CO., INC., et al., petitioners


vs.
INTERNATIONAL CORPORATE BANK AND COURT OF APPEALS, respondents.

Manuel R. Singson for petitioners.

Quisumbing, Torres & Evangelista for private respondent.

BIDIN, J.:

This is a petition for review on certiorari of the joint decision * promulgated on December 22, 1986, by the respondent Court of Appeals in
CA-G.R. No. 01063 entitled "International Corporate Bank, plaintiff-appellee vs. Radiowealth, Inc. and Domingo M. Guevara, defendants-
appellants" and in CA-G.R. No. 01064 entitled "International Corporate Bank, plaintiff-appellee vs. Radiowealth Finance Company, Inc.,
Radiowealth, Inc. and D.M.G., Inc., defendants-appellants," the dispositive portion of which reads:

WHEREFORE, finding no error in the Order appealed from, the same is hereby affirmed in toto, with costs against the appellants. (Rollo, p.
101).

The basic facts appear undisputed and they are as follows:

Sometime in 1978, petitioners Radiowealth, Inc. (RWI) and Radiowealth Finance Company, Inc. (RFC) applied for and obtained credit
facilities from private respondent International Corporate Bank (Interbank). Petitioners Domingo Guevara (Guevara, for short) and D.M.G.,
Inc., acted as sureties to the obligations contracted by RWI and RFC. The obligations of petitioners were accordingly covered and evidenced
by promissory notes, trust receipts and agreements.

A common stipulation in the covering promissory notes, trust receipts, and continuing surety agreements between the borrowing petitioners
and the lending private respondent provided, to wit:

In the event of the bringing of any action or suit by you or any default of the undersigned hereunder I/We shall on demand pay you
reasonable attorney's fees and other fees and costs of collection, which shall in no cases be less than ten percentum (10 %) of the value of the
property and the amount involved by the action or suit. (Rollo, p. 211).

From 1978 to 1980, petitioners were not able to comply with their obligations on time with Interbank due to subsequent severe economic and
financial reverses. Petitioners thus asked Interbank for a restructuring of their outstanding loans, but the parties were not able to arrive at a
mutually acceptable proposition.

On December 28, 1979, Interbank, constrained to seek judicial remedy, through its counsel Norberto J. Quisumbing and Associates, lodged
before the then Court of First Instance of Manila its first complaint, docketed thereat as Civil Case No. 128744, for collection of sum of
money with an application for a writ of preliminary attachment against RWI and Guevara covering the principal sum of P1,585,933.61 plus
penalties, service charges, interests, attorney's fees, costs and exemplary damages (Rollo, pp. 31-38).

This was followed by another complaint filed on January 9, 1980 before the same trial court against RFC, RWI and D.M.G., Inc., also with
an application for a writ of preliminary attachment, docketed as Civil Case No. 128897, for the collection of the principal sum of
P2,113,444.58, plus interests, penalties, service charges, attorney's fees, costs and exemplary damages (Rollo, pp. 39-47).

Petitioners, however, opted to amicably settle their obligations promptly. They, therefore, did not file any answer nor any responsive pleading
to the complaints, and instead entered into a compromise agreement with Interbank shortly about four (4) months later. Said compromise
agreement between the parties was embodied in two Motions for Judgment Based on Compromise dated March 21, 1980 (Rollo, pp. 48-55)
corresponding to the separate claims in the said two complaints which were accordingly submitted to the court a quo for approval. These
motions did not however, cover the payment by the petitioners of Interbank's claims for attorney's fees, costs of collection and expenses of
litigation which were left open by the parties for further negotiations.
In its decision in Civil Case No. 128744, dated March 28, 1980, the trial court approved the parties' corresponding compromise agreement
thereto, with the reservation that "(T)his decision does not terminate this case because matters respecting payment of attorney's fees, costs
and collection."

Similarly, the trial court, in its decision in Civil Case No. 128897 of even date, also approved the parties' corresponding compromise
agreement thereto with the Identical reservation as aforequoted (Rollo, pp. 60-61).

Thereafter, further proceedings were conducted by the trial court particularly on the issue of the alleged unreasonableness and
unconscionableness of the attorney's fees. It appears from the records of the cases, however, that Atty. Norberto J. Quisumbing, counsel for
Interbank, was able to adduce his evidence in support for the attorney's fees due to his said client, while Attys. Reyes and Guevara, counsel
for petitioners in the trial court, were not given their request for further hearing against the claimed attorney's fees despite some supervening
events as alleged in their motion for reconsideration dated January 29, 1981 (Rollo, pp. 82-84) which was denied in the Order of January 30,
1981 (Rollo, p. 85).

At any rate, the trial court, in its Order dated January 2, 1981, had already reduced Interbank's claim for attorney's fees, from the stipulated
10 % to 8 %, pertinent portions thereof are hereunder quoted, thus:

(T)he 'ten per cent' in the foregoing quoted provisions includes attorney's fees, other fees and cost of collection. In paragraph No. 2 of the
compromise agreement in Civil Case No. 128744 under which the defendants therein acknowledge their indebtedness of Pl,585,933.61 as of
December 28, 1979, it is provided that in paying the same there shall be added to it 16 % per annum as interest, 2 % per annum as service
charge, 2 % per month or any fraction thereof as penalty from January 31, 1980. A similar provision is contained in paragraph No. 2 of the
compromise agreement filed in Civil Case No.. 128897 under which the defendants therein admitted their indebtedness of P2,113,444.58,
payment of which was to commence on or before January 31, 1980. The service charge of 2 % should be deducted from the 10 % already
mentioned above, to give the rate of attorney's fees which is 8% in accordance with the provisions already aforequoted. Eight percent (8 %)
of l,585,833.61, or P126,824.68 is the attorney's fees in Civil Case No. 128897 sums which ... are not excessive and perhaps acceptable to
plaintiff which was willing to have its claim reduced to P73,987.57 had defendants acceded to its offer to compromise attorney's fees and
expenses of litigation.

PREMISES CONSIDERED, the Court hereby orders the defendants in Civil Case No. 128744 to pay the plaintiff jointly and severally
P126,824.68 and the defendants in Civil Case No. 128897 to pay the plaintiff, also jointly and severally, P169,075.56 with interest at 12 %
per annum from this date until the same is paid.

SO ORDERED. (Rollo, pp. 80-81).

Not satisfied with said trial court's order, petitioners appealed the same before the respondent appellate court raising therewith the following
assigned errors:

A. The lower court erred in not giving the defendants the opportunity to be heard in a hearing set for the purpose of determining the amount
of attorney's fees;

B. The lower court erred in insisting that the amount of attorney's fees should be governed by the contract signed by the parties;

C. The lower court erred in not substantially reducing the amount of attorney's fees. (Rollo, pp. 242-243).

The respondent appellate court, however, affirmed in toto the assailed order of the trial court.

Hence, the instant petition.

Petitioners raise the following issues before this Court:

I. Whether or not the reasonableness of attorney's fees in the case at bar is a question of law;

II. Whether or not the award of attorney's fees in the case at bar is reasonable;

III. Whether or not a contracted stipulation regarding attorney's fees may be disregarded by this Honorable Court;

IV. whether or not attorney's fees require proof (Rollo, p. 243).

Deducible from the contentions of the parties, is the sole issue of whether or not the amount equivalent to 8 % of the recovery or sums of
money due from the two civil complaints adjudged as attorney's fees by the trial court and affirmed by the respondent appellate court, is fair
and reasonable under the peculiar facts and circumstances herein. Corollarily, whether or not the court has discretion to modify the attorney's
fees previously agreed upon by the parties under a valid contractual stipulation.

Petitioners assert that the sums of P126,824.68 in Civil Case No. 128744 and P169,075.56 in Civil Case No. 128897 or 8 % of the amount
involved in the respective suits, adjudged as attorney's fees due to Norberto J. Quisumbing and Associates, counsel of record of the judgment
creditor the herein private respondent Interbank, per the order of the trial court, is unreasonable, exhorbitant and unconscionable under the
premises considering the following undisputed facts: that said cases were immediately settled with the execution of a compromise agreement
after the complaints with prayer for preliminary attachment had been filed by the private respondent against the petitioners in the lower court,
and no answer was filed by petitioners; that pursuant to the Compromise Agreement between the parties, petitioner Radiowealth, Inc. has
fully paid to Interbank in Civil Case No. 128744 the total amount of P2,867,802.64, while petitioner Radiowealth Finance Co., Inc. (RFC)
has fully paid to Interbank in Civil Case No. 128897 the total amount of P3,018,192.52; that of the amounts paid to Interbank, petitioner
Radiowealth, Inc., has fully paid the total sum of P118,075.84 as service charge and penalties, while petitioner Radiowealth Finance Co.,
Inc., had paid the total amount of P135,526.40 as penalties and service charges, all in addition to the interests paid by petitioners to
Interbank.

Interbank, on the other hand, avers that petitioners have omitted to state certain facts and circumstances, as follows: that the collection suits
filed against petitioners involve charges of violation of the trust receipts law for disposing of the goods they had received from Interbank on
trust receipts and failing to surrender the proceeds thereof; that Atty. Quisumbing had successfully obtained attachment against their
properties; that Atty. Quisumbing succeeded in forcing petitioners to agree in the joint motions for judgment based on compromise to such
stipulation which made them fear a default in the payment of the amortizations or installments of the compromise amount; that the principal
amount collected from petitioners totalled P3,699,378.19, not counting the interests; that petitioners' obligations to Interbank were not
evidenced by one but many letters of credit and trust receipts; that the records were destroyed by fire and had to be reconstituted; that
Interbank had already given petitioners very substantial discounts on penalty charges; and, despite clear contractual stipulations, the lower
court had already reduced the 10 % stipulated attorney's fees and expenses of litigation to 8 %.

As a basic premise, the contention of petitioners that this Court may alter, modify or change even an admittedly valid stipulation between the
parties regarding attorney's fees is conceded. The high standards of the legal profession as prescribed by law and the Canons of Professional
Ethics regulate if not limit the lawyer's freedom in fixing his professional fees. The moment he takes his oath, ready to undertake his duties
first, as a practitioner in the exercise of his profession, and second, as an officer of the court in the administration of justice, the lawyer
submits himself to the authority of the court. It becomes axiomatic therefore, that power to determine the reasonableness or the
unconscionable character of attorney's fees stipulated by the parties is a matter falling within the regulatory prerogative of the courts (Panay
Electric Co., Inc. vs. Court of Appeals, 119 SCRA 456 [1982]; De Santos vs. City of Manila, 45 SCRA 409 [1972]; Rolando vs. Luz, 34
SCRA 337 [1970]; Cruz vs. Court of Industrial Relations, 8 SCRA 826 [1963]). And this Court has consistently ruled that even with the
presence of an agreement between the parties, the court may nevertheless reduce attorney's fees though fixed in the contract when the amount
thereof appears to be unconscionable or unreasonable (Borcena vs. Intermediate Appellate Court, 147 SCRA 111 [1987]; Mutual Paper Inc.
vs. Eastern Scott Paper Co., 110 SCRA 481 [1981]; Gorospe vs. Gochango, 106 Phil. 425 [1959]; Turner vs. Casabar, 65 Phil. 490 [1938];
F.M. Yap Tico & Co. vs. Alejano, 53 Phil. 986 [1929]). For the law recognizes the validity of stipulations included in documents such as
negotiable instruments and mortgages with respect to attorney's fees in the form of penalty provided that they are not unreasonable or
unconscionable (Philippine Engineering Co. vs. Green, 48 Phil. 466).

There is no mistake, however, that the reasonableness of attorney's fees, though seemingly a matter of fact which takes into account the
peculiar circumstances of the case, is a question of law where the facts are not disputed at all. For a question of law does not call for an
examination of the probative value of the evidence presented by the parties (Air France vs. Carrascoso, 18 SCRA 155 [1966]), and where the
issue is the construction or interpretation to be placed by the appellate court upon documentary evidence, or when a case is submitted upon
an agreed statement of facts or where all the facts are stated in the judgment, the question is one of law where the issue is the correctness of
the conclusion drawn therefrom (Cunanan vs. Lazatin, 74 Phil. 719 [1944]; Ng Young vs. Villa, 93 Phil. 21 [1953]). In the case at bar, the
issues do not call for an examination of the probative value of the evidence because the ultimate facts are admitted by the parties and all the
basic facts are stated in the judgment.

Nevertheless, a careful review of the records shows that the modified attorney's fees fixed by the trial court and affirmed by the respondent
appellate court, appears reasonable and fair under the admitted circumstances of the case. As aptly reasoned out by the said court:

We find nothing wrong in the aforegoing disquisition of the lower court.

It is to be remembered that attorney's fees provided in contracts as recoverable against the other party and damages are not, strictly speaking,
the attorney's fees recoverable as between attorneys and client spoken of and regulated by the Rules of Court. Rather, the attorney's fees here
are in the nature of liquidated damages and the stipulations therefor is aptly called a penal clause, So long as such stipulation does not
contravene law, morals, or public order, it is strictly binding upon the defendant (Polytrade Corporation vs. Blanco, 30 SCRA 187 [1969]).
However:

"Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable. For
this reason, we do not really have to strictly view the reasonableness of the attorney's fees in the light of such facts as the amount and
character of the service rendered, the nature and importance of the litigation, and the professional character and the social standing of the
attorney. We do concede, however that these factors may be an aid in the determination of the inequity or unconscionableness of attorney's
fees as liquidated damages. (Supra)

May the attorney's fees granted by the court be tagged as iniquitous or unconscionable? We give the answer in the negative. The high
standing of plaintiffs counsel has not been challenged.

In the motion for judgment based on compromise agreement, defendants acknowledged and admitted their default or failure to pay their joint
and several obligations or indebtedness arising from the credit facilities which plaintiff extended to defendants and availed of by the latter,
the punctual payment of which having been guaranteed and warranted by the other defendants. Having admitted such default in the payment
of their obligations, the filing of the action in court and, consequently, the legal services of counsel became imperative and thereby, set into
operation the contract clause on the payment of attorney's fees.

The complaints are not simple actions for collection. They are accompanied with a prayer for the issuance of a writ of preliminary
attachment, and charge defendants with violation of the trust receipts law and they involve several letters of credit and trust receipts. The fact
that the compromise agreements were entered into after the complaints were filed against appellants indubitably proves that the legal action
taken by counsel for the plaintiff against the defendants contributed in no measure to the early settlement of defendants' obligation.

Considering further that, apart from the reduction and waiver of penalty charges due to the plaintiff to the extent of P79, 191.72, the service
charge of 2 % was further deducted by the lower court thereby, reducing the attorney's fees to 8 % the court is of the considered opinion and
so holds that given the prestige of plaintiff's counsel, the nature of the action and quality of legal services rendered, the award of attorney's
fees in a sum equivalent to 8 % of the judgment which is below the stipulated fees of 10 % could hardly be suggested as iniquitous and
unconscionable. On the contrary, it easily falls within the rule of conscionable and reasonable. (Rollo, pp. 100-101).

The foregoing disquisition merits our assent.

Moreover, even if the so-called supervening event which ought to have been heard in the trial court as alleged in petitioners' motion for
reconsideration dated January 29, 1981, i.e., "that supervening events happened from the time the trust receipt agreements were signed in
which the defendants agreed to pay 10 % of the amount due as attorney's fees and costs of collection up to the actual filing of the complaint
and these events were the payments of interest in the amount of P285,341.27, as interest, P41,507.37 as service charges and P76,568.47 as
penalty by Radiowealth, Inc.; that Radiowealth Finance Co., Inc. has paid the amount of P281,940.12 as interest, P38,721.83 as service
charges and P96,804.57 as penalty (Rollo, pp. 137-138), were to be considered, they would still be insufficient to justify a further substantial
reduction in the adjudged attorney's fees. At any rate, it would be noted that petitioners have not even prayed for a specific reduction as to
amount or percentage of the attorney's fees except for their sweeping allegations of unreasonableness, exhorbitance and unconscionableness.

WHEREFORE, the assailed decision of the respondent appellate court is Affirmed, with costs de officio.

SO ORDERED.
G.R. No. 81471 April 26, 1989

CHONG GUAN TRADING, petitioner,


vs.
NATIONAL LABOR RELATIONS COMMISSION and JOSE M. CHUA, respondents.

Neva B. Blancaver and Apolinario N. Lomabao, Jr. for petitioner.

Faustino F. Tugade for private respondent.

The Solicitor General for public respondent.

CORTES, J.:

Assailed in this petition is the decision of the National Labor Relations Commission (NLRC) in NLRC Case No. 11-4406-83, entitled "Jose
M. Chua v. Chong Guan Trading," whereby the NLRC held that private respondent Jose M. Chua was illegally dismissed by petitioner
Chong Guan Trading. The Court after a careful examination of the pleadings filed in this case, i.e., the Petition and its Annexes, the
Comment of public respondent, the Reply and Supplemental Reply of petitioner, the Manifestation/Opposition of private respondent, and the
Rejoinder of public respondent, considered the Comment as answer, the issues joined, and the case submitted for decision.

Jose M. Chua was employed as sales manager of Chong Guan Trading, a dealer of paper and paper products owned by Mariano, Pepito and
Efren Lim. Private respondent started working with the petitioner way back in 1960 but it was only in 1972 that his name was registered by
petitioner with the Social Security System. [Decision of SSC in SSS Case No. 8728, p. 1; Rollo, p. 49.]

In November 1983, private respondent filed a complaint with the Office of the Labor Arbiter of the National Capital Region charging
petitioner with illegal dismissal and non-payment of overtime pay and other benefits provided for by law. In his complaint, private
respondent alleged that he was fired by Mariano Lim because of the incident that occurred on October 28,1983.

It appears from the record that on the morning of October 28, 1983, a customer, who borrowed the store's telephone directory, accidentally
dropped it on the top-glass of the store's showcase causing it to break. When Pepito Lim saw the already taped broken top-glass he asked for
an explanation from private respondent. In order to cover up for the customer, private respondent admitted that he himself accidentally broke
it. Pepito then got angry and hurled "unprintable words and invectives" at private respondent. [Decision of NLRC, p. 2; Rollo, p. 14.] What
transpired thereafter was disputed by both parties. Private respondent claimed that he was dismissed by Mariano Lim when the later ordered
him to leave petitioner's premises. Petitioner, on the other hand, denied having dismissed private respondent and claimed that it was private
respondent who went home after the incident and failed to report for work for many days thereafter. Petitioner alleged that, far from being
dismissed, it was private respondent himself who abandoned his job.

The parties filed their respective position papers and agreed to submit the case for resolution on the basis of the pleadings.

On April 18,1984, the Labor Arbiter rendered a decision finding that there was no illegal dismissal since private respondent was never
dismissed by petitioner. The Labor Arbiter held that the altercation that occurred between private respondent and the Lim brothers because of
the broken top-glass cannot be construed as the dismissal of the private respondent because it was only a minor incident. No pronouncement
on the issue of the alleged abandonment by private respondent was made but the Labor Arbiter ordered the reinstatement of private
respondent but without backwages. The dispositive portion of the decision reads:
WHEREFORE, respondents are hereby ordered to reinstate complainant to his former position without backwages, to pay him his
proportionate 13th-month pay for the year 1983 and the money equivalent of fifteen (15) days service incentive leave pay. All his other
claims including the claim for damages are hereby, DISMISSED.

SO ORDERED. [Decision of Labor Arbiter, p. 7; Rollo, p. 31 .]

Private respondent elevated the decision of the Labor Arbiter to the NLRC. In a resolution promulgated on June 30, 1987, the NLRC
dismissed the appeal for being filed out of time.

Upon motion of private respondent, the NLRC reconsidered its Resolution and gave due course to the appeal. On December 29,1987
respondent Commission decided in favor of private respondent and held that:

xxx xxx xxx

... we are by and large convinced that the appellant was indeed dismiss without the attendant formalities required by law. On account of
which he should therefore, be reinstated to his former position with three (3) years backwages without qualification or deduction.

Should reinstatement, however, be not feasible due to circumstances or developments not attributable to the appellees, the appellant should,
in addition to the three years backwages, be paid a separation pay equivalent to one half month pay for every year of service, a fraction of at
least six (6) months being considered as one whole year.

The rest of the award for other benefits stays.

WHEREFORE, modified as above-indicated, the decision appealed from is hereby, AFFIRMED.

SO ORDERED. [NLRC Decision, p. 18; Rollo, p. 18.]

From the NLRC decision, petitioner interposed the present petition.

The Court will first address the procedural issue raised by the petitioner.

Petitioner maintains that respondent NLRC has no jurisdiction to entertain the appeal flied by private respondent, much less modify the
decision appealed from, the same having become final and executory after the lapse of ten (10) days from respondent's receipt thereof.

Article 223 of the Labor Code [Pres. Decree 442, as amended] provides for a reglementary period of ten (10) days within which to appeal a
decision of the labor arbiter to the NLRC. The ten-day period has been interpreted by this Court in the case of Vir-jen and Marine Services,
Inc. v. National Labor Relations Commission [G.R. Nos. 58011-12, July 20, 1987, 115 SCRA 347] as ten (10) "calendar" days and not ten
(10) "working" days.

In the instant case, while the appeal was filed within ten (10) working days from receipt of the decision, it was filed beyond the (10) calendar
days prescribed by law. Private respondent received a copy of the decision of Labor Arbiter Martinez on May 3, 1984 while the appeal was
filed only on May 15, 1984 or twelve (12) days from notice of the decision. [Resolution of NLRC, p. 1; Rollo, p. 32.]

It is true that the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional, and
failure to perfect an appeal has the effect of rendering the judgment final and executory. [Narag v. National Labor Relations Commission,
G.R. No. 69628, October 28,1987, 155 SCRA 199.] However, as correctly pointed out by the Solicitor General, the NLRC may disregard the
procedural lapse where there is an acceptable reason to excuse tardiness in the taking of an appeal. [Comment of the Office of the Solicitor
General, p. 6; Rollo, p. 46; See also Firestone Tire and Rubber Company of the Philippines v. Lariosa, G.R. No. 70479, February 27, 1987,
148 SCRA 187; MAI Philippines, Inc. v. National Labor Relations Commission, G.R. No. 73662, June 18, 1987, 151 SCRA 196.]

In this case, the appeal was filed out of time because the counsel of private respondent relied on the footnote of the notice of the decision of
the Labor Arbiter which stated that "the aggrieved party may appeal ... within ten (10) working days, as per NLRC Resolution No. 1, series of
1977." [Decision of NLRC, p. 1; Rollo, p. 13; Emphasis supplied.] In the case of Firestone Tire and Rubber Co. of the Phil. v.
Lariosa, [supra], which has substantially the same set of facts as this case, the Court accepted the party's reliance on the erroneous notice in
the labor arbiter's decision as a reasonable ground for excusing non-compliance with the ten (10) calendar day period for appeal. Explaining
the reason for this ruling, the Court said:

xxx xxx xxx


Mindful of the fact that Lariosa's counsel must have been misled by the implementing rules of the labor commission and considering that the
shortened period for an appeal is principally intended more for the employee's benefit, rather than that of the employer, We are inclined to
overlook this particular procedural lapse and to proceed with the resolution of the instant case, [at p. 191.]

xxx xxx xxx

Thus, private respondent's late filing of the appeal notwithstanding, the Court finds that public respondent did not commit grave abuse of
discretion in giving due course to the appeal.

Having disposed of the procedural issue, the Court will now deal with the main issue in this case, which is whether or not NLRC committed
grave abuse of discretion in ordering petitioner to pay private respondent three years backwages and separation pay (if reinstatement is no
longer possible) for the alleged illegal dismissal of private respondent.

While petitioner concedes that private respondent must be reinstated since there was no intentional abandonment on the part of private
respondent, it challenges the order for the payment of backwages and separation pay. Petitioner contends that there was no illegal dismissal
to speak of since private respondent was never dismissed in the first place, and that justice dictates that private respondent must simply be
reinstated. [Reply, pp. 1-2; Rollo, pp. 51-52.]

Both the labor arbiter and the NLRC agree that the accidental breaking of the showcase's top-glass was so minor an incident as to provoke an
employer to dismiss a managerial employee who has worked with him for more than twenty (20) years. [Decision of NLRC, Rollo, p. 16.]
However, in holding that private respondent was illegally dismissed by petitioner, the NLRC held that:

We agree that the accidental breaking of the showcase's top-glass was a minor incident. Ordinarily it could not provoke an employer (who
knew what its repercussions could be) to dismiss an employee for that matter. But the appellees [petitioner Chong Guan trading and its
owners] who, we perceive, were indeed bent on ousting the appellant [private respondent Chua] magnified it to such a serious proportion,
as shown by the unprintable words and invectives that they hurled to the appellant, to ostensibly justify their heretofore desire to terminate
him.

In short, they seized the incident as the most opportune time to implement their obvious decision to lay-off the appellant. [Decision of NLRC,
p. 4; Rollo, p. 16; Emphasis supplied.]

The import of the above findings of the NLRC is that the breaking of the top-glass was used by petitioner as an excuse to terminate
respondent Chua in accordance with its scheme or plan to oust him.

The Court cannot sustain the findings of respondent NLRC.

As found by the labor arbiter, no evidence was presented to establish the existence of the so-called scheme to oust private respondent
[Decision of Labor Arbiter, p. 5; Rollo, p. 29.] It was based only on private respondent's unsupported claim that there was an "orchestrated
scheme or plan" to oust him and that this plan had been carefully laid out for a long time. Private respondent's claim is not borne out by the
record which shows that petitioner has been granting substantial cash advances to private respondent. In fact barely a month before his
alleged illegal dismissal, petitioner allowed private respondent to make a cash advance of P4,718.00. [Decision of Labor Arbiter, p. 5; Rollo,
p. 29.] If indeed there was a scheme to oust private respondent, petitioner should have denied him further cash advances knowing that his
services will soon be terminated and as a result thereof, there may be no way to recover the cash advances.

Furthermore, the NLRC admitted in its decision that its finding that the petitioner was "indeed bent on ousting" private respondent was based
only on its "perception" and not on any evidence on record. [Decision of NLRC, p. 4; Rollo, p. 16.] This Court, however, cannot rely on
NLRC's perception or speculations in the absence of any credible evidence to support it. [San Miguel Corporation v. National Labor
Relations Commission, G.R. No. 50321, March 13, 1984, 128 SCRA 180.] For while it is well-established that the findings of facts of the
NLRC are entitled to great respect and are generally binding on this Court [Antipolo Highway Lines, Inc. v. Inciong, G.R. No. L-38532, June
27, 1975, 64 SCRA 441; Philippine Labor Alliance Council (PLAC) v. Bureau of Labor Relations, G.R. No. L-41288, January 31, 1977, 75
SCRA 162; Genconsu Free Workers Union v. Inciong, G.R. No. L-48687, July 2, 1979, 91 SCRA 311; Pan-Philippine Life Insurance
Corporation v. NLRC, G.R. No. 53721, June 29, 1982, 114 SCRA 866; Pepsi-Cola Labor Union-BLFUTUPAS Local Chapter No. 896 v.
National Labor Relations Commission, G.R. No. 58341, June 29, 1982, 114 SCRA 930; Mamerto v. Inciong, G.R. No. 53068, November 15,
1982, 118 SCRA 265; San Miguel Corporation v. National Labor Relations Commission, G.R. No. 50321, March 13, 1984, 128 SCRA 180]
it is equally well-settled that the Court will not uphold erroneous conclusions of the NLRC when the Court finds that the latter committed
grave abuse of discretion in reversing the decision of the labor arbiter or when the findings of facts from which the conclusions were based
were not supported by substantial evidence [Insular Life Assurance Co., Ltd. Employees Association-NATU v. Insular Life Assurance Co.,
Ltd., G.R. No. L- 25291, March 10, 1977, 76 SCRA 50; Kapisanan ng Manggagawa sa Camara Shoes v. Camara Shoes, G.R. No. 50985,
January 30, 1982, 111 SCRA 477.]
The question that must now be addressed by the Court is whether, absent the alleged scheme or plan to oust private respondent, it can be
inferred from the events that transpired on the morning of October 28, 1983 that private respondent was illegally dismissed by petitioner.

Private respondent claims that Mariano Lim dismissed him when the latter said: "Lumayas ka rito." This is disputed by the petitioner who
claims that it was private respondent who voluntarily left petitioner's premises.

After a careful examination of the events that gave rise to the present controversy as shown by the record, the Court is convinced that private
respondent was never dismissed by the petitioner. Even if it were true that Mariano Lim ordered private respondent to go and that at that time
he intended to dismiss private respondent, the record is bereft of evidence to show that he carried out this intention. Private respondent was
not even notified that he had been dismissed. Nor was he prevented from returning to his work after the October 28 incident. The only thing
that is established from the record, and which is not disputed by the parties, is that private respondent Chua did not return to his work after
his heated argument with the Lim brothers.

Moreover, petitioner has consistently manifested its willingness to reinstate private respondent to his former position. This negates any
intention on petitioner's part to dismiss private respondent. Petitioner first expressed its willingness to reinstate private respondent during the
initial hearing of the case before the Labor Arbiter. [Decision of Labor Arbiter, p. 6; Rollo, p. 30.] In its position paper the petitioner also
stated that:

xxxxxxxxx

IN PASSING, we gladly reiterate ... that the management is still waiting and more than willing to accept him [private respondent] and return
to his former position, notwithstanding his long unauthorized absences and the intentional abandonment from his job.

xxxxxxxxx

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

This was again reiterated by the petitioner in its Reply to the Comment of public respondent filed in connection with the instant petition.
[Reply, pp. 1- 2; Rollo, pp. 51-52.]

Therefore, considering the Court's finding that private respondent was never dismissed by the petitioner, the award of three years backwages
was not proper. Backwages, in general, are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal
dismissal from work. [New Manila Candy Workers Union (NACONWA-PAFLU) v. Court of Industrial Relations, G.R. No. L-29728,
October 30, 1978, 86 SCRA 37; Durabuilt Recapping Plant and Co. v. National Labor Relations Commission, G.R. No. 76746, July 27,
1987, 152 SCRA 328.] Where the employee was not dismissed and his failure to work was not due to the employer's fault, the burden of
economic loss suffered by the employee should not be shifted to the employer. [SSS v. SSS Supervisors' Union-CUGCO, G.R. No. L-31832,
October 23, 1982, 117 SCRA 746; Durabuilt Recapping Plant and Co. v. National Labor Relations Commission, supra.] In this case, private
respondent's failure to work was due to the misunderstanding between the petitioner's management and private respondent. As correctly
observed by the Labor Arbiter, private respondent must have construed the October 28 incident as his dismissal so that he opted not to work
for many days thereafter and instead filed a complaint for illegal dismissal.[Decision of Labor Arbiter, p. 6; Rollo, p. 30.] On the other hand,
petitioner interpreted private respondent's failure to report for work as an intentional abandonment. [Annex "B "to the Petition, p. 5; Rollo, p.
24.] However, there was no intent to dismiss private respondent since the petitioner is willing to reinstate him. Nor was there an intent to
abandon on the part of private respondent since he immediately filed a complaint for illegal dismissal soon after the October 28 incident. It
would be illogical for private respondent to abandon his work and then immediately file an action seeking his reinstatement. [Judric Canning
Corporation v. Inciong, G.R. No. 51494, August 19, 1982, 115 SCRA 887; Flexo Manufacturing Corporation v. National Labor Relations
Commission, G.R. No. 55971, February 28, 1985, 135 SCRA 145; Remerco Garments Manufacturing v. Ministry of Labor and Employment,
G.R. Nos. 56176-77, February 28, 1985, 135 SCRA 167.] Under these circumstances, it is but fair that each party must bear his own loss,
thus placing the parties on equal footing. [Pan American World Airways, Inc. v. Court of Industrial Relations, et al., G.R. No. L-20434, July
30, 1966, 17 SCRA 813; SSS v. SSS Supervisors' Union-CUGCO, supra.]

As to the separation pay, considering that petitioner has expressed its willingness to reinstate private respondent to his former position, the
order for the payment of separation pay is no longer necessary.

WHEREFORE, premises considered, the decision of respondent NLRC is REVERSED and SET ASIDE. The decision of the Labor Arbiter is
REINSTATED.

SO ORDERED.
G.R. No. 72096 January 29, 1988

JOHN CLEMENT CONSULTANTS, INC. and EDI STAFFBUILDERS INTERNATIONAL, INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, and NESTOR A. FLORES, respondents.

NARVASA, J.:

As is well known, no law provides for an appeal from decisions of the National Labor Relations Commission; hence, there can be no review
and reversal on appeal by higher authority of its factual or legal conclusions. When, however, it decides a case without or in excess of its
jurisdiction, or with grave abuse of discretion, the party thereby adversely affected may obtain a review and nullification of that decision by
this Court through the extraordinary writ of certiorari. Since, in this case, it appears that the Commission has indeed acted without
jurisdiction and with grave abuse of discretion in taking cognizance of a belated appeal sought to be taken from a decision of a Labor Arbiter
and thereafter reversing it, the writ of certiorari will issue to undo those acts, and do justice to the aggrieved party.

Nestor Flores was engaged on April 17, 1978 as Managing Consultant by the John Clement Consultants, Inc., hereafter, simply JCCI. He was
placed in charge of a division of JCCI, Staffbuilders International, Inc., hereafter simply SBII. A year or so afterwards, Flores was promoted
to the position of Managing Consultant of JCCI's International Division.

In November, 1979, Flores was assigned in Bahrain, where he stayed up to February, 1980. During his tour of duty in that country, he
obtained cash advances amounting to P14,211.30. This liability he failed to liquidate even after he returned to the Philippines, an
infringement of standing company policy. The JCCI President directed the Finance Department to liquidate Flores' indebtedness by deducting
the amount thereof from his salary in four (4) equal monthly installments, effective on the date of his return to this country. Evidently piqued
by such a directive, Flores sent a telex message on April 21, 1980 to his President, who was then in the Middle East, advising of his desire to
discuss terms of his separation from employment even by telex. The President's reply was that he would discuss those terms only when he
returned on May 15, 1980.

Forthwith upon the return to the Philippines of the JCCI President, Flores met with him and reiterated his desire to resign. He was however
advised to first take a two-week vacation leave, to meditate on his future with the company, which he did. While on leave, he rendered
consultancy services for a rival firm, Sigma Personnel Services. Then on June 9, 1980, his leave having ended, he again met with the JCCI
President and for the third time expressed his wish to resign, irrevocably. His resignation was then accepted, and he was told that a written
communication to this effect was expected and should state that it would be effective immediately, conformably with the usual practice as
regards senior managers among so- called multinationals. He was also told that they would be meeting to discuss the terms of his separation
from the company.

Unaccountably Flores failed to submit any resignation letter. On June 11, 1980, the JCCI President issued a memorandum announcing Flores'
resignation and ordering the supervisors theretofore serving under Flores to report directly to him (the President), in order to protect the
competitive status of the firm. Flores thereupon ceased to come to the company premises; and he failed to appear at the meetings scheduled
to discuss the terms of the severance of his ties with the JCCI. He also failed to return the company car assigned for his use, eventually doing
so only on July 23, 1980, after receipt of a series of telegrams demanding such return.

Three months after his resignation, or on September 25, 1980, more particularly, Flores filed a complaint for illegal dismissal against JCCI
and EDI with the Ministry of Labor & Employment. Due proceedings were had on his complaint, inclusive of the submission of position
papers by the parties, and the holding of a hearing on the issues. While the case was pending, it further appears that Flores resumed, or
continued, rendition of services to JCCI's competitor firm, Sigma Personnel Services, and even succeeded in "pirating" (causing transfer of
business to Sigma of) one of JCCI's clients, United Engineering Services, Inc.

The decision on Flores' complaint was rendered by the Labor Arbiter on November 29, 1982. 1 It dismissed his complaint for lack of merit.
The judgment however declared that there was due to him the sum of P6,671.24 representing his bonus or share in the profits for the period
from January to June, 1980, which amount JCCI and its affiliates were ordered to pay within ten (10) days under sanction of automatic
issuance of a writ of execution for failure to do so.

Notice of the Labor Arbiter's decision was received by Flores on December 29, 1982. Fifteen days later, on January 13, 1983, he perfected an
appeal to the National Labor Relations Commission. 2 JCCI filed a motion to dismiss the appeal on January 28, 1983, asserting that it had
been filed beyond the reglementary period of ten (10) days from notice. 3 The motion to dismiss was never resolved. On April 26, 1984, the
NLRC, by a majority vote, promulgated judgment reversing the Labor Arbiter's decision, ordering the reinstatement of Flores to his former
position and the payment to him of fixed back wages for one (1) year without qualification or deduction from earnings elsewhere during the
period of his dismissal, and affirming the Arbiter's award of P6,671.24 representing bonus or share of the profit as well as his unpaid salary
from June 1 to 15, 1980, deducting therefrom his advances. 4 JCCI's motion for reconsideration filed on May 18, 1984 was denied by
Resolution dated August 28, 1985, 5 the NLRC inter alia holding itself to have jurisdiction over the case.

In the special civil action of certiorari, instituted in this Court by JCCI and EDI, they contend that

1) the NLRC had no jurisdiction to take cognizance of Flores' appeal from the Labor Arbiter's decision: the appeal was perfected after the
lapse of' the reglementary period of ten (10) calendar days prescribed therefor, comformably with this Court's ruling in Vir-Jen Shipping and
Marine Services, Inc. v. NLRC, 6 promulgated on July 20, 1982; the material dates essential for a determination of the seasonableness of the
appeal had been subject of stipulation by the parties; no appeal having been timely taken, the labor arbiter's decision became final and the
case was thereby placed beyond the appellate jurisdiction of the NLRC; hence, the latter's assumption of jurisdiction over the appeal was an
overt defiance of the Vir-Jen ruling, and

2) even assuming NLRC's competence to take cognizance of the appeal, its decision was nonetheless tainted by grave abuse of discretion (a)
in overturning the Labor Arbiter's judgment, the latter verdict being fully supported by the evidence on record, as well as (b) in decreeing the
reinstatement of Flores and payment of back wages to him. 7

The petitioners' points are well taken. Their petition should be granted. The writ of certiorari will issue in their favor. As the Solicitor
General correctly points out, Flores' appeal was indeed filed out of time: and the facts clearly establish that Flores had not been illegally
dismissed but had in truth voluntarily resigned, his offer to resign being unconditional and irrevocable, and Flores clearly had acted in bad
faith: he deliberately withheld submission of his written resignation in order to retain employment in JCCI while "moonlighting" in a rival
enterprise, contrary to JCCI Company policy. 8

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

This Court is also satisfied, after a thoroughgoing review of the record, that the findings of fact of the Labor Arbiter are warranted by the
evidence, and the rejection and reversal thereof by the NLRC was without justification, and was therefore whimsical and capricious.
WHEREFORE, the decision of the National Labor Relations Commission dated April 26, 1984, and its Resolution dated August 28, 1985,
both subject of the petition, are annulled and set aside, and the Decision of the Labor Arbiter rendered on November 29, 1982 REINSTATED
and AFFIRMED. This decision is immediately executory and no motion for extension of time to file motion for reconsideration will be
entertained. Costs against private respondent.

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


G.R. No. 109166 July 6, 1995

HERNAN R. LOPEZ, JR., petitioner,


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

PUNO, J.:

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

The facts in brief.

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

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

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

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

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

xxx xxx xxx

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

As broken down, the awards consist of the following:

xxx xxx xxx

I. Backwages July 5, 1990 to January


4, 1991 (6 mos.)

P89.00/day x 30 days 2,670.00/mos. x 6 = P16,020.0


mos. 0

II. Separation pay

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


month

III Wage Differential May 10, 1990 to


. July 4, 1990

(1 mo. & 25 days)

MW P89.00/day
(2,670.00/mo.)

SR 73.5

Diff. 15.50/day x 25 387.5


days 0

465/mo. x 1 mo. 465.0 852.5


0

P19,542.5
07

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

Petitioner now contends:

FIRST

THERE IS NO SUBSTANTIAL EVIDENCE THAT WOULD SUPPORT THE FINDING OF THE


RESPONDENT COMMISSION THAT PETITIONER ALLEGEDLY RE-EMPLOYED
RESPONDENT AMANTE CONSIDERING THAT THE PAYROLLS WHERE IT BASED ITS
FINDINGS WERE ONLY PRESENTED FOR THE FIRST TIME ON APPEAL AND THEREFORE
NOT SUBSTANTIAL EVIDENCE TO SUPPORT SAID FINDING.

SECOND

THE RESPONDENT COMMISSION ABUSED ITS DISCRETION IN FINDING THAT


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

THE RESPONDENT COMMISSION ABUSED ITS DISCRETION IN HOLDING THAT


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

FOURTH

THE RESPONDENT COMMISSION ABUSED ITS DISCRETION IN HOLDING THAT


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

FIFTH

THE RESPONDENT COMMISSION ABUSED ITS DISCRETION IN AWARDING BACKWAGES


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

SIXTH

THERE IS NO SUBSTANTIAL EVIDENCE THAT WOULD SUPPORT THE FINDING OF THE


RESPONDENT COMMISSION THAT RESPONDENT AMANTE IS ENTITLED TO WAGE
DIFFERENTIAL.

There is no merit in the petition.

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

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

Article 281 of the Labor Code provides:

Probationary employment shall not exceed six (6) months from the date the employee started working,
unless it is covered by an apprenticeship agreement stipulating longer period. The services of an
employee who has been engaged on a probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
It is true that probationary employees do not enjoy permanent status but they can only be removed from their
work during their probationary period for a valid reason. 10 In the case at bench, private respondent was re-
employed with Hacienda Colisap for barely two (2) months when he was dismissed without a just cause and
without due process. The evidence of private respondent proving this fact cannot be overturned by the flimsy
contention of petitioner that he did not cause the former's dismissal as he was abroad at that time.

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

xxx xxx xxx

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

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

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

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

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

xxx xxx xxx

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

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

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

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

SO ORDERED.

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


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

PEDRO B. NARAG, petitioner,


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

GANCAYCO, J.:

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

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

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

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

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

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

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

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

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

MEMO TO: OIC Pedro Narag


UGCC Security Department

Bo. Ugong, Pasig, Metro Manila

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

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

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

For information and guidance.

(Sgd.) ENRIQUE G. PEREGRIN

Director SDC

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SO ORDERED.
G.R. No. 111905 July 31, 1995 Latest salary:
P1,775.00 per month
ORIENTAL MINDORO ELECTRIC COOPERATIVE,
INC., petitioner, P1,775 x 36 months =
vs. P36,900.00
NATIONAL LABOR RELATIONS COMMISSION and
OSCAR NITURAL, respondents. The grant of separation pay is hereby deleted.

Except for the foregoing Modifications the rest of


the Decision appealed from is hereby affirmed.3
REGALADO, J.:
On July 28, 1993, a resolution was issued by the NLRC
Through this special civil action for certiorari, petitioner seeks the stating, inter alia, that a typographical error had been committed
nullification of the May 20, 1993 decision and the July 28, 1993 when it indicated in the decision that the product of P1,775.00
resolution of respondent National Labor Relations Commission multiplied by 36 is P36,900.00, and clarifying that it should instead
(NLRC) in NLRC Case No. RB-IV-2-2646-89 for having been be P63,900.00.4
issued with grave abuse of discretion. Said decision ordered
petitioner Oriental Mindoro Electric Cooperative, Inc. (ORMECO), Petitioner submits the following allegations: Private respondent
among others, to reinstate private respondent Oscar Nitural to his Nitural was an employee of Oriental Mindoro Electrical
former or equivalent position without loss of seniority rights and Cooperative II, wherein he was subjected to several disciplinary
with full back wages not exceeding three years. The resolution of actions to wit:
July 28, 1993 was issued to correct a typographical error in the
amount of the award to private respondent by a nunc pro April 25, 1985 Suspended for two
tunc amendment thereof and, also, to dismiss ORMECO's appeal to months for non-remittance of collections;
the Secretary of Labor.
April 22, 1986 Apprehended for
On February 20, 1989, private respondent filed before the misuse of cooperative vehicle;
Arbitration Branch, Regional Office No. IV, NLRC, a complaint
against ORMECO for illegal suspension, non-payment of half of his
13th month pay and non-payment of his salary differential April 4, 1987 Reported by security
pay.1 After due submission of the position papers and other guard as drunk and throwing stones at
pleadings of the parties, the labor arbiter rendered a decision on July the ORMECO building; and
10, 1990 to the effect that
July 20, 1987 Suspended for
Considering the strained relationship between the drunkenness at work.5
complainant and the respondents exacerbated by
the instant complaint, Ormeco, Inc. is hereby On May 16, 1988, Ormeco II merged with Ormeco I, resulting in
directed to pay complainant separation pay the existence of herein petitioner ORMECO. Prior to his formal
computed at one month pay for every year of absorption by ORMECO, Nitural was instructed to report to the
service plus 1/2 of the 13th month pay still engineering department of the corporation at Calapan, Oriental
unpaid. Further, 10% of all the amounts due to Mindoro. He reported for work for several days but after August 7,
complainant is hereby awarded as attorney's fees.2 1988, he rarely reported for duty until his suspension on September
20, 1993.6
Both parties appealed said decision to the Third Division of the
NLRC. On May 20, 1993, the NLRC promulgated its decision with Previous to these dates, on July 22, 1988 to be precise, a complaint
the following disposition: against private respondent was filed by one of ORMECO's
customers for unauthorized solicitation of P250.00 allegedly for the
WHEREFORE, premises considered, the appeal purchase of service drop wire. Asked to explain by the general
of respondents is dismissed for failure to file the manager of petitioner, Nitural said that the customer himself asked
required bond, even as it really lacks merit, and him to buy the service drop wire. Unconvinced, the general manager
the appeal of the complainant is hereby granted asked him to put his explanation in writing but Nitural failed to do
insofar as his prayer for reinstatement is so.7
concerned. Consequently, respondent is hereby
directed to reinstate complainant to his former or After August 7, 1988, Nitural was frequently absent from work
equivalent position without loss of seniority rights without permission from ORMECO. Petitioner was thus compelled
and with full backwages not to exceed three years, to temporarily suspend him on September 20, 1988 due to habitual
computed as follows: absenteeism and absence without official leave. On February 4,
1989, Nitural was directed to appear before the Board of Directors
From: September 20, of ORMECO to explain his side but he informed said body that he
1988 September 20, would rather see them before the Department of Labor and
1991
Employment. Again, on February 25, 1989, Nitural was asked to Secondly, petitioner even failed to file the requisite appeal bond in
appear before the same body but he failed to show up on said date.8 its appeal to the NLRC from the decision of the labor arbiter. The
NLRC decision, dated May 20, 1993, states that "at the outset we
On the other hand, Nitural alleges that from September, 1981, he wish to point out that indeed the respondent failed to file the
started working as a service driver in ORMECO II. On September required appeal bond and this makes its appeal outright
20, 1988, he received from his employer a letter of indefinite dismiss(i)ble."19 Indeed, Article 223 of the Labor Code provides that
suspension for alleged absence without leave from August 15 to
September 20, 1988. He maintains that he was sick at that time,
hence his inability to report for work, and he submitted a medical In case of a judgment involving a monetary
certificate as evidence thereof. Nitural claims that his indefinite award, an appeal by the employer may be
suspension from work amounted to a constructive dismissal from perfected only upon the posting of a cash or surety
work, thus he was denied due process. He further claims that in bond issued by a reputable bonding company duly
1986, labor inspectors who came to the company discovered accredited by the Commission in the amount
instances of underpayment of wages. To cover up such violation, the equivalent to the monetary award in the judgment
employees were required to sign waivers of their right to claim the appealed from.
salary differentials. As a result of his decision to pursue his claim
for salary differentials before the Regional Office in Quezon The intention of the lawmakers to make the bond an indispensable
City,9 he was illegally dismissed.10 requisite for the perfection of an appeal by the employer is
underscored by the provision that an appeal by the employer may be
Private respondent argues that the present petition was filed out of perfected "only upon the posting of a cash or surety bond." The
time because prior to its filing, a writ of execution ordering his word "only" makes it perfectly clear, that the lawmakers intended
reinstatement was already issued by the labor arbiter on August 11, the posting of a cash or surety bond by the employer to be the
1993. On September 14, 1993, the labor arbiter likewise directed the exclusive means by which an employer's appeal may be perfected.
branch manager of the Philippine National Bank, Calapan Branch, That requirement is intended to discourage employers from using an
Oriental Mindoro to release from the time deposit of ORMECO the appeal to delay, or even evade, their obligation to satisfy their
amount of P71,266.25 as monetary award to Nitural and the amount employees' just and lawful claims.20
of P800.00 as execution fees in the name of the cashier, NLRC,
Manila. Considering, however, that the current policy is not to strictly
follow technical rules but rather to take into account the spirit and
Citing Philippine Overseas Drilling and Oil Development intention of the Labor Code,21 it would be prudent for us to look into
Corporation vs. Ministry of Labor, et al.,11 private respondent the merits of the case, especially since petitioner disputes the
further argues that a petition for certiorari is considered to have allegation that private respondent was illegally dismissed. It
been filed belatedly if made after the lower tribunal had already contends that Nitural was merely placed under suspension, hence
issued a writ of execution. This is not exactly correct. The petition there was no severance of employer-employee relationship. We
may precisely have been filed to question the very issuance of the disagree.
writ of execution as well as the decision and/or resolution on which
it was based. Nonetheless, the present petition must fail for the A portion of the letter sent to Nitural by ORMECO Administrative
reasons hereunder stated. Manager Danilo G. Pesigan reads:

Firstly, petitioner failed to seasonably seek relief from the decision . . . Ang iyong pinuno ay nagmumungkahi
of the NLRC in the proper forum and within the prescribed period. na pansamantala ka munang patigilin sa iyong
The questioned decision was promulgated on May 20, 1993.12 On trabahohanggat hindi natatapos ang pagsisiyasat
June 6, 1993, Nitural filed a motion for recomputation and to sa iyong bagong kaso.
include his 13th month pay therein.13 On July 3, 1993, petitioner
filed a notice of appeal to the Secretary of Labor14 and, on July 9, Sa dahilang may panibago na namang reklamo sa
1993, a motion for extension of time to file an appeal iyo, ipinasiya ng ating tanggapan ang
memorandum.15 On July 28, 1993, a resolution was issued by the pansamantalang pagtigil sa iyong trabaho habang
NLRC denying the recomputation sought by Nitural for being filed ikaw ay walang matibay na katibayan na
out of time and likewise denying the notice of appeal with extension maipakikita upang matapos ang pagsisiyasat sa
of time filed by ORMECO for being "untenable, as this is not dati at ngayong bagong reklamo sa
provided for by our existing law on the matter."16 iyo.22 (Emphases supplied.)

Obviously, ORMECO's attempt to appeal the NLRC's decision and This clearly shows that Nitural was placed under indefinite
resolution to the Secretary of Labor was erroneous. Parenthetically, suspension which is tantamount to constructive dismissal. Petitioner
Article 223 of the Labor Code formerly granted an aggrieved party may call it by another name but it is nevertheless constructive
the remedy of appeal from a decision of the NLRC to the Secretary dismissal.
of Labor.17 Presidential Decree No. 1391, however, amended said
Article 223 and abolished appeals to the Secretary of Labor "to
insure speedy labor justice."18 Since petitioner's appeal to the ORMECO points out that, as earlier narrated, Nitural was instructed
Secretary of Labor was not authorized in law, it did not toll or affect by the former on May 16, 1988 to report to the main office in
the period for seeking relief from the decision and resolution of the Calapan, Oriental Mindoro. Although he reported for duty for a few
NLRC through a petition for certiorari. In fact, petitioner did not days, thereafter he seldom reported for work until he was eventually
even file a motion for reconsideration with the NLRC for purposes suspended. Notwithstanding the fact that Nitural sent radio
of such a petition. messages on August 22 and September 16, 1988, informing the
office of his absences, he never bothered to verify whether or not his terminated a written notice containing a statement of the causes for
absences were approved or granted.23 termination. It shall afford the latter ample opportunity to be heard
and to defend himself with the assistance of his representative, if he
The inquiry then is whether or not the requirement for the lawful so desires, in accordance with company rules and regulations.
dismissal of an employee by his employer was followed. Under the
Labor Code, as amended, the requirements for the lawful dismissal Although ORMECO did send a notice of indefinite suspension,
of an employee by his employer are twofold: the substantive and the which was tantamount to a termination, Nitural was not afforded the
procedural. Not only must the dismissal be for a valid or authorized right to a hearing. From the actuations of ORMECO, it would
case24 but the rudimentary requirements of due process notice appear that the notices sent to Nitural for an audience with the board
and hearing must also be observed before an employee may be of directors was but a token gesture on its part to give its actions a
dismissed.25 One cannot go without the other for, otherwise, the semblance of regularity and legality. For, while Nitural was
termination would, in the eyes of the law, be illegal.26 suspended effective September 20, 1988, it was only on February 4,
1989, or after more than four months from the sending of the notice
Petitioner maintains that Nitural was dismissed due to habitual of indefinite suspension, that ORMECO directed Nitural to appear
absenteeism and absence without leave. The latter, although before its board of directors.
admitting that he was absent during the period involved, presented
as proof that he was sick at the time of his absence a medical The Court can well understand the reluctance of ORMECO to
certificate issued by Municipal Health Officer Aristeo V. Baldos of reinstate private respondent. Nitural has not exactly been the model
Pinamalayan, Oriental Mindoro stating that Nitural was suffering employee, and had even previously been suspended or warned for
from neuro-circulatory asthenia and was advised to rest and take various infractions. In fact, in its petition, ORMECO stated that it
medication for an least one month. 27 does "not disavow its dislike for the private respondent." It points
out Nitural's "record of being the subject of various disciplinary
Petitioner did not question the validity of this medical certification, actions, and his open and deliberate defiance of petitioner's orders
much less its authenticity. Hence, for purposes of this case, it can be and directives."30 Both the labor arbiter and the NLRC, however,
presumed that Nitural was really sick at that time. It must also be noted that the previous infractions were condoned or the
noted that Nitural sent two notices to his employer regarding his corresponding penalties had been imposed therefor. Furthermore,
inability to report for work. Dismissal of an employee due to his the assailed decision and resolution of respondent NLRC had
prolonged absence with leave by reason of illness duly established actually attained finality.
by the presentation of a medical certificate is not justified.28
WHEREFORE, the petition for certiorari is DISMISSED, and the
It is also clear that procedural due process was not followed. impugned decision and resolution of public respondent National
Although it is the management's prerogative to transfer, demote, Labor Relations Commission are hereby AFFIRMED.
discipline and even to dismiss an employee to protect its
business,28 Article 278 of the Labor Code requires that the employer SO ORDERED.
shall furnish the worker whose employment is sought to be
G.R. No. 106370 September 8, 1994 This is with regards [sic] the work recommendation for Mr. Bert
Alvarez.
PHILIPPINE GEOTHERMAL, INC., petitioner,
vs. At this point in time, 5 months post-injury, he can be given
NATIONAL LABOR RELATIONS COMMISSION and moderate working activities, pulling, pushing, carrying and turning
EDILBERTO M. ALVAREZ, respondents. a 20 lbs.-25 lbs. weight/force.

Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles for On the 6th month, he can go back to his previous job.
petitioner.
Despite this certification, respondent Alvarez continued to absent
Fidel Angelito I. Arias for private respondent. himself from work and by the end of 1989 he had used ten (10) days
of vacation leave, eighteen (18) days of sick leave, fifteen (15) days
of WCA leave and four (4) days of emergency leave for the period
starting 31 July 1989.
PADILLA, J.:
On 28 December 1989, Dr. Leagogo, after examining Alvarez,
Petitioner Philippine Geothermal, Incorporated filed the present
certified that the latter's injury had healed completely and that he
petition for certiorari seeking the reversal of the decision of public
could thus return to his pre-injury work.
respondent National Labor Relation Commision In NLRC CA No.
L-000295-91/RB-IV-1-3583-91 entitled "Edilberto M. Alvarez v. On the same day, Alvarez consulted another doctor, Dr. Angela D.V.
Philippine Geothermal, Inc. et al." Garcia, a private physician, who likewise confirmed that there were
"no contraindications for him (Alvarez) not to attend to his work."
The relevant facts of this case are as follows:
On 29 December 1989, based on Dr. Leagogo's findings, petitioner
Private respondent Edilberto M. Alvarez was first employed by
wrote Alvarez stating:
petitioner on 2 July 1979. On 31 May 1989, private respondent, who
was then occupying the position of Steam Test Operator II, injured This is to inform you that based on the examination performed on
his right wrist when a steam-pressured "chicksan swivel joint December 28, 1989 by your attending physician, Dr. Liberato
assembly" exploded while he was checking a geothermal well Antonio C. Leagogo, Jr., your right wrist fracture is completely
operated by petitioner. As a result, private respondent's right arm healed as stated in the attached medical certificate. Therefore, you
was placed in a plaster cast and he was confined at the San Pablo are advised to go back to your regular duty as an Operator II at the
Doctor's Hospital from 31 May 1989 to 3 June 1989. Well Testing Section effective immediately.

Dr. Oscar M. Brion, the attending physician, diagnosed private xxx xxx xxx
respondent's injuries to be:
Any absences you may incur in the future will be subject to our
1) Complete fracture/dislocation distal radius (r); existing policy on leaves and absences. . . . 2

2) Complete fracture styloid process and dislocation of the ulna; Since Alvarez failed to report for work from 2 to 10 January 1990,
petitioner again wrote him stating:
3) Right pelvic contusion, which required a recuperation period of
approximately forty-five (45) days. . . . it is indicated that your therapy has no contraindication for you
not to attend to your work. However, from that date up to now,
Petitioner thus gave private respondent a fifty (50) days "work-
January 11, you have not reported for work. . . .
connected accident" (WCA) leave with pay until 29 July 1989.
Petitioner also referred private respondent's case to Dr. Liberato Therefore, as of January 11, 1990, you are considered to be "Absent
A.C. Leagogo, Jr. of the Philippine Orthopedic Institute, at Without Official Leave (AWOL) and Without Pay". This letter
petitioner's expense. serves as a warning letter per our rules and regulations,
Unauthorized absences, rule 3, par. i, page 31.
On 26 July 1989, Dr. Leagogo certified that private respondent was
fit to return to work with the qualification however, that he could You are advised to immediately report for work or further
only perform light work. Thus, on 31 July 1989, when respondent disciplinary action will be taken. 3
Alvarez returned to work, he was assigned to "caliberation of barton
recorders", in accordance with the doctor's recommendations. After reading the letter. Alvarez wrote a hand-written note on
petitioner's copy of the letter, stating "Please wait for my doctor's
On 13 November 1989, Alvarez was again examined by Dr. medical certificate from Dr. Relampagos."
Leagogo who issued a medical certificate which reads: 1
On 19 January 1990, Dr. Victoria Pineda, an orthopedic doctor of emphasize that from February 8 to 28, all your absences are
the National Orthopedic Hospital whom Alvarez also consulted considered unauthorized and without pay. Please be reminded that,
issued the following medical certificate: according to company rules, employees who go on unauthorized
absences of six (6) or more days are subject to dismissal.
Patient has reached a plateau in his rehabilitation with limitations of
wrist motion (r) as regular. Fit for work. 4 The company, therefore, believes that it has given all the time, help,
and considerations in your case. We go by the doctor's certifications
On 20 January 1990, Alvarez consulted Dr. Francisco, another that you are already fit to work.
orthopedic doctor at the Polymedic General Hospital, who
recommended a set of laboratory tests to be conducted on Alvarez' In view of the above, we are giving you a final warning. Should you
right wrist. fail to report to work on Monday, March 5, 1990 your employment
with the company will be terminated. 8
On 1 February 1990, Dr. Relampagos of the National Orthopedic
Hospital certified Alvarez to be "Fit for light job." 5 This fourth warning letter of petitioner was unheeded. Alvarez
failed to report for work; neither did he inform petitioner of the
On 6 February 1990, Dr. Francisco, who read and interpreted the reason for his continued absences.
results of the tests undertaken on Alvarez at the St. Luke's Medical
Center, certified that there is no "hindrance for him (Mr. Alvarez) to As a consequence, petitioner terminated Alvarez, employment on
do his office work." 6 9 March 1990.

Notwithstanding the above medical findings, respondent Edilberto On 19 June 1990, Alvarez filed a complaint for illegal dismissal
M. Alvarez continued to incur numerous absences. He did not report against petitioner with the Regional Arbitration Branch, Region IV.
for work in the months of January and February 1990.
On 19 December 1990, the labor arbiter dismissed the complaint,
On 7 February 1990, petitioner addressed its third letter to Alvarez without prejudice, for failure of the complainant to submit his
stating: position paper despite repeated orders from the labor arbiter.

The attached medical certificates from Dr. Garcia, Dr. Pineda, On 16 January 1991, private respondent refiled his complaint for
Dr. Relampagos, Dr. Francisco, and Dr. Leagogo all indicate that illegal dismissal.
you are fit to work. Based on these medical certificates, your
absences from January 11 to February 6 1990 (23 working days) On 6 September 1991 the labor arbiter rendered a decision holding
will be charged to your sick leave credits. Be advised that your sick private respondent's termination from employment as valid and
leave credits will be exhausted on February 8, 1990 therefore, you justified.
will not be paid for subsequent absences.
On appeal to the public respondent National Labor Relations
In addition, if you fail to report to work and are unable to present a Commission (NLRC), the decision was reserved and set aside.
medical certificate explaining your absences, you will face Petitioner was ordered to reinstate Edilberto M. Alvarez to his
disciplinary action. I am enclosing the statement of company policy former position without loss of seniority rights but without
on absences for your information and would strongly suggest that backwages.
you report to work immediately. 7
A Motion for Reconsideration was denied on 15 May 1992.
Under petitioner's company rules, employees who incur Petitioner then filed the present petition for certiorari, based on two
unauthorized absences of six (6) days or more are subject to (2) grounds namely:
dismissal. Thus, when Alvarez failed to report for work from 8 to 28
RESPONDENT COMMISSION ABUSED ITS DISCRETION
February 1990, a total of eighteen (18) working days with three (3)
AND ACTED BEYOND ITS JURISDICTION BY
days off, petitioner wrote Alvarez a fourth time stating in part:
ENTERTAINING AN APPEAL THAT WAS FILED OUT OF
This refers to your continued refusal to report back to work TIME
following your recovery from a work-related accident involving
EVEN ON THE MERITS OF THE CASE, RESPONDENT
your right wrist last May 31, 1989. That you have recovered is
COMMISSION ABUSED ITS DISCRETION BY FAILING TO
based on the certification of four (4) physicians, including the
APPRECIATE OVERWHELMING EVIDENCE UNIFORMLY
company-retained orthopedic doctor and three (3) other orthopedic
SHOWING THAT THE TERMINATION OF MR. ALVAREZ WAS
specialists whom you personally chose and consulted.
VALID AND JUSTIFIED. 9
xxx xxx xxx
On the issue of whether or not the appeal from the decision of the
In order not to lose your income, the company has allowed you to labor arbiter to the NLRC was filed within the ten (10) day
charge all these unwarranted absences against your accumulated reglementary period, it is undisputed that private respondent
sick leave credits. Our records show that as of February 7, 1990, received a copy of the labor arbiter's decision on 5 September 1991.
you have used up all your remaining sick leaves. We would like to Alvarez thus had up to 15 September 1991 to perfect his appeal.
Since this last mentioned date was a Sunday, private respondent had and was actually given an additional fifteen (15) days WCA leave to
to file his appeal on the next business day, 16 September 1991. allow him to consult his doctors and fully recover from his injuries.
Moreover, petitioner gave Alvarez several warnings to report for
Petitioner contends that the appeal was filed only on 20 September work, otherwise, he would face disciplinary sanctions. In spite of
1991. Respondent NLRC however found that private respondent these warnings, Alvarez was absent without official leave (AWOL)
filed his appeal by registered mail on 16 September 1991, the same for eighteen (18) days. Under company policy, of which Alvarez
day that petitioner's counsel was furnished copies of said appeal. 10 was made aware, employees who incur without valid reason six (6)
or more absences are subject to dismissal.
We will not disturb this factual finding of the NLRC.
Petitioner, in its fourth and last warning letter to Alvarez, was
The contention that even assuming arguendo that the appeal was
willing to allow him to resume his work in spite of the eighteen (18)
filed on time, the appeal fee was paid four (4) days late (and,
days he went on AWOL. It was made clear, however, that should
therefore, the appeal to the NLRC should be dismissed) likewise
private respondent still fail to report for work on 5 March 1990, his
fails to entirely empress us. In C.W. Tan Manufacturing v.
employment would be terminated.
NLRC, 11 we held that "the broader interest of justice and the desired
objective of deciding the case on the merits demand that the appeal Private respondent failed to report for work on 5 March 1990.
be given due course." Petitioner validly dismissed him not only for violation of company
policy but also for violation of Section 282(c) of the Labor Code
On the issue of whether or not Edilberto M. Alvarez was validly
aforecited.
dismissed, we rule in the affirmative and consequently the decision
of respondent NLRC is set aside. While it is true that compassion and human consideration should
guide the disposition of casses involving termination of employment
Article 282(b) of the Labor Code provides that an employer may
since it affects one's source or means of livelihood, it should not be
validly dismiss an employee for gross and habitual neglect by the
overlooked that the benefits accorded to labor do not include
employee of his duties. In the present case, it is clear that private
compelling an employer to retain the services of an employee who
respondent was guilty of seriously neglecting his duties.
has been shown to be a gross liability to the employer. The law in
The records establish that as early as 26 July 1989, Dr. Leagogo protecting the rights of the employees authorizes neither oppression
already had certified that Alvarez could perform light work. On 13 nor self-destruction of the employer. 12 It should be made clear that
November 1989, when the law tilts the scale of justice in favor of labor, it is but a
Dr. Leagogo certified that Alvarez could perform moderate work recognition of the inherent economic inequality between labor and
and it was further certified that by December 1989, Alvarez could management. The intent is to balance the scale of justice; to put the
return to his pre-injury duties. Notwithstanding these certifications, two parties on relatively equal positions. There may be cases where
Alvarez continued to incur unexplained absences until his dismissal the circumstances warrant favoring labor over the interests of
on 9 March 1990. management but never should the scale be so tilted if the result is an
injustice to the employer. Justitia nemini neganda est (Justice is to
A review of Alvarez' record of attendance shows that from August be denied to none).
to December 1989, he reported for work only seventy-seven (77)
times while he incurred forty-seven (47) absences. In Cando v. National Labor Relations Commission 13 the Court
awarded separation pay to an employee who was terminated for
An employee who earnestly desires to resume his regular duties unuathorized absences. We believe that separation pay of one-half
after recovering from an injury undoubtedly will not go through the (1/2) month salary for every year of service is adequate in this case.
trouble of getting opinions from five (5) different of getting
opinions from five (5) different physicians before going back to WHEREFORE, the decision of respondent National Labor
work after he has been certified to be fit to return to his regular Relations Commision is hereby SET ASIDE and the decision of the
duties. Labor Arbiter is reinstated with the MODIFICATION that petitioner
Philippine Geothermal, Inc. is ordered to pay private respondent
Petitioner has not been shown to be without sympathy or concern Edilberto M. Alvarez separation pay equivalent to one-half (1/2)
for Alvarez. He was given fifty (50) days work-connected accident month salary for every year of service starting from 2 July 1979
(WCA) leave with pay to allow him to recuperate from his injury until his dismissal on 9 March 1990.
without loss of earnings. He was allowed to use his leave credits
SO ORDERED.
G.R. No. 101135 July 14, 1995

TEODORO RANCES, petitioner,


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

QUIASON, J.:

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

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

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

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

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

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

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

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

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

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

II

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

Sec. 5. Requisites for Perfection of Appeal. The appeal shall be filed within the reglementary period as provided in Section 1 of this Rule;
shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 6 of this
Rule; shall be accompanied by a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof; the
relief prayed for; and a statement of the date when the appellant received the appealed decision, and/or proof of service on the other party of
such appeal.

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

Section 7 of the same Rules provides:

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

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

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

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

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

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

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

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

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

POCKETBELL PHILIPPINES, INC., petitioner,


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

MENDOZA, J.:

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

The facts are as follows:

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

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

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

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

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

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

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

3. The assignment is at Davao City. This would mean that I would not be able to continue my studies here in manila. 1

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

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

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

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

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

On March 15, 1988, Alinas filed a complaint for unfair labor practice against the company and Jose Abejo, in the latter's official and personal
capacity. The case was assigned to Labor Arbiter Cornelio Linsangan, who, in a decision dated may 30, 1989, found the dismissal valid and
accordingly dismissed the private respondent's complaint.3
On appeal the NLRC reversed. The dispositive portion of its decision,4 dated November 26, 1991, reads:

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

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

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

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

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

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

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

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

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

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

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

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

xxx xxx xxx

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

DECISION

SERENO, J.:

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

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

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

SO ORDERED.2

The undisputed facts are as follows:

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

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

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

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

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

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

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

2. To pay complainant his backwages reckoned from the date of his dismissal on September 22, 1998 until actual reinstatement or merely
reinstatement in the payroll which as of this date is in the amount of P722,400.00;
3. To pay complainant moral damages in the amount of P2,000,000.00; and,

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

SO ORDERED.4

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

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

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

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

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

In the meantime, while the appeal was pending, on 19 October 2000, respondents board chairperson and concurrent President/CEO Rogelio
L. Singson ordered the reinstatement of petitioner to the latters former position as head executive assistant, effective 24 October 2000. 8

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

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

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

Petitioner Salenga thereafter moved for a partial reconsideration of the above-mentioned Decision. He sought the reinstatement of the award
of exemplary and moral damages. He likewise insisted that the NLRC should not have entertained the appeal on the following grounds: (1)
respondent CDC did not file an appeal and did not post the required cash or surety bond; (2) both Timbol-Roman and Colayco were
admittedly not real parties-in-interest; (3) they were not the employer or the employers authorized representative and, thus, had no right to
appeal; and (4) both appeals had not been perfected for failure to post the required cash or surety bond. In other words, petitioners theory
revolved on the fact that neither Timbol-Roman nor Colayco was authorized to represent the corporation, so the corporation itself did not
appeal LA Darlucios Decision. As a result, that Decision should be considered as final and executory.

For its part, the OGCC also filed a Motion for Reconsideration 11 of the NLRCs 30 July 2001 Decision insofar as the finding of illegal
dismissal was concerned. It no longer questioned the commissions finding that petitioner was a regular employee, but instead insisted that he
had been dismissed as a consequence of his redundant position. The motion, however, was not verified by the duly authorized representative
of respondent CDC.

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

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

The complaint below is dismissed for being without merit.

SO ORDERED.13

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

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

Pursuant to the NLRCs dismissal of the Complaint of petitioner Salenga, Angeles subsequently denied the formers request for his
retirement benefits, to wit:15

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

xxx xxx xxx

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

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

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

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

After giving due course to the Motion for Reconsideration filed by petitioner Salenga, the NLRC issued a Resolution 16 on 10 September
2003, partially granting the motion. This time, the First Division of the NLRC held that, absent a board resolution authorizing Timbol-Roman
to file the appeal on behalf of respondent CDC, the appeal was not perfected and was thus a mere scrap of paper. In other words, the NLRC
had no jurisdiction over the appeal filed before it.

The NLRC further held that respondent CDC had failed to show that petitioner Salengas dismissal was pursuant to a valid corporate
reorganization or board resolution. It also deemed respondent estopped from claiming that there was indeed a redundancy, considering that
petitioner Salenga had been reinstated to his position as head executive assistant. While it granted the award of moral damages, it
nevertheless denied exemplary damages. Thus, the dispositive portion of its Decision reads:
WHEREFORE, premises considered, the complainants Motion for Reconsideration is GRANTED and We set aside our Resolution of
December 5, 2002. The Decision of the Labor Arbiter dated February 29, 2000 is REINSTATED with the MODIFICATION that:

1.) Being a nominal party, respondent Rufo Colayco is declared to be not jointly and severally liable with respondent Clark Development
Corporation;

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

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

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

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

SO ORDERED.17

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

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

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

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

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

Respondent CDC filed with the CA in February 2004 a Petition for Certiorari with a prayer for the issuance of a temporary restraining order
and/or a writ of preliminary injunction. However, the Petition still lacked a board resolution from the board of directors of respondent
corporation authorizing its then President Angeles to verify and certify the Petition on behalf of the board. It was only on 16 March 2004 that
counsel for respondent filed a Manifestation/Motion21 with an attached Secretarys Certificate containing the boards Resolution No. 86,
Series of 2001. The Resolution authorized Angeles to represent respondent corporation in prosecuting, maintaining, or compromising any
lawsuit in connection with its business.

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

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

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

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

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


a. Recomputed award 3,758,786

b. Legal interest 5,089,342.58

c. Attorneys fees 1,196,052.80

d. Litigation expenses 250,000

b. Retirement pay

a. Retirement gratuity 6,987,944

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

c. Legal interest 4,050,544.96

d. Attorneys fees 1,147,781.90

On 11 May 2004, the CA issued a Resolution26 ordering petitioner Salenga to comment on the Petition and holding in abeyance the issuance
of a temporary restraining order.

The parties thereafter filed their respective pleadings.

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

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

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

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

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

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

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

Thereafter, on 8 March 2005, LA Bactin issued an Order33 resolving the Omnibus Motion filed by petitioner Salenga for the recomputation of
the monetary claims due him. In the Order, LA Bactin denied petitioners Motion for the recomputation of the award of back wages, benefits,
allowances and privileges based on the 29 February 2000 Decision of LA Darlucio. LA Bactin held that since the Decision had become final
and executory, he no longer had jurisdiction to amend or to alter the judgment.

Anent the second issue of the computation of retirement benefits, LA Bactin also denied the claim of petitioner Salenga, considering that the
latters retirement benefits had already been paid. The LA, however, did not rule on whether petitioner was entitled to retirement benefits,
either under the Government Service Insurance System (GSIS) or under the Social Security System (SSS), and held that this issue was
beyond the expertise and jurisdiction of a LA.
Petitioner Salenga thereafter appealed to the NLRC, which granted the appeal in a Resolution34 dated 22 July 2005. First, it was asked to
resolve the issue of the propriety of having the Laguesma Law Office represent respondent CDC in the proceedings before the LA. The said
law firm entered its appearance as counsel for respondent during the pre-execution conference/hearing on 1 October 2004. On this issue, the
NLRC held that respondent corporations legal department, which had previously been representing the corporation, was not validly
substituted by the Laguesma Law Office. In addition, the NLRC held that respondent had failed to comply with Memorandum Circular No.
9, Series of 1998, which strictly prohibits the hiring of lawyers of private law firms by GOCCs without the prior written conformity and
acquiescence of the Office of Solicitor General, as the case may be, and the prior written concurrence of the Commission on Audit (COA).
Thus, the NLRC held that all actions and submissions undertaken by the Laguesma Law Office on behalf of respondent were null and void.

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

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

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

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

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

xxx xxx xxx

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

SO ORDERED.36

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

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

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

On 13 September 2005, the CA promulgated the assailed Decision. Relying heavily on the reports of Reviewer Arbiters Cristeta D. Tamayo
and Thelma M. Concepcion, it held that petitioner Salenga was a corporate officer. Thus, the issue before the NLRC was an intra-corporate
dispute, which should have been lodged with the Securities and Exchange Commission (SEC), which had jurisdiction over the case at the
time the issue arose. The CA likewise held that the NLRC committed grave abuse of discretion when it allowed and granted petitioner
Salengas second Motion for Reconsideration, which was a prohibited pleading.

Petitioner subsequently filed a Motion for Reconsideration on 7 October 2005, alleging that the CA committed grave abuse of discretion in
reconsidering the findings of fact, which had already been found to be conclusive against respondent; and in taking cognizance of the latters
Petition which had not been properly verified.

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

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

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

Petitioner raises the following issues for our resolution:

I.

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

II.

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

III.

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

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

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

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

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

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

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

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

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

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

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

The Courts Ruling

The Petition has merit.

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

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

The NLRC had no jurisdiction


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

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

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

xxx xxx xxx

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

xxx xxx xxx

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

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

This Office is also of the view that complainant was not accorded his right to due process prior to his termination. The law requires that the
employer must furnish the worker sought to be dismissed with two (2) written notices before termination may be validly effected: first, a
notice apprising the employee of the particular acts or omissions for which his dismissal is sought and, second, a subsequent notice informing
the employee of the decision to dismiss him. In the case at bar, complainant was not apprised of the grounds of his termination. He was not
given the opportunity to be heard and defend himselfxxx40

The OGCC, representing respondent CDC and former CEO Colayco separately appealed from the above Decision. Both alleged that they had
filed the proper bond to cover the award granted by LA Darlucio.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in
relation to the monetary award.
The filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph shall not stop the running of the
period to perfect an appeal. (Emphasis supplied)

The OGCC failed to produce any valid authorization from the board of directors despite petitioner Salengas repeated demands. It had been
given more than enough opportunity and time to produce the appropriate board resolution, and yet it failed to do so. In fact, many of its
pleadings, representations, and submissions lacked board authorization.

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

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

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

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

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

xxx xxx xxx

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

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

But this difficult fact of life within the OSG, equitable as it may seem, does not excuse it from wantonly executing by itself the verification
and certificate of non-forum shopping. If the OSG is compelled by circumstances to verify and certify the pleading in behalf of a client
agency, the OSG should at least endeavor to inform the courts of its reasons for doing so, beyond instinctively citing City Warden of the
Manila City Jail v. Estrella and Commissioner of Internal Revenue v. S.C. Johnson and Son, Inc.
Henceforth, to be able to verify and certify an initiatory pleading for non-forum shopping when acting as counsel of record for a client
agency, the OSG must (a) allege under oath the circumstances that make signatures of the concerned officials impossible to obtain within the
period for filing the initiatory pleading; (b) append to the petition or complaint such authentic document to prove that the party-petitioner or
complainant authorized the filing of the petition or complaint and understood and adopted the allegations set forth therein, and an affirmation
that no action or claim involving the same issues has been filed or commenced in any court, tribunal or quasi-judicial agency; and, (c)
undertake to inform the court promptly and reasonably of any change in the stance of the client agency.

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

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

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

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

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

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

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

CDC is not under the civil service laws on retirement.

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

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

Petitioner Salenga contends that respondent CDC is covered by the GSIS Law. Thus, he says, the computation of his retirement benefits
should include all the years of actual government service, starting from the original appointment forty (40) years ago up to his retirement.
Respondent CDC owes its existence to Executive Order No. 80 issued by then President Fidel V. Ramos. It was meant to be the
implementing and operating arm of the Bases Conversion and Development Authority (BCDA) tasked to manage the Clark Special
Economic Zone (CSEZ). Expressly, respondent was formed in accordance with Philippine corporation laws and existing rules and
regulations promulgated by the SEC pursuant to Section 16 of Republic Act (R.A.) 7227.44 CDC, a government-owned or -controlled
corporation without an original charter, was incorporated under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1), the civil service
embraces only those government-owned or -controlled corporations with original charter. As such, respondent CDC and its employees are
covered by the Labor Code and not by the Civil Service Law, consistent with our ruling in NASECO v. NLRC,45 in which we established this
distinction. Thus, in Gamogamo v. PNOC Shipping and Transport Corp.,46 we held:

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

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

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

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

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

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

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

Hence, petitioner Salenga is entitled to receive only his retirement benefits based only on the number of years he was employed with the
corporation under the conditions provided under its retirement plan, as well as other benefits given to him by existing laws.1wphi1

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

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

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

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


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

DECISION

BRION, J.:

We resolve the petition for review on certiorari1 before us, seeking the reversal of the resolutions dated June 9, 20102 and October 5, 20103 of
the Court of Appeals (CA) in CA-G.R. SP No. 113980.

The Antecedents

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

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

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

The Compulsory Arbitration Rulings


and Related Incidents

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

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

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

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

The CA Decision

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

The Petition

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

The Case for Martinez

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

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

The Courts Ruling

We find merit in the petition.

We note that this case was dismissed on purely technical grounds at both the NLRC and the CA levels, in total disregard of the merits of the
case. The NLRC dismissed the companys appeal for non-perfection for its failure "to substantially address the issue of failure to post the
required appeal bond pursuant to Section 6, Rule VI of the 2005 Revised Rules of Procedure of the NLRC."17 In summarily throwing out the
appeal, the NLRC apparently forgot that earlier, or on September 15, 2008, it gave the company "ten (10) unextendible days xxx within
which to file an additional cash or surety bond in the amount of FOUR HUNDRED THIRTY TWO THOUSAND EIGHT HUNDRED
NINETY TWO PESOS and 93/100 (432,892.93)"18 when it denied the companys motion to reduce bond. The NLRC even warned that
"[t]heir failure to post the required bond shall result in the dismissal of the appeal for non-perfection." 19

As earlier mentioned, the company complied with the NLRC directive by posting a surety bond in the required amount 20 within the 10-day
period; it received a copy of the NLRC resolution directing it to post an additional cash or surety bond on October 13, 2008 and posted the
bond on October 23, 2008. The company likewise submitted a joint declaration between the company representative and the surety company
on the period of effectivity of the bond,21 and the documents on the legal status of the surety company.22 The NLRC grossly erred, therefore,
in declaring that the company failed to address the issue of its failure to post the required bond. The CA grossly failed to consider this lapse.

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

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

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

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

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

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

DECISION

SERENO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to annul the entire proceedings before the Court of
Appeals (CA) in CA-G.R. SP No. 102201, in which it issued its Decision dated 21 July 2008 and Resolution dated 16 March 2009. 2

Statement of Facts and of the Case

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

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

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

On 22 May 2006, the Labor Arbiter (LA) rendered a Decision3 finding that petitioners were illegally dismissed. The dispositive portion reads:

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

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

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

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

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

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

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

Thereafter, petitioners filed a Motion to Annul Proceedings11 dated 9 September 2008 before the CA. They moved to annul the proceedings
on the ground of lack of jurisdiction. They argued that the NLRC Decision had already attained finality, since the Petition before the CA was
belatedly filed, and the signatory to the Certification of non-forum shopping lacked the proper authority.

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

Hence, this Petition.

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

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

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

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

This Court will resolve the issues raised in seriatim.

Actual Addresses of Parties

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

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

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

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

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

Affidavit of Service

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

xxx xxx xxx

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

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

Substantive Issue: Illegal Dismissal

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

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

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

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

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

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

SO ORDERED.

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