G.R. No. 144767. March 21, 2002.* DILY DANY NACPIL, petitioner, vs. INTERCONTINENTAL BROADCASTING CORPORATION, respondent.

Corporation Law; Securities and Exchange Commission; Two elements to be considered in determining whether the SEC has jurisdiction over the controversy.The Court has consistently held that there are two elements to be considered in determining whether the SEC has jurisdiction over the controversy, to wit: (1) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy. Same; Same; The board of directors may also be empowered under the by-laws to create additional officers as may be necessary.The Court has held that in most cases the by-laws may and usually do provide for such other officers, and that where a corporate office is not specifically indicated in the roster of corporate offices in the by-laws of a corporation, the board of directors may also be empowered under the by-laws to create additional officers as may be necessary. Same; Same; The relationship of a person to a corporation, whether as officer or agent or employee is not determined by the nature of the services performed, but instead by the incidents of the relationship as they actually exist.As to petitioners argument that the nature of his functions is recommendatory thereby making him a mere managerial officer, the Court has previously held that the relationship of a person to a corporation, whether as officer or agent or employee is not determined by the nature of the services performed, but instead by the incidents of the relationship as they actually exist. Remedial Law; Jurisdiction; Court has consistently held that where there is a finding that any decision was rendered without jurisdiction, the action shall be dismissed; Lack of jurisdiction can be interposed at any time, during appeal or even after final judgment.The IBCs failure to post an appeal bond within the period mandated under Article 223 of the Labor Code has been rendered immaterial by the fact that the Labor Arbiter did not have jurisdiction over the case since as stated earlier, the same is in the nature of an intra-corporate controversy. The Court has consistently held that where there is a finding that any decision was rendered without jurisdiction, the action shall be dismissed. Such defense can be interposed at any time, during appeal or even after final judgment. It is a well-settled rule that jurisdiction is conferred only by the Constitution or by law. It cannot be fixed by the will of the parties; it cannot be acquired through, enlarged or diminished by, any act or omission of the parties. PETITION for review on certiorari of the decision and Resolution of the Court of Appeals. The facts are stated in the opinion of the Court. Cruz, Enverga & Lucero for petitioner. The Government Corporate Counsel for respondent. KAPUNAN, J.: This is a petition for review on certiorari under Rule 45, assailing the Decision of the Court of Appeals dated November 23, 1999 in CA-G.R. SP No. 527551 and the Resolution dated August 31, 2000 denying petitioner Dily Dany Nacpils motion for reconsideration. The Court of Appeals reversed the decisions promulgated by the Labor Arbiter and the National Labor Relations Commission (NLRC), which consistently ruled in favor of petitioner. Petitioner states that he was Assistant General Manager for Finance/Administration and Comptroller of private respondent Intercontinental Broadcasting Corporation (IBC) from 1996 until April 1997. According to petitioner, when Emiliano Templo was appointed to replace IBC President Tomas Gomez III sometime in March 1997, the former told the Board of Directors that as soon as he assumes the IBC

presidency, he would terminate the services of petitioner. Apparently, Templo blamed petitioner, along with a certain Mr. Basilio and Mr. Gomez, for the prior mismanagement of IBC. Upon his assumption of the IBC presidency, Templo allegedly harassed, insulted, humiliated and pressured petitioner into resigning until the latter was forced to retire. However, Templo refused to pay him his retirement benefits, allegedly because he had not yet secured the clearances from the Presidential Commission on Good Government and the Commission on Audit. Furthermore, Templo allegedly refused to recognize petitioners employment, claiming that petitioner was not the Assistant General Manager/Comptroller of IBC but merely usurped the powers of the Comptroller. Hence, in 1997, petitioner filed with the Labor Arbiter a complaint for illegal dismissal and non-payment of benefits. Instead of filing its position paper, IBC filed a motion to dismiss alleging that the Labor Arbiter had no jurisdiction over the case. IBC contended that petitioner was a corporate officer who was duly elected by the Board of Directors of IBC; hence, the case qualifies as an intracorporate dispute falling within the jurisdiction of the Securities and Exchange Commission (SEC). However, the motion was denied by the Labor Arbiter in an Order dated April 22, 1998.2 On August 21, 1998, the Labor Arbiter rendered a Decision stating that petitioner had been illegally dismissed. The dispositive portion thereof reads: WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of the complainant and against all the respondents, jointly and severally, ordering the latter: 1. To reinstate complainant to his former position without diminution of salary or loss of seniority rights, and with full backwages computed from the time of his illegal dismissal on May 16, 1997 up to the time of his actual reinstatement which is tentatively computed as of the date of this decision on August 21, 1998 in the amount of P1,231,750.00 (i.e., P75,000.00 a month x 15.16 months = P1,137,000.00 plus 13th month pay equivalent to 1/12 of P1,137,000.00 = P94,750.00 or the total amount of P1,231,750.00). Should complainant be not reinstated within ten (10) days from receipt of this decision, he shall be entitled to additional backwages until actually reinstated. 2. Likewise, to pay complainant the following: a) P 2 Million as and for moral damages; b) P500,000.00 as and for exemplary damages; plus and (sic) c) Ten (10%) percent thereof as and for attorneys fees. SO ORDERED.3 IBC appealed to the NLRC, but the same was dismissed in a Resolution dated March 2, 1999, for its failure to file the required appeal bond in accordance with Article 223 of the Labor Code.4 IBC then filed a motion for reconsideration that was likewise denied in a Resolution dated April 26, 1999.5 IBC then filed with the Court of Appeals a petition for certiorari under Rule 65, which petition was granted by the appellate court in its Decision dated November 23, 1999. The dispositive portion of said decision states: WHEREFORE, premises considered, the petition for Certiorari is GRANTED. The assailed decisions of the Labor Arbiter and the NLRC are REVERSED and SET ASIDE and the complaint is DISMISSED without prejudice. SO ORDERED.6 Petitioner then filed a motion for reconsideration, which was denied by the appellate court in a Resolution dated August 31, 2000. Hence, this petition. Petitioner Nacpil submits that: I. THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER WAS APPOINTED BY RESPONDENTS BOARD OF DIRECTORS AS COMPTROLLER. THIS FINDING IS CONTRARY TO THE COMMON, CONSISTENT POSITION AND ADMISSION OF BOTH PARTIES. FURTHER,

RESPONDENTS BY-LAWS DOES NOT INCLUDE COMPTROLLER AS ONE OF ITS CORPORATE OFFICERS. II. THE COURT OF APPEALS WENT BEYOND THE ISSUE OF THE CASE WHEN IT SUBSTITUTED THE NATIONAL LABOR RELATIONS COMMISSIONS DECISION TO APPLY THE APPEAL BOND REQUIREMENT STRICTLY IN THE INSTANT CASE. THE ONLY ISSUE FOR ITS DETERMINATION IS WHETHER NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN DOING THE SAME.7 The issue to be resolved is whether the Labor Arbiter had jurisdiction over the case for illegal dismissal and non-payment of benefits filed by petitioner. The Court finds that the Labor Arbiter had no jurisdiction over the same. Under Presidential Decree No. 902-A (the Revised Securities Act), the law in force when the complaint for illegal dismissal was instituted by petitioner in 1997, the following cases fall under the exclusive of the SEC: 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 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 appointment of directors, trustees, officers, or managers of such corporations, partnerships or associations; d) Petitions of corporations, partnerships, or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses property to cover all of its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the Management Committee created pursuant to this decree. (Emphasis supplied.) The Court has consistently held that there are two elements to be considered in determining whether the SEC has jurisdiction over the controversy, to wit: (1) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy.8 Petitioner argues that he is not a corporate officer of the IBC but an employee thereof since he had not been elected nor appointed as Comptroller and Assistant Manager by the IBCs Board of Directors. He points out that he had actually been appointed as such on January 11, 1995 by the IBCs General Manager, Ceferino Basilio. In support of his argument, petitioner underscores the fact that the IBCs By-Laws does not even include the position of comptroller in its roster of corporate officers.9 He therefore contends that his dismissal is a controversy falling within the jurisdiction of the labor courts.10 Petitioners argument is untenable. Even assuming that he was in fact appointed by the General Manager, such appointment was subsequently approved by the Board of Directors of the IBC.11 That the position of Comptroller is not expressly mentioned among the officers of the IBC in the By-Laws is of no moment, because the IBCs Board of Directors is empowered under Section 25 of the Corporation Code12 and under the corporations By-Laws to appoint such other officers as it may deem necessary. The By-Laws of the IBC categorically provides:

XII. OFFICERS The officers of the corporation shall consist of a President, a VicePresident, a Secretary-Treasurer, a General Manager, and such other officers as the Board of Directors may from time to time does fit to provide for. Said officers shall be elected by majority vote of the Board of Directors and shall have such powers and duties as shall hereinafter provide (Emphasis supplied).13 The Court has held that in most cases the by-laws may and usually do provide for such other officers,14 and that where a corporate office is not specifically indicated in the roster of corporate offices in the bylaws of a corporation, the board of directors may also be empowered under the by-laws to create additional officers as may be necessary.15 An office has been defined as a creation of the charter of a corporation, while an officer as a person elected by the directors or stockholders. On the other hand, an employee occupies no office and is generally employed not by action of the directors and stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee.16 As petitioners appointment as comptroller required the approval and formal action of the IBCs Board of Directors to become valid,17 it is clear therefore holds that petitioner is a corporate officer whose dismissal may be the subject of a controversy cognizable by the SEC under Section 5(c) of P.D. 902-A which includes controversies involving both election and appointment of corporate directors, trustees, officers, and managers.18 Had petitioner been an ordinary employee, such board action would not have been required. Thus, the Court of Appeals correctly held that: Since complainants appointment was approved unanimously by the Board of Directors of the corporation, he is therefore considered a corporate officer and his claim of illegal dismissal is a controversy that falls under the jurisdiction of the SEC as contemplated by Section 5 of P.D. 902-A. The rule is that dismissal or non-appointment of a corporate officer is clearly an intra-corporate matter and jurisdiction over the case properly belongs to the SEC, not to the NLRC.19 As to petitioners argument that the nature of his functions is recommendatory thereby making him a mere managerial officer, the Court has previously held that the relationship of a person to a corporation, whether as officer or agent or employee is not determined by the nature of the services performed, but instead by the incidents of the relationship as they actually exist.20 It is likewise of no consequence that petitioners complaint for illegal dismissal includes money claims, for such claims are actually part of the perquisites of his position in, and therefore linked with his relations with, the corporation. The inclusion of such money claims does not convert the issue into a simple labor problem. Clearly, the issues raised by petitioner against the IBC are matters that come within the area of corporate affairs and management, and constitute a corporate controversy in contemplation of the Corporation Code.21 Petitioner further argues that the IBC failed to perfect its appeal from the Labor Arbiters Decision for its non-payment of the appeal bond as required under Article 223 of the Labor Code, since compliance with the requirement of posting of a cash or surety bond in an amount equivalent to the monetary award in the judgment appealed from has been held to be both mandatory and jurisdictional.22 Hence, the Decision of the Labor Arbiter had long become final and executory and thus, the Court of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction in giving due course to the IBCs petition for certiorari, and in deciding the case on the merits. The IBCs failure to post an appeal bond within the period mandated under Article 223 of the Labor Code has been rendered immaterial by the fact that the Labor Arbiter did not have jurisdiction over the case since as stated earlier, the same is in the nature of an intra-corporate controversy. The Court has consistently held that where there is a finding that any decision was rendered without jurisdiction, the action

shall be dismissed. Such defense can be interposed at any time, during appeal or even after final judgment.23 It is a well-settled rule that jurisdiction is conferred only by the Constitution or by law. It cannot be fixed by the will of the parties; it cannot be acquired through, enlarged or diminished by, any act or omission of the parties.24 Considering the foregoing, the Court holds that no error was committed by the Court of Appeals in dismissing the case filed before the Labor Arbiter, without prejudice to the filing of an appropriate action in the proper court. It must be noted that under Section 5.2 of the Securities Regulation Code (Republic Act No. 8799) which was signed into law by then President Joseph Ejercito Estrada on July 19, 2000, the SECs jurisdiction over all cases enumerated in Section 5 of P.D. 902-A has been transferred to the Regional Trial Courts.25 The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over the cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. (Emphasis supplied.) WHEREFORE, the petition is hereby DISMISSED and the Decision of the Court of Appeals in CA-G.R. SP No. 52755 is AFFIRMED. SO ORDERED. Davide, Jr. (C.J., Chairman) and Ynares-Santiago, J., concur. Puno, J., On official leave. Petition dismissed, judgment affirmed. Note.The controversy among stockholders, partners or associates themselves is intra-corporate in nature and falls within the jurisdiction of the Securities and Exchange Commission. (Lim Tay vs. Court of Appeals, 293 SCRA 634 [1998])

has time and again frowned upon the undesirable practice of a party submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when adverse. Here, the principle of estoppel lies. Hence, a party may be estopped or barred from raising the question of jurisdiction for the first time in a petition before the Supreme Court when it failed to do so in the early stages of the proceedings. Same; Employer-Employee Relationship; Regular Employees; An employee is regular because of the nature of the work and the length of service, not because of the mode or even the reason for hiring him.It appears that private respondent was appointed Accounting Clerk by the Bank on July 14, 1963. From that position she rose to become supervisor. Then in 1982, she was appointed Assistant VicePresident which she occupied until her illegal dismissal on July 19, 1991. The banks contention that she merely holds an elective position and that in effect she is not a regular employee is belied by the nature of her work and her length of service with the Bank. As earlier stated, she rose from the ranks and has been employed with the Bank since 1963 until the termination of her employment in 1991. As Assistant Vice President of the Foreign Department of the Bank, she is tasked, among others, to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased, including the signing of transmittal letters covering the same. It has been stated that the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. Additionally, an employee is regular because of the nature of work and the length of service, not because of the mode or even the reason for hiring them. As Assistant VicePresident of the Foreign Department of the Bank she performs tasks integral to the operations of the bank and her length of service with the bank totaling 28 years speaks volumes of her status as a regular employee of the bank. In fine, as a regular employee, she is entitled to security of tenure; that is, her services may be terminated only for a just or authorized cause. This being in truth a case of illegal dismissal, it is no wonder then that the Bank endeavored to the very end to establish loss of trust and confidence and serious misconduct on the part of private respondent but, as will be discussed later, to no avail. Same; Same; Illegal Dismissal; The Supreme Court is not a trier of facts and will not weigh anew the evidence already passed upon by the Court of Appeals.We uphold the findings of the Court of Appeals that the dismissal of private respondent on the ground of loss of trust and confidence was without basis. The charge was predicated on the testimony of Ms. Joven and we defer to the findings of the Labor Arbiter as confirmed and adopted by the Court of Appeals on the credibility of said witness. This Court is not a trier of facts and will not weigh anew the evidence already passed upon by the Court of Appeals. Actions; Pleadings and Practice; Appeals; Certiorari; Words and Phrases; Appeal and Certiorari, Distinguished; An ordinary appeal is distinguished from the remedy of certiorari under Rule 65 of the Revised Rules of Court in that in ordinary appeals it is settled that a party who did not appeal cannot seek affirmative relief other than the ones granted in the decision of the court below, while resort to a judicial review of the decisions of the National Labor Relations Commission in a petition for certiorari is confined to issues of want or excess of jurisdiction and grave abuse of discretion.On the third issue, the Bank questions the award of full backwages and other benefits from July 19, 1991 up to the finality of this judgment; separation pay equivalent to one (1) month salary for every year of service in lieu of reinstatement; and attorneys fees equivalent to ten (10%) percent of the total award. The Bank argues, in the main, that private respondent is not entitled to full backwages in view of the fact that she did not bother to appeal that portion of the labor arbiters

G.R. No. 141093. February 20, 2001.* PRUDENTIAL BANK and TRUST COMPANY, petitioner, vs. CLARITA T. REYES, respondent.

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

judgment awarding back wages limited to three years. It must be stressed that private respondent filed a special civil action for certiorari to review the decision of the NLRC and not an ordinary appeal. An ordinary appeal is distinguished from the remedy of certiorari under Rule 65 of the Revised Rules of Court in that in ordinary appeals it is settled that a party who did not appeal cannot seek affirmative relief other than the ones granted in the decision of the court below. On the other hand, resort to a judicial review of the decisions of the National Labor Relations Commission in a petition for certiorari under Rule 65 of Rules of Court is confined to issues of want or excess of jurisdiction and grave abuse of discretion. In the instant case, the Court of Appeals found that the NLRC gravely abused its discretion in finding that the private respondents dismissal was valid and so reversed the same. Corollary to the foregoing, the appellate court awarded backwages in accordance with current jurisprudence. Labor Law; Illegal Dismissal; Backwages; Employees illegally dismissed prior to the effectivity of Republic Act No. 6715 on March 21, 1989 are entitled to backwages up to three (3) years without deduction or qualification, while those illegally dismissed after are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement.Indeed, jurisprudence is clear on the amount of backwages recoverable in cases of illegal dismissal. Employees illegally dismissed prior to the effectivity of Republic Act No. 6715 on March 21, 1989 are entitled to backwages up to three (3) years without deduction or qualification, while those illegally dismissed after are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement. Considering that private respondent was terminated on July 19, 1991, she is entitled to full backwages from the time her actual compensation was withheld from her (which, as a rule, is from the time of her illegal dismissal) up to the finality of this judgment (instead of reinstatement) considering that reinstatement is no longer feasible as correctly pointed out by the Court of Appeals on account of the strained relations brought about by the litigation in this case. Since reinstatement is no longer viable, she is also entitled to separation pay equivalent to one (1) month salary for every year of service. Lastly, since private respondent was compelled to file an action for illegal dismissal with the labor arbiter, she is likewise entitled to attorneys fees at the rate above-mentioned. There is no room to argue, as the Bank does here, that its liability should be mitigated on account of its good faith and that private respondent is not entirely blameless. There is no showing that private respondent is partly at fault or that the Bank acted in good faith in terminating an employee of twenty-eight years. In any event, Article 279 of Republic Act No. 6715 clearly and plainly provides for full backwages to illegally dismissed employees. PETITION for review on certiorari of a decision of the Court of Appeals. The facts are stated in the opinion of the Court. Abello, Concepcion, Regala & Cruz for petitioner. Siguion-Reyna, Montecillo & Ongsiako collaborating counsel for petitioner. Rodolfo G. Pulanco for private respondent. GONZAGA-REYES, J.: Before the Court is a petition for review on certiorari of the Decision,1 dated October 15, 1999 of the Court of Appeals in C.A.-G.R. SP No. 30607 and of its Resolution, dated December 6, 1999 denying petitioners motion for reconsideration of said decision. The Court of Appeals reversed and set aside the resolution2 of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 009364-95, reversing and setting aside the labor arbiters decision and dismissing for lack of merit private respondents complaint.3

The case stems from NLRC NCR Case No. 00-06-03462-92, which is a complaint for illegal suspension and illegal dismissal with prayer for moral and exemplary damages, gratuity, fringe benefits and attorneys fees filed by Clarita Tan Reyes against Prudential Bank and Trust Company (the Bank) before the labor arbiter. Prior to her dismissal, private respondent Reyes held the position of Assistant Vice President in the foreign department of the Bank, tasked with the duties, among others, to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased, including the signing of transmittal letters covering the same. After proceedings duly undertaken by the parties, judgment was rendered by Labor Arbiter Cornelio L. Linsangan, the dispositive portion of which reads: WHEREFORE, finding the dismissal of complainant to be without factual and legal basis, judgment is hereby rendered ordering the respondent bank to pay her back wages for three (3) years in the amount of P540,000.00 (P15,000.00 x 36 mos.). In lieu of reinstatement, the respondent is also ordered to pay complainant separation pay equivalent to one month salary for every year of service, in the amount of P420,000.00 (P15,000 x 28 mos.). In addition, the respondent should also pay complainant profit sharing and unpaid fringe benefits. Attorneys fees equivalent to ten (10%) percent of the total award should likewise be paid by respondent. SO ORDERED.4 Not satisfied, the Bank appealed to the NLRC which, as mentioned at the outset, reversed the Labor Arbiters decision in its Resolution dated 24 March 1997. Private respondent sought reconsideration which, however, was denied by the NLRC in its Resolution of 28 July 1998. Aggrieved, private respondent commenced on October 28, 1998, a petition for certiorari before the Supreme Court.5 The subject petition was referred to the Court of Appeals for appropriate action and disposition per resolution of this Court dated November 25, 1998, in accordance with the ruling in St. Martin Funeral Homes vs. NLRC.6 In its assailed decision, the Court of Appeals adopted the following antecedent facts leading to Reyess dismissal as summarized by the NLRC: The auditors of the Bank discovered that two checks, No. 0117287232-146, in the amount of US$109,650.00, and No. 0117307232-146, in the amount of US$115,000.00, received by the Bank on April 6, 1989, drawn by the Sanford Trading against Hongkong and Shanghai Banking Corporation, Jurong Branch, Singapore, in favor of Filipinas Tyrom, were not sent out for collection to Hongkong Shanghai Banking Corporation on the alleged order of the complainant until the said checks became stale. The Bank created a committee to investigate the findings of the auditors involving the two checks which were not collected and became stale. On March 8, 1991, the president of the Bank issued a memorandum to the complainant informing her of the findings of the auditors and asked her to give her side. In reply, complainant requested for an extension of one week to submit her explanation. In a subsequent letter, dated March 14, 1991, to the president, complainant stated that in view of the refusal of the Bank that she be furnished copies of the pertinent documents she is requesting and the refusal to grant her a reasonable period to prepare her answer, she was constrained to make a general denial of any misfeasance or malfeasance on her part and asked that a formal investigation be made. As the complainant failed to attend and participate in the formal investigation conducted by the Committee on May 24, 1991, despite due notice, the Committee proceeded with its hearings and heard the testimonies of several witnesses.

The Committees findings were: a) The two (2) HSBC checks were received by the Foreign Department on 6 April 1989. On the same day, complainant authorized the crediting of the account of Filipinas Tyrom in the amount of P4,780,102.70 corresponding to the face value of the checks, (Exhibits 6, 22 to 22-A and 23 to 23-A). On the following day, a transmittal letter was prepared by Ms. Cecilia Joven, a remittance clerk then assigned in the Foreign Department, for the purpose of sending out the two (2) HSBC checks for collection. She then requested complainant to sign the said transmittal letters (Exhibits 1, 7 and 25; TSN, 11 March 1993, pp. 4252), as it is complainant who gives her instructions directly concerning the transmittal of foreign bills purchased. All other transmittal letters are in fact signed by complainant. b) After Ms. Joven delivered the transmittal letters and the checks to the Accounting Section of the Foreign Department, complainant instructed her to withdraw the same for the purpose of changing the addressee thereon from American Express Bank to Bank of Hawaii (ibid.) under a special collection scheme (Exhibits 4 and 5 to 5-B). c) After complying with complainants instruction, Ms. Joven then returned to complainant for the latter to sign the new transmittal letters. However, complainant told Ms. Joven to just hold on to the letters and checks and await further instructions (ibid.). Thus, the new transmittal letters remained unsigned. (See Exhibits 5 to 5B). d) In June 1989, Ms. Joven was transferred to another department. Hence, her duties, responsibilities and functions, including the responsibility over the two (2) HSBC checks, were turned over to another remittance clerk, Ms. Analisa Castillo (Exhibit 14; TSN, 4 June 1993, pp. 27-29). e) When asked by Ms. Castillo about the two (2) HSBC checks, Ms. Joven relayed to the latter complainants instruction (Exhibit 14; TSN, 4 June 1993, p. 42). f) About fifteen (15) months after the HSBC checks were received by the Bank, the said checks were discovered in the course of an audit conducted by the Banks auditors. Atty. Pablo Magno, the Banks legal counsel, advised complainant to send the checks for collection despite the lapse of fifteen (15) months. g) Complainant, however, deliberately withheld Atty. Magnos advice from her superior, the Senior Vice-President, Mr. Renato Santos and falsely informed the latter that Atty. Magno advised that a demand letter be sent instead, thereby further delaying the collection of the HSBC checks. h) On 10 July 1990, the HSBC checks were finally sent for collection, but were returned on 16 July 1990 for the reason account closed (Exhibits 2-A and 3-A). After a review of the Committees findings, the Board of Directors of the Bank resolved not to re-elect complainant any longer to the position of assistant president pursuant to the Banks By-laws. On July 19, 1991, complainant was informed of her termination of employment from the Bank by Senior Vice President Benedicto L. Santos, in a letter the text of which is quoted in full: Dear Mrs. Reyes: After a thorough investigation and appreciation of the charges against you as contained in the Memorandum of the President dated March 8, 1991, the Fact Finding Committee which was created to investigate the commission and/or omission of the acts alluded therein, has found the following: 1. You have deliberately held the clearing of Checks Nos. 11728 and 11730 of Hongkong and Shanghai Banking Corporation in the total amount of US$224,650.00 by giving instructions to the collection clerk not to send the checks for collection. In view thereof, when the said checks were finally sent to clearing after the lapse of 15 months from receipt of said checks, they were returned for the reason Account closed. To date, the value of said checks have not been paid by

Filipinas Tyrom, which as payee of the checks, had been credited with their peso equivalent; 2. You tried to influence the decision of Atty. Pablo P. Magno, Bank legal counsel, by asking him to do something allegedly upon instructions of a Senior Vice President of the Bank or else lose his job when in truth and in fact no such instructions was given; and 3. You deliberately withheld from Mr. Santos, Senior Vice President, the advice given by the legal counsel of the Bank which Mr. Santos had asked you to seek. As a matter of fact, you even relayed a false advice which delayed further the sending of the two checks for collection. Likewise, you refused to heed the advice of the Banks legal counsel to send the checks for collection. These findings have given rise to the Banks loss of trust and confidence in you, the same being acts of serious misconduct in the performance of your duties resulting in monetary loss to the Bank. In view thereof, the Board has resolved not to re-elect you to the position of Assistant Vice President of the Bank. Accordingly, your services are terminated effective immediately. In relation thereto, your monetary and retirement benefits are forfeited except those that have vested in you. In her position paper, complainant alleged that the real reason for her dismissal was her filing of the criminal cases against the bank president, the vice president and the auditors of the Bank, such filing not being a valid ground for her dismissal. Furthermore, she alleged that it would be self-serving for the respondent to state that she was found guilty of gross misconduct in deliberately withholding the clearing of the two dollar checks. She further alleged that she was not afforded due process as she was not given the chance to refute the charges mentioned in the letter of dismissal. Hence, she was illegally dismissed. On the other hand, respondent argues that there were substantial bases for the Bank to lose its trust and confidence on the complainant and, accordingly, had just cause for terminating her services. Moreover, for filing the clearly unfounded suit against the respondents officers, complainant is liable to pay moral and exemplary damages and attorneys fees.7 The Court of Appeals found that the NLRC committed grave abuse of discretion in ruling that the dismissal of Reyes is valid. In effect, the Court of Appeals reinstated the judgment of the labor arbiter with modification as follows: WHEREFORE, in the light of the foregoing, the decision appealed from is hereby REVERSED and SET ASIDE. In lieu thereof, judgment is hereby rendered ordering respondent Bank as follows: 1. To pay petitioner full backwages and other benefits from July 19, 1991 up to the finality of this judgment; 2. To pay petitioner separation pay equivalent to one (1) month salary for every year of service in lieu of reinstatement; and 3. To pay attorneys fee equivalent to ten (10%) percent of the total award. SO ORDERED.8 Hence, the Banks recourse to this Court contending in its memorandum that: IN SETTING ASIDE THE DECISION DATED 24 MARCH 1997 AND THE RESOLUTION DATED 28 JULY 1998 OF THE NLRC AND REINSTATING WITH MODIFICATION THE DECISION DATED 20 JULY 1995 OF LABOR ARBITER CORNELIO L. LINSANGAN, THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED, IN VIEW OF THE FOLLOWING: I. IT IS THE SEC (NOW THE REGIONAL TRIAL COURT) AND NOT THE NLRC WHICH HAS ORIGINAL AND EXCLUSIVE JURISDICTION OVER CASES INVOLVING THE REMOVAL FROM OFFICE OF CORPORATE OFFICERS. II.

EVEN ASSUMING ARGUENDO THAT THE NLRC HAS JURISDICTION, THERE WAS SUBSTANTIAL EVIDENCE OF RESPONDENTS MISCONDUCT JUSTIFYING THE BANKS LOSS OF TRUST AND CONFIDENCE ON (sic) HER. III. EVEN ASSUMING ARGUENDO THAT RESPONDENT WAS ENTITLED TO BACKWAGES, THE HONORABLE COURT OF APPEALS ERRED IN AWARDING UNLIMITED AND UNQUALIFIED BACKWAGES THEREBY GOING FAR BEYOND THE LABOR ARBITERS DECISION LIMITING THE SAME TO THREE YEARS, WHICH DECISION RESPONDENT HERSELF SOUGHT TO EXECUTE.9 In sum, the resolution of this petition hinges on (1) whether the NLRC has jurisdiction over the complaint for illegal dismissal; (2) whether complainant Reyes was illegally dismissed; and (3) whether the amount of back wages awarded was proper. On the first issue, petitioner seeks refuge behind the argument that the dispute is an intra-corporate controversy concerning as it does the nonelection of private respondent to the position of Assistant VicePresident of the Bank which falls under the exclusive and original jurisdiction of the Securities and Exchange Commission (now the Regional Trial Court) under Section 5 of Presidential Decree No. 902-A. More specifically, petitioner contends that complainant is a corporate officer, an elective position under the corporate by-laws and her nonelection is an intra-corporate controversy cognizable by the SEC invoking lengthily a number of this Courts decisions.10 Petitioner Bank can no longer raise the issue of jurisdiction under the principle of estoppel. The Bank participated in the proceedings from start to finish. It filed its position paper with the Labor Arbiter. When the decision of the Labor Arbiter was adverse to it, the Bank appealed to the NLRC. When the NLRC decided in its favor, the bank said nothing about jurisdiction. Even before the Court of Appeals, it never questioned the proceedings on the ground of lack of jurisdiction. It was only when the Court of Appeals ruled in favor of private respondent did it raise the issue of jurisdiction. The Bank actively participated in the proceedings before the Labor Arbiter, the NLRC and the Court of Appeals. While it is true that jurisdiction over the subject matter of a case may be raised at any time of the proceedings, this rule presupposes that laches or estoppel has not supervened. In this regard, Baaga vs. Commission on the Settlement of Land Problems,11 is most enlightening. The Court therein stated: This Court has time and again frowned upon the undesirable practice of a party submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when adverse. Here, the principle of estoppel lies. Hence, a party may be estopped or barred from raising the question of jurisdiction for the first time in a petition before the Supreme Court when it failed to do so in the early stages of the proceedings. Undeterred, the Bank also contends that estoppel cannot lie considering that from the beginning, petitioner Bank has consistently asserted in all its pleadings at all stages of the proceedings that respondent held the position of Assistant Vice President, an elective position which she held by virtue of her having been elected as such by the Board of Directors. As far as the records before this Court reveal however, such an assertion was made only in the appeal to the NLRC and raised again before the Court of Appeals, not for purposes of questioning jurisdiction but to establish that private respondents tenure was subject to the discretion of the Board of Directors and that her non-reelection was a mere expiration of her term. The Bank insists that private respondent was elected Assistant Vice President sometime

in 1990 to serve as such for only one year. This argument will not do either and must be rejected. It appears that private respondent was appointed Accounting Clerk by the Bank on July 14, 1963. From that position she rose to become supervisor. Then in 1982, she was appointed Assistant Vice President which she occupied until her illegal dismissal on July 19, 1991. The banks contention that she merely holds an elective position and that in effect she is not a regular employee is belied by the nature of her work and her length of service with the Bank. As earlier stated, she rose from the ranks and has been employed with the Bank since 1963 until the termination of her employment in 1991. As Assistant Vice President of the Foreign Department of the Bank, she is tasked, among others, to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased, including the signing of transmittal letters covering the same. It has been stated that the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer.12 Additionally, an employee is regular because of the nature of work and the length of service, not because of the mode or even the reason for hiring them.13 As Assistant Vice President of the Foreign Department of the Bank she performs tasks integral to the operations of the bank and her length of service with the bank totaling 28 years speaks volumes of her status as a regular employee of the bank. In fine, as a regular employee, she is entitled to security of tenure; that is, her services may be terminated only for a just or authorized cause.14 This being in truth a case of illegal dismissal, it is no wonder then that the Bank endeavored to the very end to establish loss of trust and confidence and serious misconduct on the part of private respondent but, as will be discussed later, to no avail. This brings us to the second issue wherein the Bank insists that it has presented substantial evidence to prove the breach of trust on the part of private respondent warranting her dismissal. On this point, the Court of Appeals disagreed and set aside the findings of the NLRC that Reyes deliberately withheld the release of the two dollar checks; that she is guilty of conflict of interest that she waived her right to due process for not attending the hearing; and that she was dismissed based on loss of trust and confidence. We quote pertinent portions of the decision, to wit: FIRST. Respondent Bank heavily relied on the testimony and affidavit of Remittance Clerk Joven in trying to establish loss of confidence. However, Jovens allegation that petitioner instructed her to hold the subject two dollar checks amounting to $224,650.00 falls short of the requisite proof to warrant petitioners dismissal. Except for Jovens bare assertion to withhold the dollar checks per petitioners instruction, respondent Bank failed to adduce convincing evidence to prove bad faith and malice. It bears emphasizing that respondent Banks witnesses merely corroborate Jovens testimony. Upon this point, the rule that proof beyond reasonable doubt is not required to terminate an employee on the charge of loss of confidence and that it is sufficient that there is some basis for such loss of confidence, is not absolute. The right of an employer to dismiss employees on the ground that it has lost its trust and confidence in him must not be exercised arbitrarily and without just cause. For loss of trust and confidence to be valid ground for an employees dismissal, it must be substantial and not arbitrary, and must be founded on clearly established facts sufficient to warrant the employees separation from work (Labor vs. NLRC, 248 SCRA 183). SECOND. Respondent Banks charge of deliberate withholding of the two dollar checks finds no support in the testimony of Atty. Jocson, Chairman of the Investigating Committee. On cross examination, Atty. Jocson testified that the documents themselves do not show any direct

withholding (pp. 186-187, Rollo). There being conflict in the statement of witnesses, the court must adopt the testimony which it believes to be true (U.S. vs. Losada, 18 Phil. 90). THIRD. Settled is the rule that when the conclusions of the Labor Arbiter are sufficiently substantiated by the evidence on record, the same should be respected by appellate tribunals since he is in a better position to assess and evaluate the credibility of the contending parties (Ala Mode Garments, Inc. vs. NLRC, 268 SCRA 497). In this regard, the Court quotes with approval the following disquisition of Labor Arbiter Linsangan, thus: This Office has repeatedly gone over the records of the case and painstakingly examined the testimonies of respondent banks witnesses. One thing was clearly established: that the legality of complainants dismissal based on the first ground stated in respondents letter of termination (exh. 25-J, supra) will rise or fall on the credibility of Miss Joven who undisputedly is the star witness for the bank. It will be observed that the testimonies of the banks other witnesses, Analiza Castillo, Dante Castor and Antonio Ragasa pertaining to the non-release of the dollar checks and their corresponding transmittal letters were all anchored on what was told them by Ms. Joven, that is: she was instructed by complainant to hold the release of subject checks. In a nutshell, therefore, the issue boils down to who between complainant and Ms. Joven is more credible. After painstakingly examining the testimonies of Ms. Joven and respondents other witnesses this Office finds the evidence still wanting in proof of complainants guilt. This Office had closely observed the demeanor of Ms. Joven while testifying on the witness stand and was not impressed by her assertions. The allegation of Ms. Joven in that her non-release of the dollar checks was upon the instruction of complainant Reyes is extremely doubtful. In the first place, the said instruction constitutes a gross violation of the banks standard operating procedure. Moreover, Ms. Joven was fully aware that the instruction, if carried out, will greatly prejudice her employer bank. It was incumbent upon Ms. Joven not only to disobey the instruction but even to report the matter to management, if same was really given to her by Complainant. Our doubt on the veracity of Ms. Jovens allegation even deepens as we consider the fact that when the non-release of the checks was discovered by Ms. Castillo the former contented herself by continuously not taking any action on the two dollar checks. Worse, Ms. Joven even impliedly told Ms. Castillo (sic) to ignore the two checks and just withhold their release. In her affidavit Ms. Castillo said: 4. When I asked Cecille Joven what I was supposed to do with those checks, she said the same should be held as per instruction of Mrs. Reyes. (Exh. 14, supra). The evidence shows that it was only on 16 May 1990 that Ms. Joven broke her silence on the matter despite the fact that on 15 November 1989, at about 8:00 p.m. the complainant, accompanied by driver Celestino Banito, went to her residence and confronted her regarding the non-release of the dollar checks. It took Ms. Joven eighteen (18) months before she explained her side on the controversy. As to what prompted her to make her letter of explanation was not even mentioned. On the other hand, the actions taken by the complainant were spontaneous. When complainant was informed by Mr. Castor and Ms. Castillo regarding the non-release of the checks sometime in November, 1989 she immediately reported the matter to Vice President Santos, Head of the Foreign Department. And as earlier mentioned, complainant went to the residence of Ms. Joven to confront her. In this regard, Celestino Bonito, complainants driver, stated in his affidavit, thus:

1. Sometime on November 15, 1989 at about 7:00 oclock in the evening, Mrs. Clarita Tan Reyes and I were in the residence of one Ms. Cecille Joven, then a Processing Clerk nin the Foreign Department of Prudential Bank; 2. Ms. Cecille Joven, her mother, myself, and Mrs. Clarita Tan Reyes were seated in the sala when the latter asked the former, Ms. Cecille Joven, how it came about that the two dollar checks which she was then holding with the transmittal letters, were found in a plastic envelope kept daytoday by the former; 3. Hesitatingly, Cecille Joven said: Eh, Mother (Mrs. Tan Reyes had been intimately called Mother in the Bank) akala ko bouncing checks yon mga yon; 4. Mrs. Clarita Tan Reyes, upon hearing those words, was surprised and she said: Ano, papaano mong alam na bouncing na hindi mo pa pinadadala; 5. Mrs. Cecille Joven turned pale and was not able to answer. There are other factors that constrain this Office to doubt even more the legality of complainants dismissal based on the first ground stated in the letter of dismissal. The non-release of the dollar checks was reported to top management sometime on 15 November 1989 when complainant, accompanied by Supervisor Dante Castor and Analiza Castillo, reported the matter to Vice President Santos. And yet, it was only on 08 March 1991, after a lapse of sixteen (16) months from the time the non-release of the checks was reported to the Vice President, that complainant was issued a memorandum directing her to submit an explanation. And it took the bank another four (4) months before it dismissed complainant. The delayed action taken by respondent against complainant lends credence to the assertion of the latter that her dismissal was a mere retaliation to the criminal complaints she filed against the banks top officials. It clearly appears from the foregoing that the complainant herein has no knowledge of, much less participation in, the nonrelease of the dollar checks under discussion. Ms. Joven is solely responsible for the same. Incidentally, she was not even reprimanded by the bank. FOURTH. Respondent Bank having failed to furnish petitioner necessary documents imputing loss of confidence, petitioner was not amply afforded opportunity to prepare an intelligent answer. The Court finds nothing confidential in the auditors report and the affidavit of Transmittal Clerk Joven. Due process dictates that management accord the employees every kind of assistance to enable him to prepare adequately for his defense, including legal representation. The issue of conflict of interest not having been covered by the investigation, the Court finds it irrelevant to the charge.15 We uphold the findings of the Court of Appeals that the dismissal of private respondent on the ground of loss of trust and confidence was without basis. The charge was predicated on the testimony of Ms. Joven and we defer to the findings of the Labor Arbiter as confirmed and adopted by the Court of Appeals on the credibility of said witness. This Court is not a trier of facts and will not weigh anew the evidence already passed upon by the Court of Appeals.16 On the third issue, the Bank questions the award of full backwages and other benefits from July 19, 1991 up to the finality of this judgment; separation pay equivalent to one (1) month salary for every year of service in lieu of reinstatement; and attorneys fees equivalent to ten (10%) percent of the total award. The Bank argues, in the main, that private respondent is not entitled to full backwages in view of the fact that she did not bother to appeal that portion of the labor arbiters judgment awarding back wages limited to three years. It must be stressed that private respondent filed a special civil action for certiorari to review the decision of the NLRC17 and not an ordinary appeal. An ordinary appeal is distinguished from the remedy of certiorari under Rule 65 of the Revised Rules of Court in that in ordinary appeals it is settled that a party who did not appeal cannot seek affirmative relief

other than the ones granted in the decision of the court below.18 On the other hand, resort to a judicial review of the decisions of the National Labor Relations Commission in a petition for certiorari under Rule 65 of Rules of Court is confined to issues of want or excess of jurisdiction and grave abuse of discretion.19 In the instant case, the Court of Appeals found that the NLRC gravely abused its discretion in finding that the private respondents dismissal was valid and so reversed the same. Corollary to the foregoing, the appellate court awarded backwages in accordance with current jurisprudence. Indeed, jurisprudence is clear on the amount of backwages recoverable in cases of illegal dismissal. Employees illegally dismissed prior to the effectivity of Republic Act No. 6715 on March 21, 1989 are entitled to backwages up to three (3) years without deduction or qualification, while those illegally dismissed after are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement.20 Considering that private respondent was terminated on July 19, 1991, she is entitled to full backwages from the time her actual compensation was withheld from her (which, as a rule, is from the time of her illegal dismissal) up to the finality of this judgment (instead of reinstatement) considering that reinstatement is no longer feasible as correctly pointed out by the Court of Appeals on account of the strained relations brought about by the litigation in this case. Since reinstatement is no longer viable, she is also entitled to separation pay equivalent to one (1) month salary for every year of service.21 Lastly, since private respondent was compelled to file an action for illegal dismissal with the labor arbiter, she is likewise entitled to attorneys fees22 at the rate above-mentioned. There is no room to argue, as the Bank does here, that its liability should be mitigated on account of its good faith and that private respondent is not entirely blameless. There is no showing that private respondent is partly at fault or that the Bank acted in good faith in terminating an employee of twenty-eight years. In any event, Article 279 of Republic Act No. 671523 clearly and plainly provides for full backwages to illegally dismissed employees. WHEREFORE, the instant petition for review on certiorari is DENIED, and the assailed Decision of the Court of Appeals, dated October 15, 1999, is AFFIRMED. SO ORDERED. Melo (Chairman), Vitug, Panganiban and Sandoval-Gutierrez, JJ., concur. Petition denied, judgment affirmed. Notes.Where the illegal dismissal transpired before the effectivity of R.A. 6715, or before 21 March 1989, the award of back wages in favor of the dismissed employee is limited to three (3) years without deduction or qualification. (Manipon, Jr. vs. National Labor Relations Commission, 239 SCRA 451 [1994]) Employees illegally dismissed after March 21, 1989, the date of effectivity of R.A. 6715 which amended Art. 279 of the Labor Code, are entitled to full backwages. (Valiant Machinery and Metal Corporation vs. National Labor Relations Commission, 252 SCRA 369 [1996]) The amendment to Article 279 of the Labor Code introduced by R.A. 6715 has no retroactive effect. (Hilario vs. National Labor Relations Commission, 252 SCRA 555 [1996])

Labor Law; Jurisdictions; Mainland Construction Co., Inc. vs. Movilla (250 SCRA 290 [1995]) instructs that a corporation can engage its corporate officers to perform services under a circumstance which would make them employees. The Labor Arbiter has thus jurisdiction over respondents complaint.While, indeed, respondent was the Corporate Secretary of the Rural Bank of Coron, she was also its Financial Assistant and the Personnel Officer of the two other petitioner corporations. Mainland Construction Co., Inc. v. Movilla (250 SCRA 290 [1995]) instructs that a corporation can engage its corporate officers to perform services under a circumstance which would make them employees. The Labor Arbiter has thus jurisdiction over respondents complaint. Appeals; Bonds; Jurisdictions; For the non-posting of an appeal bond within the reglementary period divests the National Labor Relations Commission of its jurisdiction to entertain the appeal. The appellate court did not thus err in dismissing the petition before it. And contrary to petitioners assertion, the appellate court dismissed its petition not on a mere technicality. For the non-posting of an appeal bond within the reglementary period divests the NLRC of its jurisdiction to entertain the appeal. Same; Same; It bears emphasis that all that is required to perfect the appeal is the posting of a bond to ensure that the award is eventually paid should the appeal be dismissed. Petitioners should thus have posted a bond, even if it were only partial, but they did not. No relaxation of the Rule may thus be considered.It bears emphasis that all that is required to perfect the appeal is the posting of a bond to ensure that the award is eventually paid should the appeal be dismissed. Petitioners should thus have posted a bond, even if it were only partial, but they did not. No relaxation of the Rule may thus be considered. PETITION for review on certiorari of a decision of the Court of Appeals. The facts are stated in the opinion of the Court. Rodolfo V. Tagapan, Jr. for petitioners. Ricardo F. Requinta & Associates for respondent. CARPIO-MORALES, J.: In 1987, Virgilio Garcia, founder of petitioner corporations (the corporations), hired the then still single Annalisa Cortes (respondent) as clerk of the Rural Bank of Coron (Manila Office). After Virgilio died, his son Victor took over the management of the corporations. Anita Cortes (Anita), the wife of Victor Garcia, was also involved in the management of the corporations. Respondent later married Anitas brother Eduardo Cortes. Anita soon assumed the position of Vice President of petitioner Citizens Development Incorporated (CDI) and practically controlled the financial operations of almost all of the other corporations in the course of which she allowed some of her relatives and in-laws, including respondent, to hold several key sensitive positions thereat. Respondent later became the Financial Assistant, Personnel Officer and Corporate Secretary of The Rural Bank of Coron, Personnel Officer of CDI, and also Personnel Officer and Disbursing Officer of The Empire Cold Storage Development Corporation (ECSDC). She simultaneously received salaries from these corporations. On examination of the financial books of the corporations by petitioner Sandra Garcia Escat, a daughter of Virgilio Garcia who was previously residing in Spain, she found out that respondent was involved in several anomalies,1 drawing petitioners to terminate respondents services on November 23, 1998 in petitioner corporations.2 By letter of November 25, 19983 addressed to individual petitioners Caridad B. Garcia (widow of Virgilio Garcia), Sandra G. Escat, and Olga

G.R. No. 164888. December 6, 2006.* RURAL BANK OF CORON (PALAWAN), INC., EMPIRE COLD STORAGE AND DEVELOPMENT CORPORATION, CITIZENS DEVELOPMENT INCORPORATED, CARIDAD B. GARCIA, SANDRA G. ESCAT, LORNA GARCIA, and OLGA G. ESCAT, petitioners, vs. ANNALISA CORTES, respondent.

G. Escat (another daughter of Virgilio Garcia), respondents counsel conveyed respondents willingness to abide by the decision to terminate her but reminded them that she was entitled to separation pay equivalent to 11 months salary as well as to the other benefits provided by law in her favor. Respondents counsel thus demanded the payment of respondents unpaid salary for the months of October and November 1998, separation pay equivalent to 12 months salary,4 13th month pay and other benefits. As the demand remained unheeded, respondent filed a complaint5 for illegal dismissal and non-payment of salaries and other benefits, docketed as NLRC-NCR Case No. 00-0505738-99. Petitioners moved for the dismissal of the complaint on the ground of lack of jurisdiction, contending that the case was an intra-corporate controversy involving the removal of a corporate officer, respondent being the Corporate Secretary of the Rural Bank of Coron, Inc., hence, cognizable by the Securities and Exchange Commission (SEC) pursuant to Section 5 of PD 902-A.6 In resolving the issue of jurisdiction, the Labor Arbiter noted as follows: It is to be noted that complainant, aside from her being Corporate Secretary of Rural Bank of Coron, complainant was likewise appointed as Financial Assistant & Personnel Officer of all respondents herein, whose services w[ere] terminated on 23 November 1998, hence, the instant complaint. Verily, a Financial Assistant & Personnel Officer is not a Corporate Officer of the *petitioners+ corporation, thus, pursuant to Article 217 of the Labor Code, as amended, the instant case falls within the ambit of original and exclusive jurisdiction of this Office.7 (Emphasis and italics supplied). Eventually, the Labor Arbiter found for respondent, computing the monetary award due her as follows: Backwages P658,000.00 13th Month Pay for 1998, 1999 & 2000 ___63,000.00 P721,000.00 Separation Pay 315,000.00 Unpaid Salary 25,900.00 Attorneys fees __106,190.00 P1,168,090.00 Thus, the Labor Arbiter, by Decision of July 18, 2001, disposed: WHEREFORE, in view of all the foregoing, respondents are hereby ordered to jointly and severally pay complainant the total amount of ONE MILLION ONE HUNDRED SIXTY-EIGHT THOUSAND NINETY (P1,168,090.00) PESOS as discussed above.8 On August 13, 2001, the tenth or last day of the period of appeal,9 petitioners filed a Notice of Appeal and Motion for Reduction of Bond10 to which they attached a Memorandum on Appeal.11 In their Motion for Reduction of Bond, petitioners alleged that the corporations were under financial distress and the Rural Bank of Coron was under receivership. They thus prayed that the amount of bond be substantially reduced, preferably to one half thereof or even lower.12 By Resolution of October 16, 2001,13 the National Labor Relations Commission (NLRC), while noting that petitioners timely filed the appeal, held that the same was not accompanied by an appeal bond, a mandatory requirement under Article 22314 of the Labor Code and Section 6, Rule VI of the NLRC New Rules of Procedure. It also noted

that the Motion for Reduction of Bond was premised on self-serving allegations. It accordingly dismissed the appeal. Petitioners Motion for Reconsideration15 was denied by the NLRC by November 26, 2001 Resolution,16hence, they filed a Petition for Certiorari17 before the Court of Appeals. By Decision dated May 26, 2004,18 the appellate court dismissed the petition for lack of merit. Petitioners motion for reconsideration was also denied by Resolution of August 13, 2004.19 Hence, this petition,20 petitioners faulting the appellate court for: I . . . FAIL[URE] TO RULE THAT THE NLRCS RULE OF PROCEDURE WHICH PROVIDES FOR THE POSTING OF A BOND AS A CONDITION PRECEDENT FOR PERFECTING AN APPEAL IS CONTRARY TO LAW AND ESTABLISHED JURISPRUDENCE. II . . . DISMISS*ING+ PETITIONERS*+ PETITION FOR *CERTIORARI+ BASED ON TECHNICALITY AND FAIL[URE] TO DECIDE THE SAME BASED ON ITS MERIT. III . . . DISMISSING PETITIONERS PETITION FOR CERTIORARI FROM THE DECISION OF THE NLRC FOR NON-PERFECTION THEREOF. IV . . . DISMISSING PETITIONERS PETITION FOR *CERTIORARI+ FROM THE DECISION OF THE NLRC WITHOUT RESOLVING THE CASE BASED ON ITS MERITS. V . . . FAIL[URE] TO DECLARE THAT INDIVIDUAL PETITIONERS ARE NOT SOLIDARY LIABLE TO PAY THE RESPONDENT FOR HER MONETARY CLAIM IN VIEW OF THE ABSENCE OF ANY EVIDENCE SHOWING THAT THEY WERE MOTIVATED BY ILLWILL OR MALICE IN SEVERING HER EMPLOYMENT. VI . . . FAIL[URE] TO RESOLVE THE ISSUE OF JURISDICTION.21 While, indeed, respondent was the Corporate Secretary of the Rural Bank of Coron, she was also its Financial Assistant and the Personnel Officer of the two other petitioner corporations.22 Mainland Construction Co., Inc. v. Movilla23 instructs that a corporation can engage its corporate officers to perform services under a circumstance which would make them employees.24 The Labor Arbiter has thus jurisdiction over respondents complaint. On the first three assigned errors which bear on whether petitioners appeal before the NLRC was perfected: As before the Court of Appeals, petitioners cite Cosico, Jr. v. NLRC25 and Taberrah v. NLRC26 in support of their contention that their appeal before the NLRC was perfected. As correctly ruled by the Court of Appeals, however, the cited cases are not in point. The appellant in Taberrah filed a motion to fix appeal bond instead of posting an appeal bond; and the Supreme Court relaxed the requirement considering that the labor arbiters decision did not contain a computation of the monetary award. In Cosico, the appeal bond posted was of insufficient amount but the Supreme Court ruled that provisions of the Labor Code on requiring a bond on appeal involving monetary awards must be given liberal interpretation in line with the desired objective of resolving controversies on their merits. Herein, no appeal bond, whether sufficient or not, was ever filed by the

petitioners.27 (Italics in the original; emphasis and underscoring supplied) Petitioners additionally cite Star Angel Handicraft v. NLRC28 to support their position that there is a distinction between the filing of an appeal within the reglementary period and its perfection. In the parallel case of Computer Innovations Center v. National Labor Relations Commission,29 this Court hesitated to reiterate the doctrine in Star Angel in this wise: Petitioners invoke the aforementioned holding in Star Angel that there is a distinction between the filing of an appeal within the reglementary period and its perfection, and that the appeal may be perfected after the said reglementary period. Indeed, Star Angel held that the filing of a motion for reduction of appeal bond necessarily stays the reglementary period for appeal. However, in this case, the motion for reduction of appeal bond, which was incorporated in the appeal memorandum, was filed only on the tenth or final day of the reglementary period. Under such circumstance, the motion for reduction of appeal bond can no longer be deemed to have stayed the appeal, and the petitioner faces the risk, as had happened in this case, of summary dismissal of the appeal for non-perfection. Moreover, the reference in Star Angel to the distinction between the period to file the appeal and to perfect the appeal has been pointedly made only once by this Court in Gensoli v. NLRC thus, it has not acquired the sheen of venerability reserved for repeatedlycited cases. The distinction, if any, is not particularly evident or material in the Labor Code; hence, the reluctance of the Court to adopt such doctrine. Moreover, the present provision in the NLRC Rules of Procedure, that the filing of a motion to reduce bond shall not stop the running of the period to perfect appeal flatly contradicts the notion expressed in Star Angel that there is a distinction between the filing an appeal and perfecting an appeal. Ultimately, the disposition of Star Angel was premised on the ruling that a motion for reduction of the appeal bond necessarily stays the period for perfecting the appeal, and that the employer cannot be expected to perfect the appeal by posting the proper bond until such time the said motion for reduction is resolved. The unduly stretchedout distinction between the period to file an appeal and to perfect an appeal was not material to the resolution of Star Angel, and this could be properly considered as obiter dictum.30 (Italics in the original; emphasis and underscoring supplied) The appellate court did not thus err in dismissing the petition before it. And contrary to petitioners assertion, the appellate court dismissed its petition not on a mere technicality. For the non-posting of an appeal bond within the reglementary period divests the NLRC of its jurisdiction to entertain the appeal. Thus, in the same case of Computer Innovations Center, this Court held: Petitioners also characterize the appeal bond requirement as a technical rule, and that the dismissal of an appeal on purely technical grounds is frowned upon. However, Article 223, which prescribes the appeal bond requirement, is a rule of jurisdiction and not of procedure. There is a little leeway for condoning a liberal interpretation thereof, and certainly none premised on the ground that its requirements are mere technicalities. It must be emphasized that there is no inherent right to an appeal in a labor case, as it arises solely from grant of statute, namely the Labor Code. We have indeed held that the requirement for posting the surety bond is not merely procedural but jurisdictional and cannot be trifled with. Non-compliance with such legal requirements is fatal and has the effect of rendering the judgment final and executory. The petitioners cannot be allowed to seek refuge in a liberal application of rules for their act of negligence.31 (Emphasis and italics supplied)

It bears emphasis that all that is required to perfect the appeal is the posting of a bond to ensure that the award is eventually paid should the appeal be dismissed. Petitioners should thus have posted a bond, even if it were only partial, but they did not. No relaxation of the Rule may thus be considered.32 In the case at bar, petitioner did not post a full or partial appeal bond within the prescribed period, thus, no appeal was perfected from the decision of the Labor Arbiter. For this reason, the decision sought to be appealed to the NLRC had become final and executory and therefore immutable. Clearly then, the NLRC has no authority to entertain the appeal, much less to reverse the decision of the Labor Arbiter. Any amendment or alteration made which substantially affects the final and executory judgment is null and void for lack of jurisdiction, including the entire proceeding held for that purpose.33 (Emphasis and italics supplied) As the decision of the Labor Arbiter had become final and executory, a discussion of the fourth and fifth assigned errors is no longer necessary. WHEREFORE, the petition is DENIED. SO ORDERED. Quisumbing (Chairperson), Carpio, Tinga and Velasco, Jr., JJ., concur. Petition denied. Notes.Perfection of an appeal in the manner and within the period laid down by law is not only mandatory but also jurisdictional. (Heirs of Spouse Julian Dela Cruz and Magdalena Tuazon vs. Heirs of Florentino Quintos, Sr., 385 SCRA 471 [2002]) If the judgment involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond. (R & E Transport, Inc. vs. Latag, 422 SCRA 698 [ [Rural Bank of Coron (Palawan), Inc. vs. Cortes, 510 SCRA 443(2006)]

G.R. No. 113191. September 18, 1996.* DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER NIEVES V. DE CASTRO and JOSE C. MAGNAYI, respondents.

Constitutional Law; Actions; Except in the specified cases of borrowing and guarantee operations, as well as the purchase, sale and underwriting of securities, the ADB enjoys immunity from legal process of every form.The above stipulations of both the Charter and Headquarters Agreement should be able, nay well enough, to establish that, except in the specified cases of borrowing and guarantee operations, as well as the purchase, sale and underwriting of securities, the ADB enjoys immunity from legal process of every form. The Banks officers, on their part, enjoy immunity in respect of all acts performed by them in their official capacity. The Charter and the Headquarters Agreement granting these immunities and privileges are treaty covenants and commitments voluntarily assumed by the Philippine government which must be respected. SPECIAL CIVIL ACTION in the Supreme Court. Certiorari. The facts are stated in the opinion of the Court. Ronald E. Javier for private respondent. VITUG, J.: The questions raised in the petition for certiorari are a few coincidental matters relative to the diplomatic immunity extended to the Asian Development Bank (ADB). On 27 January 1993, private respondent initiated NLRC-NCR Case No. 00-01-0690-93 for his alleged illegal dismissal by ADB and the latters

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violation of the labor-only contracting law. Two summonses were served, one sent directly to the ADB and the other through the Department of Foreign Affairs (DFA), both with a copy of the complaint. Forthwith, the ADB and the DFA notified respondent Labor Arbiter that the ADB, as well as its President and Officers, were covered by an immunity from legal process except for borrowings, guaranties or the sale of securities pursuant to Article 50(1) and Article 55 of the Agreement Establishing the Asian Development Bank (the Charter) in relation to Section 5 and Section 44 of the Agreement Between The Bank And The Government Of The Philippines Regarding The Banks Headquarters (the Headquarters Agreement). The Labor Arbiter took cognizance of the complaint on the impression that the ADB had waived its diplomatic immunity from suit. In time, the Labor Arbiter rendered his decision, dated 31 August 1993, that concluded: WHEREFORE, above premises considered, judgment is hereby rendered declaring the complainant as a regular employee of respondent ADB, and the termination of his services as illegal. Accordingly, respondent Bank is hereby ordered: 1. To immediately reinstate the complainant to his former position effective September 16, 1993; 2. To pay complainant full backwages from December 1, 1992 to September 15, 1993 in the amount of P42,750.00 (P4,500.00 x 9 months); 3. And to pay complainants other benefits and without loss of seniority rights and other privileges and benefits due a regular employee of Asian Development Bank from the time he was terminated on December 31, 1992; 4. To pay 10% attorneys fees of the total entitlements.1 The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA referred the matter to the National Labor Relations Commission (NLRC); in its referral, the DFA sought a formal vacation of the void judgment. Replying to the letter, the NLRC Chairman, wrote: The undersigned submits that the request for the investigation of Labor Arbiter Nieves de Castro, by the National Labor Relations Commission, has been erroneously premised on Art. 218(c) of the Labor Code, as cited in the letter of Secretary Padilla, considering that the provision deals with a question, matter or controversy within its (the Commission) jurisdiction obviously referring to a labor dispute within the ambit of Art. 217 (on jurisdiction of Labor Arbiters and the Commission over labor cases). The procedure, in the adjudication of labor cases, including raising of defenses, is prescribed by law. The defense of immunity could have been raised before the Labor Arbiter by a special appearance which, naturally, may not be considered as a waiver of the very defense being raised. Any decision thereafter is subject to legal remedies, including appeals to the appropriate division of the Commission and/or a petition for certiorari with the Supreme Court, under Rule 65 of the Rules of Court. Except where an appeal is seasonably and properly made, neither the Commission nor the undersigned may review, or even question, the propriety of any decision by a Labor Arbiter. Incidentally, the Commission sits en banc (all fifteen Commissioners) only to promulgate rules of procedure or to formulate policies (Art. 213, Labor Code). On the other hand, while the undersigned exercises administrative supervision over the Commission and its regional branches and all its personnel, including the Executive Labor Arbiters and Labor Arbiters (penultimate paragraph, Art. 213, Labor Code), he does not have the competence to investigate or review any decision of a Labor Arbiter. However, on the purely administrative aspect of the decision-making process, he may cause that an investigation be made of any

misconduct, malfeasance or misfeasance, upon complaint properly made. If the Department of Foreign Affairs feels that the action of Labor Arbiter Nieves de Castro constitutes misconduct, malfeasance or misfeasance, it is suggested that an appropriate complaint be lodged with the Office of the Ombudsman. Thank you for your kind attention.2 Dissatisfied, the DFA lodged the instant petition for certiorari. In this Courts resolution of 31 January 1994, respondents were required to comment. Petitioner was later constrained to make an application for a restraining order and/or writ of preliminary injunction following the issuance, on 16 March 1994, by the Labor Arbiter of a writ of execution. In a resolution, dated 07 April 1994, the Court issued the temporary restraining order prayed for. The Office of the Solicitor General (OSG), in its comment of 26 May 1994, initially assailed the claim of immunity by the ADB. Subsequently, however, it submitted a Manifestation (dated 20 June 1994) stating, among other things, that after a thorough review of the case and the records, it became convinced that ADB, indeed, was correct in invoking its immunity from suit under the Charter and the Headquarters Agreement. The Court is of the same view. Article 50(1) of the Charter provides: The Bank shall enjoy immunity from every form of legal process, except in cases arising out of or in connection with the exercise of its powers to borrow money, to guarantee obligations, or to buy and sell or underwrite the sale of securities.3 Under Article 55 thereof All Governors, Directors, alternates, officers and employees of the Bank, including experts performing missions for the Bank: (l) shall be immune from legal process with respect of acts performed by them in their official capacity, except when the Bank waives the immunity.4 Like provisions are found in the Headquarters Agreement. Thus, its Section 5 reads: The Bank shall enjoy immunity from every form of legal process, except in cases arising out of, or in connection with, the exercise of its powers to borrow money, to guarantee obligations, or to buy and sell or underwrite the sale of securities.5 And, with respect to certain officials of the bank, Section 44 of the agreement states: Governors, other representatives of Members, Directors, the President, Vice-President and executive officers as may be agreed upon between the Government and the Bank shall enjoy, during their stay in the Republic of the Philippines in connection with their official duties with the Bank: x x x x x x x x x (b) Immunity from legal process of every kind in respect of words spoken or written and all acts done by them in their official capacity.6 The above stipulations of both the Charter and Headquarters Agreement should be able, nay well enough, to establish that, except in the specified cases of borrowing and guarantee operations, as well as the purchase, sale and underwriting of securities, the ADB enjoys immunity from legal process of every form. The Banks officers, on their part, enjoy immunity in respect of all acts performed by them in their official capacity. The Charter and the Headquarters Agreement granting these immunities and privileges are treaty covenants and commitments voluntarily assumed by the Philippine government which must be respected. In World Health Organization vs. Aquino,7 we have declared: 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

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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 x x x 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, x x x or other officer acting under his direction. Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction x x x 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 government follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdic-tion. 8 To the same effect is the decision in International Catholic Migration Commission vs. Calleja,9 which has similarly deemed the Memoranda of the Legal Adviser of the Department of Foreign Affairs to be a categorical recognition by the Executive Branch of Government that ICMC x x x enjoy(s) immunities accorded to international organizations and which determination must be held conclusive upon the Courts in order not to embarrass a political department of Government. In the instant case, the filing of the petition by the DFA, in behalf of ADB, is itself an affirmance of the governments own recognition of ADBs immunity. Being an international organization that has been extended a diplomatic status, the ADB is independent of the municipal law.10 In Southeast Asian Fisheries Development Center vs. Acosta,11 the Court has cited with approval the opinion12 of the then Minister of Justice, thus One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals of the country where it is found. (See Jenks, Id., pp. 37-44). The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in their operations or even influence or control its policies and decisions of the organization; besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its member-states.13 Contrary to private respondents assertion, the claim of immunity is not here being raised for the first time; it has been invoked before the forum of origin through communications sent by petitioner and the ADB to the Labor Arbiter, as well as before the NLRC following the rendition of the questioned judgment by the Labor Arbiter, but evidently to no avail. In its communication of 27 May 1993, the DFA, through the Office of Legal Affairs, has advised the NLRC: Respectfully returned to the Honorable Domingo B. Mabazza, Labor Arbitration Associate, National Labor Relations Commission, National Capital Judicial Region, Arbitration Branch, Associated Bank Bldg., T.M. Kalaw St., Ermita, Manila, the attached Notice of Hearing addressed to the Asian Development Bank, in connection with the aforestated case, for the reason stated in the Departments 1st Indorsement dated 23 March 1993, copy attached, which is self-explanatory. In view of the fact that the Asian Development Bank (ADB) invokes its immunity which is sustained by the Department of Foreign Affairs, a continuous hearing of this case erodes the credibility of the Philippine government before the international community, let alone the negative implication of such a suit on the official relationship of the Philippine government with the ADB. For the Secretary of Foreign Affairs (Sgd.) SIME D. HIDALGO

Assistant Secretary14 The Office of the President, likewise, has issued on 18 May 1993 a letter to the Secretary of Labor, viz: Dear Secretary Confesor, I am writing to draw your attention to a case filed by a certain Jose C. Magnayi against the Asian Development Bank and its President, Kimimasa Tarumizu, before the National Labor Relations Commission, National Capital Region Arbitration Board (NLRC NCR Case No. 0001690-93). Last March 8, the Labor Arbiter charged with the case, Ms. Nieves V. de Castro, addressed a Notice of Resolution/Order to the Bank which brought it to the attention of the Department of Foreign Affairs on the ground that the service of such notice was in violation of the RP-ADB Headquarters Agreement which provided, inter-alia, for the immunity of the Bank, its President and officers from every form of legal process, except only, in cases of borrowings, guarantees or the sale of securities. The Department of Foreign Affairs, in turn, informed Labor Arbiter Nieves V. de Castro of this fact by letter dated March 22, copied to you. Despite this, the labor arbiter in question persisted to send summons, the latest dated May 4, herewith attached, regarding the Magnayi case. The Supreme Court has long settled the matter of diplomatic immunities. In WHO vs. Aquino, SCRA 48, it ruled that courts should respect diplomatic immunities of foreign officials recognized by the Philippine government. Such decision by the Supreme Court forms part of the law of the land. Perhaps you should point out to Labor Arbiter Nieves V. de Castro that ignorance of the law is a ground for dismissal. Very truly yours, (Sgd.) JOSE B. ALEJANDRINO Chairman, PCC-ADB15 Private respondent argues that, by entering into service contracts with different private companies, ADB has descended to the level of an ordinary party to a commercial transaction giving rise to a waiver of its immunity from suit. In the case of Holy See vs. Hon. Rosario, Jr.,16 the Court has held: There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the Courts of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state, but not with regard to private act or acts jure gestionis. x x x x x x x x x Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit.17 The service contracts referred to by private respondent have not been intended by the ADB for profit or gain but are official acts over which a waiver of immunity would not attach. With regard to the issue of whether or not the DFA has the legal standing to file the present petition, and whether or not petitioner has regarded the basic rule that certiorari can be availed of only when there is no appeal nor plain, speedy and adequate remedy in the ordinary course of law, we hold both in the affirmative. The DFAs function includes, among its other mandates, the determination of persons and institutions covered by diplomatic immunities, a determination which, when challenged, entitles it to seek

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relief from the court so as not to seriously impair the conduct of the countrys foreign relations. The DFA must be allowed to plead its case whenever necessary or advisable to enable it to help keep the credibility of the Philippine government before the international community. When international agreements are concluded, the parties thereto are deemed to have likewise accepted the responsibility of seeing to it that their agreements are duly regarded. In our country, this task falls principally on the DFA as being the highest executive department with the competence and authority to so act in this aspect of the international arena.18 In Holy See vs. Hon. Rosario, Jr.,19 this Court has explained the matter in good detail; viz: In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity. In the United States, the procedure followed is the process of suggestion, where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a Department of Foreign Affairs vs. NLRC suggestion that the defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign Office issues a certification to that effect instead of submitting a suggestion (OConnel, I International Law 130 *1965+; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]). In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission vs. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization vs. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a suggestion to respondent Judge. The Solicitor General embodied the suggestion in a manifestation and memorandum as amicus curiae. In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its memorandum in support of petitioners claim of sovereign immunity. In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels (Raquiza vs. Bradford, 75 Phil. 50 [1945]; Miquiabas vs. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America vs. Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the foreign states bypass the Foreign Officer, the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved.20 Relative to the propriety of the extraordinary remedy of certiorari, the Court has, under special circumstances, so allowed and entertained such a petition when (a) the questioned order or decision is issued in excess of or without jurisdiction,21 or (b) where the order or decision is a patent nullity,22 which, verily, are the circumstances that can be said to obtain in the present case. When an adjudicator is devoid of

jurisdiction on a matter before him, his action that assumes otherwise would be a clear nullity. WHEREFORE, the petition for certiorari is GRANTED, and the decision of the Labor Arbiter, dated 31 August 1993 is VACATED for being NULL AND VOID. The temporary restraining order issued by this Court on 07 April 1994 is hereby made permanent. No costs. SO ORDERED. Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur. Padilla (Chairman), J., No part, brother of Undersecretary Tomas Padilla of Foreign Affairs Department. Petition granted, judgment of Labor Arbiter vacated being null and void. Note.The issue whether an international organization is entitled to diplomatic immunity is a political question and such determination by the executive branch is conclusive on the courts and quasi-judicial agencies. (Lasco vs. United Nations Revolving Fund for Natural Resources, 241 SCRA 681 [1995]) [Department of Foreign Affairs vs. NLRC, 262 SCRA 39(1996)]

United States of America vs. Guinto Political Law; State Immunity from Suit; When the government enters into a contract, it is deemed to have descended to the level of the other contracting party, and divested of its sovereign immunity from suit with its implied consent.The general law waiving the immunity of the state from suit is found in Act No. 3083, under which the Philippine government consents and submits to be sued upon any moneyed claim involving liability arising from contract, express or implied, which could serve as a basis of civil action between private parties. In Merritt v. Government of the Philippine Islands, a special law was passed to enable a person to sue the government for an alleged tort. When the government enters into a contract, it is deemed to have descended to the level of the other contracting party and divested of its sovereign immunity from suit with its implied consent. Waiver is also implied when the government files a complaint, thus opening itself to a counterclaim. The above rules are subject to qualification. Express consent is effected only by the will of the legislature through the medium of a duly enacted statute. We have held that not all contracts entered into by the government will operate as a waiver of its nonsuability; distinction must be made between its sovereign and proprietary acts. As for the filing of a complaint by the government, suability will result only where the government is claiming affirmative relief from the defendant. Same; Same; Same; Rule on waiver, not applicable when the contract entered into involves its sovereign or governmental capacity. There is no question that the United States of America, like any other state, will be deemed to have impliedly waived its non-suability if it has entered into a contract in its proprietary or private capacity. It is only when the contract involves its sovereign or governmental capacity that no such waiver may be implied. This was our ruling in United States of America v. Ruiz, where the transaction in question dealt with the improvement of the wharves in the naval installation at Subic Bay. As this was a clearly governmental function, we held that the contract did not operate to divest the United States of its sovereign immunity from suit. Same; Same; Same; Officers acting in their official capacity cannot be directly impleaded for acts imputable to their principal which has not given its consent to be sued.It is clear from a study of the records of G.R. No. 80018 that the individually-named petitioners therein were acting in the exercise of their official functions when they conducted

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the buy-bust operation against the complainant and thereafter testified against him at his trial. The said petitioners were in fact connected with the Air Force Office of Special Investigators and were charged precisely with the function of preventing the distribution, possession and use of prohibited drugs and prosecuting those guilty of such acts. It cannot for a moment be imagined that they were acting in their private or unofficial capacity when they apprehended and later testified against the complainant. It follows that for discharging their duties as agents of the United States, they cannot be directly im-pleaded for acts imputable to their principal, which has not given its consent to be sued. As we observed in Sanders v. Veridiano: Given the official character of the above-described letters, we have to conclude that the petitioners were, legally speaking, being sued as officers of the United States government. As they have acted on behalf of that government, and within the scope of their authority, it is that government, and not the petitioners personally, that is responsible for their acts. Same; Same; Express waiver of immunity cannot be made by a mere counsel of the government but must be effected through a duly enacted statute.We reject the conclusion of the trial court that the answer filed by the special counsel of the Office of the Sheriff Judge Advocate of Clark Air Base was a submission by the United States government to its jurisdiction. As we noted in Republic v. Purisima, express waiver of immunity cannot be made by a mere counsel of the government but must be effected through a duly-enacted statute. Neither does such answer come under the implied forms of consent as earlier discussed. Same; Same; By entering into an employment contract with Geno-ve in the discharge of its proprietary functions, it impliedly divested itself of its sovereign immunity from suit.From these circumstances, the Court can assume that 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. Such services are not extended to the American servicemen for free as a perquisite of membership in the Armed Forces of the United States. Neither does it appear that they are exclusively offered to these servicemen; on the contrary, it is well known that they are available to the general public as well, including the tourists in Baguio City, many of whom make it a point to visit John Hay for this reason. All persons availing themselves of this facility pay for the privilege like all other customers as in ordinary restaurants. Although the prices are conced-edly reasonable and relatively low, such services are undoubtedly operated for profit, as a commercial and not a governmental activity. 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 that 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. PETITION for certiorari and prohibition with preliminary injunction to review the decision of the Regional Trial Court of Angeles City, Br. 62. The facts are stated in the opinion of the Court. Luna, Sison & Manas Law Office for petitioners. CRUZ, J.: These cases have been consolidated because they all involve the doctrine of state immunity. The United States of America was not impleaded in the complaints below but has moved to dismiss on the ground that they are in effect suits against it to which it has not

consented. It is now contesting the denial of its motions by the respondent judges. In G.R. No. 76607, the private respondents are suing several officers of the U.S. Air Force stationed in Clark Air Base in connection with the bidding conducted by them for contracts for barbering services in the said base. On February 24, 1986, the Western Pacific Contracting Office, Okinawa Area Exchange, U.S. Air Force, solicited bids for such contracts through its contracting officer, James F. Shaw. Among those who submitted their bids were private respondents Roberto T. Valencia, Emerenciana C. Tanglao, and Pablo C. del Pilar. Valencia had been a concessionaire inside Clark for 34 years; del Pilar for 12 years; and Tanglao for 50 years. The bidding was won by Ramon Dizon, over the objection of the private respondents, who claimed that he had made a bid for four facilities, including the Civil Engineering Area, which was not included in the invitation to bid. The private respondents complained to the Philippine Area Exchange (PHAX). The latter, through its representatives, petitioners Yvonne Reeves and Frederic M. Smouse, explained that the Civil Engineering concession had not been awarded to Dizon as a result of the February 24, 1986 solicitation. Dizon was already operating this concession, then known as the NCO club concession, and the expiration of the contract had been extended from June 30, 1986 to August 31, 1986. They further explained that the solicitation of the CE barbershop would be available only by the end of June and the private respondents would be notified. On June 30, 1986, the private respondents filed a complaint in the court below to compel PHAX and the individual petitioners to cancel the award to defendant Dizon, to conduct a rebid-ding for the barbershop concessions and to allow the private respondents by a writ of preliminary injunction to continue operating the concessions pending litigation.1 Upon the filing of the complaint, the respondent court issued an ex parte order directing the individual petitioners to maintain the status quo. On July 22, 1986, the petitioners filed a motion to dismiss and opposition to the petition for preliminary injunction on the ground that the action was in effect a suit against the United States of America, which had not waived its non-suability. The individual defendants, as officials/employees of the U.S. Air Force, were also immune from suit. On the same date, July 22, 1986, the trial court denied the application for a writ of preliminary injunction. On October 10, 1988, the trial court denied the petitioners motion to dismiss, holding in part as follows: From the pleadings thus far presented to this Court by the parties, the Courts attention is called by the relationship between the plaintiffs as well as the defendants, including the US Government, in that prior to the bidding or solicitation in question, there was a binding contract between the plaintiffs as well as the defendants, including the US Government. By virtue of said contract of concession, it is the Courts understanding that neither the US Government nor the herein principal defendants would become the employer/s of the plaintiffs but that the latter are the employers themselves of the barbers, etc. with the employer, the plaintiffs herein, remitting the stipulated percentage of commissions to the Philippine Area Exchange. The same circumstance would become in effect when the Philippine Area Exchange opened for bidding or solicitation the questioned barber shop concessions. To this extent, therefore, indeed a commercial transaction has been entered, and for purposes of the said solicitation,

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would necessarily be entered between the plaintiffs as well as the defendants. The Court, further, is of the view that Article XVIII of the RP-US Bases Agreement does not cover such kind of services falling under the concessionaireship, such as a barber shop concession.2 On December 11, 1986, following the filing of the herein petition for certiorari and prohibition with preliminary injunction, we issued a temporary restraining order against further proceedings in the court below.3 In G.R. No. 79470, Fabian Genove filed a complaint for damages against petitioners Anthony Lamachia, Wilfredo Belsa, Rose Cartalla and Peter Orascion for his dismissal as cook in the U.S. Air Force Recreation Center at the John Hay Air Station in Baguio City. It had been ascertained after investigation, from the testimony of Belsa, Cartalla and Orascion, that Genove had poured urine into the soup stock used in cooking the vegetables served to the club customers. Lamachia, as club manager, suspended him and thereafter referred the case to a board of arbitrators conformably to the collective bargaining agreement between the Center and its employees. The board unanimously found him guilty and recommended his dismissal. This was effected on March 5, 1986, by Col. David C. Kimball, Commander of the 3rd Combat Support Group, PACAF Clark Air Force Base. Genoves reaction was to file his complaint in the Regional Trial Court of Baguio City against the individual petitioners.4 On March 13, 1987, the defendants, joined by the United States of America, moved to dismiss the complaint, alleging that Lamachia, as an officer of the U.S. Air Force stationed at John Hay Air Station, was immune from suit for the acts done by him in his official capacity. They argued that the suit was in effect against the United States, which had not given its consent to be sued. This motion was denied by the respondent judge on June 4, 1987, in an order which read in part: It is the understanding of the Court, based on the allegations of the complaintwhich have been hypothetically admitted by defen-dants upon the filing of their motion to dismissthat although defen-dants acted initially in their official capacities, their going beyond what their functions called for brought them out of the protective mantle of whatever immunities they may have had in the beginning. Thus, the allegation that the acts complained of were illegal, done with extreme bad faith and with pre-conceived sinister plan to harass and finally dismiss the plaintiff, gains significance.5 The petitioners then came to this Court seeking certiorari and prohibition with preliminary injunction. In G.R. No. 80018, Luis Bautista, who was employed as a barracks boy in Camp ODonnell, an extension of Clark Air Base, was arrested following a buy-bust operation conducted by the individual petitioners herein, namely, Tomi J. King, Darrel D. Dye and Stephen F. Bostick, officers of the U.S. Air Force and special agents of the Air Force Office of Special Investigators (AFOSI). On the basis of the sworn statements made by them, an information for violation of R.A. 6425, otherwise known as the Dangerous Drugs Act, was filed against Bautista in the Regional Trial Court of Tarlac. The above-named officers testified against him at his trial. As a result of the filing of the charge, Bautista was dismissed from his employment. He then filed a complaint for damages against the individual petitioners herein claiming that it was because of their acts that he was removed.6 During the period for filing of the answer, Mariano Y. Navarro, a special counsel assigned to the International Law Division, Office of the Staff Judge Advocate of Clark Air Base, entered a special appearance for the

defendants and moved for an extension within which to file an answer and/or other pleadings. His reason was that the Attorney General of the United States had not yet designated counsel to represent the defendants, who were being sued for their official acts. Within the extended period, the defendants, without the assistance of counsel or authority from the U.S. Department of Justice, filed their answer. They alleged therein as affirmative defenses that they had only done their duty in the enforcement of the laws of the Philippines inside the American bases pursuant to the RP-US Military Bases Agreement. On May 7, 1987, the law firm of Luna, Sison and Manas, having been retained to represent the defendants, filed with leave of court a motion to withdraw the answer and dismiss the complaint. The ground invoked was that the defendants were acting in their official capacity when they did the acts complained of and that the complaint against them was in effect a suit against the United States without its consent. The motion was denied by the respondent judge in his order dated September 11, 1987, which held that the claimed immunity under the Military Bases Agreement covered only criminal and not civil cases. Moreover, the defendants had come under the jurisdiction of the court when they submitted their answer.7 Following the filing of the herein petition for certiorari and prohibition with preliminary injunction, we issued on October 14, 1987, a temporary restraining order.8 In G.R. No. 80258, a complaint for damages was filed by the private respondents against the herein petitioners (except the United States of America), for injuries allegedly sustained by the plaintiffs as a result of the acts of the defendants.9 There is a conflict of factual allegations here. According to the plaintiffs, the defendants beat them up, handcuffed them and unleashed dogs on them which bit them in several parts of their bodies and caused extensive injuries to them. The defendants deny this and claim the plaintiffs were arrested for theft and were bitten by the dogs because they were struggling and resisting arrest. The defendants stress that the dogs were called off and the plaintiffs were immediately taken to the medical center for treatment of their wounds. In a motion to dismiss the complaint, the United States of America and the individually named defendants argued that the suit was in effect a suit against the United States, which had not given its consent to be sued. The defendants were also immune from suit under the RP-US Bases Treaty for acts done by them in the performance of their official functions. The motion to dismiss was denied by the trial court in its order dated August 10, 1987, reading in part as follows: The defendants certainly cannot correctly argue that they are immune from suit. The allegations, of the complaint which is sought to be dismissed, had to be hypothetically admitted and whatever ground the defendants may have, had to be ventilated during the trial of the case on the merits. The complaint alleged criminal acts against the individually-named defendants and from the nature of said acts it could not be said that they are Acts of State, for which immunity should be invoked. If the Filipinos themselves are duty bound to respect, obey and submit themselves to the laws of the country, with more reason, the members of the United States Armed Forces who are being treated as guests of this country should respect, obey and submit themselves to its laws.10 and so was the motion for reconsideration. The defendants submitted their answer as required but subsequently filed their petiton for certiorari and prohibition with preliminary injunction with this Court. We issued a temporary restraining order on October 27, 1987.11 II

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The rule that a state may not be sued without its consent, now expressed in Article XVI, Section 3, of the 1987 Constitution, is one of the generally accepted principles of international law that we have adopted as part of the law of our land under Article II, Section 2. This latter provision merely reiterates a policy earlier embodied in the 1935 and 1973 Constitutions and also intended to manifest our resolve to abide by the rules of the international community. Even without such affirmation, we would still be bound by the generally accepted principles of international law under the doctrine of incorporation. Under this doctrine, as accepted by the majority of states, such principles are deemed incorporated in the law of every civilized state as a condition and consequence of its membership in the society of nations. Upon its admission to such society, the state is automatically obligated to comply with these principles in its relations with other states. As applied to the local state, the doctrine of state immunity is based on the justification given by Justice Holmes that there can be no legal right against the authority which makes the law on which the right depends.12 There are other practical reasons for the enforcement of the doctrine. In the case of the foreign state sought to be impleaded in the local jurisdiction, the added inhibition is expressed in the maxim par in parem, non habet imperium. All states are sovereign equals and cannot assert jurisdiction over one another. A contrary disposition would, in the language of a celebrated case, unduly vex the peace of nations.13 While the doctrine appears to prohibit only suits against the state without its consent, it is also applicable to complaints filed against officials of the state for acts allegedly performed by them in the discharge of their duties. The rule is that if the judgment against such officials will require the state itself to perform an affirmative act to satisfy the same, such as the appropriation of the amount needed to pay the damages awarded against them, the suit must be regarded as against the state itself although it has not been formally impleaded.14 In such a situation, the state may move to dismiss the complaint on the ground that it has been filed without its consent. The doctrine is sometimes derisively called the royal prerogative of dishonesty because of the privilege it grants the state to defeat any legitimate claim against it by simply invoking its non-suability. That is hardly fair, at least in democratic societies, for the state is not an unfeeling tyrant unmoved by the valid claims of its citizens. In fact, the doctrine is not absolute and does not say the state may not be sued under any circumstance. On the contrary, the rule says that the state may not be sued without its consent, which clearly imports that it may be sued if it consents. The consent of the state to be sued may be manifested expressly or impliedly. Express consent may be embodied in a general law or a special law. Consent is implied when the state enters into a contract or it itself commences litigation. The general law waiving the immunity of the state from suit is found in Act No. 3083, under which the Philippine government consents and submits to be sued upon any moneyed claim involving liability arising from contract, express or implied, which could serve as a basis of civil action between private parties. In Merritt v. Government of the Philippine Islands,15 a special law was passed to enable a person to sue the government for an alleged tort. When the government enters into a contract, it is deemed to have descended to the level of the other contracting party and divested of its sovereign immunity from suit with its implied consent.16 Waiver is also implied when the government files a complaint, thus opening itself to a counterclaim.17

The above rules are subject to qualification. Express consent is effected only by the will of the legislature through the medium of a duly enacted statute.18 We have held that not all contracts entered into by the government will operate as a waiver of its non-suability; distinction must be made between its sovereign and proprietary acts.19 As for the filing of a complaint by the government, suability will result only where the government is claiming affirmative relief from the defendant.20 In the case of the United States of America, the customary rule of international law on state immunity is expressed with more specificity in the RP-US Bases Treaty. Article III thereof provides as follows: It is mutually agreed that the United States shall have the rights, power and authority within the bases which are necessary for the establishment, use, operation and defense thereof or appropriate for the control thereof and all the rights, power and authority within the limits of the territorial waters and air space adjacent to, or in the vicinity of, the bases which are necessary to provide access to them or appropriate for their control. The petitioners also rely heavily on Baer v. Tizon,21 along with several other decisions, to support their position that they are not suable in the cases below, the United States not having waived its sovereign immunity from suit. It is emphasized that in Baer, the Court held: The invocation of the doctrine of immunity from suit of a foreign state without its consent is appropriate. More specifically, insofar as alien armed forces is concerned, the starting point is Raquiza v. Bradford, a 1945 decision. In dismissing a habeas corpus petition for the release of petitioners confined by American army authorities, Justice Hilado, speaking for the Court, cited Coleman v. Tennessee, where it was explicitly declared: It is well settled that a foreign army, permitted to march through a friendly country or to be stationed in it, by permission of its government or sovereign, is exempt from the civil and criminal jurisdiction of the place. Two years later, in Tubb and Tedrow v. Griess, this Court relied on the ruling in Raquiza v. Bradford and cited in support thereof excerpts from the works of the following authoritative writers: Vattel, Wheaton, Hall, Lawrence, Oppenheim, Westlake, Hyde, and McNair and Lauterpacht. Accuracy demands the clarification that after the conclusion of the Philippine-American Military Bases Agreement, the treaty provisions should control on such matter, the assumption being that there was a manifestation of the submission to jurisdiction on the part of the foreign power whenever appropriate. More to the point is Syquia v. Almeda Lopez, where plaintiffs as lessors sued the Commanding General of the United States Army in the Philippines, seeking the restoration to them of the apartment buildings they owned leased to the United States armed forces stationed in the Manila area. A motion to dismiss on the ground of non-suability was filed and upheld by respondent Judge. The matter was taken to this Court in a mandamus proceeding. It failed. It was the ruling that respondent Judge acted correctly considering that the action must be considered as one against the U.S. Government. The opinion of Justice Montemayor continued: It is clear that the courts of the Philippines including the Municipal Court of Manila have no jurisdiction over the present case for unlawful detainer. The question of lack of jurisdiction was raised and interposed at the very beginning of the action. The U.S. Government has not given its consent to the filing of this suit which is essentially against her, though not in name. Moreover, this is not only a case of a citizen filing a suit against his own Government without the latters consent but it is of a citizen filing an action against a foreign government without said governments consent, which renders more obvious the lack of jurisdiction of the courts of his country. The principles of law behind this rule are so elementary and of such general acceptance that we deem it unnecessary to cite authorities in support thereof. Then came Marvel Building Corporation v. Philippine War Damage Commission, where respondent, a United States Agency

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established to compensate damages suffered by the Philippines during World War II was held as falling within the above doctrine as the suit against it would eventually be a charge against or financial liability of the United States Government because x x x, the Commission has no funds of its own for the purpose of paying money judgments. The Syquia ruling was again explicitly relied upon in Marquez Lim v. Nelson, involving a complaint for the recovery of a motor launch, plus damages, the special defense interposed being that the vessel belonged to the United States Government, that the defendants merely acted as agents of said Government, and that the United States Government is therefore the real party in interest. So it was in Philippine Alien Property Administration v. Castelo, where it was held that a suit against Alien Property Custodian and the Attorney General of the United States involving vested property under the Trading with the Enemy Act is in substance a suit against the United States. To the same effect is Parreno v. McGranery, as the following excerpt from the opinion of Justice Tuazon clearly shows: It is a widely accepted principle of international law, which is made a part of the law of the land (Article II, Section 3 of the Constitution), that a foreign state may not be brought to suit before the courts of another state or its own courts without its consent. Finally, there is Johnson v. Turner, an appeal by the defendant, then Commanding General, Philippine Command (Air Force, with office at Clark Field) from a decision ordering the return to plaintiff of the confiscated military payment certificates known as scrip money. In reversing the lower court decision, this Tribunal, through Justice Montemayor, relied on Syquia v. Almeda Lopez, explaining why it could not be sustained. It bears stressing at this point that the above observations do not confer on the United States of America a blanket immunity for all acts done by it or its agents in the Philippines. Neither may the other petitioners claim that they are also insulated from suit in this country merely because they have acted as agents of the United States in the discharge of their official functions. There is no question that the United States of America, like any other state, will be deemed to have impliedly waived its non-suability if it has entered into a contract in its proprietary or private capacity. It is only when the contract involves its sovereign or governmental capacity that no such waiver may be implied. This was our ruling in United States of America v. Ruiz,22 where the transaction in question dealt with the improvement of the wharves in the naval installation at Subic Bay. As this was a clearly governmental function, we held that the contract did not operate to divest the United States of its sovereign immunity from suit. In the words of Justice Vicente Abad Santos: The traditional rule of immunity exempts a State from being sued in the courts of another State without its consent or waiver. This rule is a necessary consequence of the principles of independence and equality of States. However, the rules of International Law are not petrified; they are constantly developing and evolving. And because the activities of states have multiplied, it has been necessary to distinguish them between sovereign and governmental acts (jure imperii) and private, commercial and proprietary acts (jure gestionis). The result is that State immunity now extends only to acts jure imperii. The restrictive application of State immunity is now the rule in the United States, the United Kingdom and other states in Western Europe. xxx The restrictive application of State immunity is proper only 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 can thus be deemed to have tacitly given its consent to be sued only when it enters into business contracts. It does not apply where the contract relates to the exercise of its sovereign functions. In

this case the projects are an integral part of the naval base which is devoted to the defense of both the United States and the Philippines, indisputably a function of the government of the highest order; they are not utilized for nor dedicated to commercial or business purposes. The other petitioners in the cases before us all aver they have acted in the discharge of their official functions as officers or agents of the United States. However, this is a matter of evidence. The charges against them may not be summarily dismissed on their mere assertion that their acts are imputable to the United States of America, which has not given its consent to be sued. In fact, the defendants are sought to be held answerable for personal torts in which the United States itself is not involved. If found liable, they and they alone must satisfy the judgment. In Festejo v. Fernando,23 a bureau director, acting without any authority whatsoever, appropriated private land and converted it into public irrigation ditches. Sued for the value of the lots invalidly taken by him, he moved to dismiss the complaint on the ground that the suit was in effect against the Philippine government, which had not given its consent to be sued. This Court sustained the denial of the motion and held that the doctrine of state immunity was not applicable. The director was being sued in his private capacity for a personal tort. With these considerations in mind, we now proceed to resolve the cases at hand. III It is clear from a study of the records of G.R. No. 80018 that the individually-named petitioners therein were acting in the exercise of their official functions when they conducted the buy-bust operation against the complainant and thereafter testified against him at his trial. The said petitioners were in fact connected with the Air Force Office of Special Investigators and were charged precisely with the function of preventing the distribution, possession and use of prohibited drugs and prosecuting those guilty of such acts. It cannot for a moment be imagined that they were acting in their private or unofficial capacity when they apprehended and later testified against the complainant. It follows that for discharging their duties as agents of the United States, they cannot be directly impleaded for acts imputable to their principal, which has not given its consent to be sued. As we observed in Sanders v. Veridiano:24 Given the official character of the above-described letters, we have to conclude that the petitioners were, legally speaking, being sued as officers of the United States government. As they have acted on behalf of that government, and within the scope of their authority, it is that government, and not the petitioners personally, that is responsible for their acts. The private respondent invokes Article 2180 of the Civil Code which holds the government liable if it acts through a special agent. The argument, it would seem, is premised on the ground that since the officers are designated special agents, the United States government should be liable for their torts. There seems to be a failure to distinguish between suability and liability and a misconception that the two terms are synonymous. Suability depends on the consent of the state to be sued, liability on the applicable law and the established facts. The circumstance that a state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued. When the state does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable.

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The said article establishes a rule of liability, not suability. The government may be held liable under this rule only if it first allows itself to be sued through any of the accepted forms of consent. Moreover, the agent performing his regular functions is not a special agent even if he is so denominated, as in the case at bar. No less important, the said provision appears to regulate only the relations of the local state with its inhabitants and, hence, applies only to the Philippine government and not to foreign governments impleaded in our courts. We reject the conclusion of the trial court that the answer filed by the special counsel of the Office of the Sheriff Judge Advocate of Clark Air Base was a submission by the United States government to its jurisdiction. As we noted in Republic v. Purisima,25 express waiver of immunity cannot be made by a mere counsel of the government but must be effected through a duly-enacted statute. Neither does such answer come under the implied forms of consent as earlier discussed. But even as we are certain that the individual petitioners in G.R. No. 80018 were acting in the discharge of their official functions, we hesitate to make the same conclusion in G.R. No. 80258. The contradictory factual allegations in this case deserve in our view a closer study of what actually happened to the plaintiffs. The record is too meager to indicate if the defendants were really discharging their official duties or had actually exceeded their authority when the incident in question occurred. Lacking this information, this Court cannot directly decide this case. The needed inquiry must first be made by the lower court so it may assess and resolve the conflicting claims of the parties on the basis of the evidence that has yet to be presented at the trial. Only after it shall have determined in what capacity the petitioners were acting at the time of the incident in question will this Court determine, if still necessary, if the doctrine of state immunity is applicable. In G.R. No. 79470, private respondent Genove was employed as a cook in the Main Club located at the U.S. Air Force Recreation Center, also known as the Open Mess Complex, at John Hay Air Station. As manager of this complex, petitioner Lamachia is responsible for eleven diversified activities generating an annual income of $2 million. Under his executive management are three service restaurants, a cafeteria, a bakery, a Class VI store, a coffee and pantry shop, a main cashier cage, an administrative office, and a decentralized warehouse which maintains a stock level of $200,000.00 per month in resale items. He supervises 167 employees, one of whom was Genove, with whom the United States government has concluded a collective bargaining agreement. From these circumstances, the Court can assume that 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. Such services are not extended to the American servicemen for free as a perquisite of membership in the Armed Forces of the United States. Neither does it appear that they are exclusively offered to these servicemen; on the contrary, it is well known that they are available to the general public as well, including the tourists in Baguio City, many of whom make it a point to visit John Hay for this reason. All persons availing themselves of this facility pay for the privilege like all other customers as in ordinary restaurants. Although the prices are concededly reasonable and relatively low, such services are undoubtedly operated for profit, as a commercial and not a governmental activity. 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 that 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. But these considerations notwithstanding, we hold that the complaint against the petitioners in the court below must still be dismissed. While suable, the petitioners are nevertheless not liable. It is obvious that the claim for damages cannot be allowed on the strength of the evidence before us, which we have carefully examined. The dismissal of the private respondent was decided upon only after a thorough investigation where it was established beyond doubt that he had polluted the soup stock with urine. The investigation, in fact, did not stop there. Despite the definitive finding of Genoves guilt, the case was still referred to the board of arbitrators provided for in the collective bargaining agreement. This board unanimously affirmed the findings of the investigators and recommended Genoves dismissal. There was nothing arbitrary about the proceedings. The petitioners acted quite properly in terminating the private respondents employment for his unbelievably nauseating act. It is surprising that he should still have the temerity to file his complaint for damages after committing his utterly disgusting offense. Concerning G.R. No. 76607, we also find that the barbershops subject of the concessions granted by the United States government are commercial enterprises operated by private persons. They are not agencies of the United States Armed Forces nor are their facilities demandable as a matter of right by the American servicemen. These establishments provide for the grooming needs of their customers and offer not only the basic haircut and shave (as required in most military organizations) but such other amenities as shampoo, massage, manicure and other similar indulgences. And all for a fee. Interestingly, one of the concessionaires, private respondent Valencia, was even sent abroad to improve his tonsorial business, presumably for the benefit of his customers. No less significantly, if not more so, all the barbershop concessionaires are, under the terms of their contracts, required to remit to the United States government fixed commissions in consideration of the exclusive concessions granted to them in their respective areas. This being the case, the petitioners cannot plead any immunity from the complaint filed by the private respondents in the court below. The contracts in question being decidedly commercial, the conclusion reached in the United States of America v. Ruiz case cannot be applied here. The Court would have directly resolved the claims against the defendants as we have done in G.R. No. 79470, except for the paucity of the record in the case at hand. The evidence of the alleged irregularity in the grant of the barbershop concessions is not before us. This means that, as in G.R. No. 80258, the respondent court will have to receive that evidence first, so it can later determine on the basis thereof if the plaintiffs are entitled to the relief they seek. Accordingly, this case must also be remanded to the court below for further proceedings. IV There are a number of other cases now pending before us which also involve the question of the immunity of the United States from the jurisdiction of the Philippines. This is cause for regret, indeed, as they mar the traditional friendship between two countries long allied in the cause of democracy. It is hoped that the so-called irritants in their relations will be resolved in a spirit of mutual accommodation and respect, without the inconvenience and asperity of litigation and always with justice to both parties.

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WHEREFORE, after considering all the above premises, the Court hereby renders judgment as follows: 1. In G.R. No. 76607, the petition is DISMISSED and the respondent judge is directed to proceed with the hearing and decision of Civil Case No. 4772. The temporary restraining order dated December 11, 1986, is LIFTED. 2. In G.R. No. 79470, the petition is GRANTED and Civil Case No. 829R(298) is DISMISSED. 3. In G.R. No. 80018, the petition is GRANTED and Civil Case No. 115-C87 is DISMISSED. The temporary restraining order dated October 14, 1987, is made permanent. 4. In G.R. No. 80258, the petition is DISMISSED and the respondent court is directed to proceed with the hearing and decision of Civil Case No. 4996. The temporary restraining order dated October 27, 1987, is LIFTED. All without any pronouncement as to costs. SO ORDERED. Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Corts, Grio-Aquino, Medialdea and Regalado, JJ., concur. In G.R. No. 76607, petition dismissed; G.R. No. 79470, petition granted; G.R. No. 80018, petition granted; G.R. No. 80258, petition dismissed. Note.A direct suit against the State cannot be maintained without its consent. (Insurance Company of North America vs. Republic, L-26532, August 30, 1967, 20 SCRA 1159; Firemans Fund Insurance Co. vs. Maersk Line Far East Service, L-27189, March 28, 1969, 27 SCRA 519; Rizal Surety & Insurance Co. vs. Customs Arrastre Service, L-25709, April 25, 1969, 27 SCRA 1016.) [United States of America vs. Guinto, 182 SCRA 644(1990)]

Same; Same; Same; Jurisdiction; The jurisdiction to hear and decide disputes relating to appropriation, utilization and control of water in the first instance pertains to the Water Resources Council, while the CFI (now RTC) has only appellate jurisdiction over the case.Inasmuch as Civil Case No. 8144 involves the appropriation, utilization and control of water, We hold that the jurisdiction to hear and decide the dispute in the first instance, pertains to the Water Resources Council as provided in PD No. 1067 which is the special law on the subject. The Court of First Instance (now Regional Trial Court) has only appellate jurisdiction over the case. Same; Same; Same; Same; PD 242 is not applicable in case at bar because the controversy did not arise from the interpretation and application of statutes, contracts or agreements of the parties.P.D. No. 242 is inapplicable to this case because the controversy herein did not arise from the interpretation and application of statutes, contracts, or agreements of the parties herein. As previously stated, it involves the appropriation, utilization, and control of water. Our determination in the earlier cases (Baguio Water District vs. Trajano, 127 SCRA 730; Hagonoy Water District vs. NLRC, G.R. No. 81490, August 31, 1988) that water districts are government instrumentalities and that their employees belong to the civil service, disposes of Datuins petition in G.R. No. 84300. The National Labor Relations Commission has no jurisdiction over his complaint for illegal dismissal. PETITIONS for certiorari to review the order of the Regional Trial Court of Negros Oriental, Br. 41. The facts are stated in the opinion of the Court. Rodulfo O. Navarro and Baldomero Limbaga for petitioner in G.R. No. 63742. Joaquin R. Hitosis for respondents in G.R. No. 63742. Isabelo C. Salamida for petitioner in G.R. No. 84300. Conrado C. Ginelo, Jr. for respondent in G.R. No. 84300. Bernardito A. Florido for Phil. Asso. of Water Districts. Reuben A. Espancho for Esperidion Moso. GRIO-AQUINO, J.: The common issue in these consolidated cases is whether or not water districts created under PD No. 198, as amended, are private corporations or government-owned or controlled corporations. Another issue in G.R. No. 63742 is whether respondent Judge acted without, or in excess of, jurisdiction or with grave abuse of discretion in dismissing Civil Case No. 8144 for alleged lack of jurisdiction over the subject matter. I. G.R. No. 63742

Tanjay Water District vs. Gabaton

Administrative Law; Government Corporations; Civil Service; Corporate personality of local water districts; Water districts are quasi-public corporations whose employees belong to the civil service. Actually the question of the corporate personality of local water districts is not new. This Court ruled in the recent case of Hagonoy Water District vs. NLRC, G.R. No. 81490, August 31, 1988, that they are quasi public corporations whose employees belong to the civil service, hence, the dismissal of those employees shall be governed by the civil service law, rules and regulations. Same; Same; Same; The hiring and firing of employees of governmentowned or controlled corporations are governed by the Civil Service Law and Civil Service Rules and Regulations.The hiring and firing of employees of government-owned or controlled corporations are governed by the Civil Service Law and Civil Service Rules and Regulations. Same; Same; Same; Since PD 198 as amended is the original charter of petitioner Tanjay Water District and Tarlac Water District and all water districts, they come under the coverage of the civil service law, rules and regulations.Significantly, Article IX(B), Section 2(1) of the 1987 Constitution provides that (t)he civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters. Inasmuch as PD No. 198, as amended, is the original charter of the petitioner, Tanjay Water District, and respondent Tarlac Water District and all water districts in the country, they come under the coverage of the civil service law, rules and regulations. (Sec. 35, Art VIII and Sec. 37, Art. IX of PD No. 807).

On March 3, 1983, petitioner Tanjay Water District, represented by its manager, Joel B. Borromeo, filed in the Regional Trial Court of Negros Oriental, Dumaguete City, 7th Judicial Region, Civil Case No. 8144, an action for injunction with preliminary mandatory injunction and damages, against respondent Municipality of Pamplona and its officials to prevent them from interfering in the management of the Tanjay Waterworks System. Respondent Judge set the hearing of the application for injunction on March 16, 1983. The Municipality and its officials answered the complaint. Esperidion Moso filed a separate answer. When the case was called for hearing on March 16, 1983, respondent Judge gave the parties five (5) days to submit their respective position papers on the issue of the courts jurisdiction (or lack of it), over the action. The respondents position paper questioned the courts jurisdiction over the case and asked for its dismissal of the complaint (Annex F). Instead of a position paper, the petitioner filed a reply with opposition to the motion to dismiss (Annex G).

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On March 25, 1983, respondent Judge issued an order dismissing the complaint for lack of jurisdiction over the subject matter (water) and over the parties (both being government instrumentalities) by virtue of Art. 88 of PD No. 1067 and PD No. 242. He declared that the petitioners recourse to the court was premature because the controversy should have been ventilated first before the National Water Resources Council pursuant to Arts. 88 and 89 of PD No. 1067. He further ruled that as the parties are government instrumentalities, the dispute should be administratively settled in accordance with PD No. 242. Petitioner filed a petition for certiorari in this Court alleging that respondent Judge acted without or in excess of jurisdiction or with grave abuse of discretion in dismissing the case. II. G.R. No. 84300 Petitioner Josefino Datuin filed a complaint for illegal dismissal against respondent Tarlac Water District in the Department of Labor and Employment (DOLE) which decided in his favor. However, upon respondents motion for reconsideration (which was treated as an appeal) the National Labor Relations Commission (NLRC) reversed the decision and dismissed the complaint for lack of jurisdiction, holding that as the respondent Tarlac Water District is a corporation created by a special law (PD No. 198), its officers and employees belong to the civil service and their separation from office should be governed by Civil Service Rules and Regulations. Petitioner contends that this case is similar to the case of Tanjay Water District versus Hon. Pedro C. Gabaton, et al., G.R. No. 63742, because the lone issue in both cases is whether or not water districts created under PD No. 198, as amended, are private corporations or government-owned or controlled corporations. The two cases were consolidated pursuant to the resolution dated July 25, 1988 of this Court. Actually the question of the corporate personality of local water districts is not new. The Court ruled in the recent case of Hagonoy Water District vs. NLRC, G.R. No. 81490, August 31, 1988, that they are quasi public corporations whose employees belong to the civil service, hence, the dismissal of those employees shall be governed by the civil service law, rules and regulations. The pertinent part of this Courts decision reads as follows: The only question here is whether or not local water districts are government owned or controlled corporations whose employees are subject to the provisions of the Civil Service Law. The Labor Arbiter asserted jurisdiction over the alleged illegal dismissal of private respondent Villanueva by relying on Section 25 of Presidential Decree No. 198, known as the Provincial Water Utilities Act of 1973 which went into effect on 25 May 1973, and which provides as follows: Exemption from Civil Service.The district and its employees, being engaged in a proprietary function, are hereby exempt from the provisions of the Civil Service Law. Collective Bargaining shall be available only to personnel below supervisory levels: Provided, however, That the total of all salaries, wages, emoluments, benefits or other compensation paid to all employees in any month shall not exceed fifty percent (50%) of average net monthly revenue, said net revenue representing income from water sales and sewerage service charges, less pro-rata share of debt service and expenses for fuel or energy for pumping during the preceding fiscal year. The Labor Arbiter failed to take into account the provisions of Presidential Decree No. 1479, which went into effect on 11 June 1978. P.D. No. 1479 wiped away Section 25 of P.D. 198 quoted above, and Section 26 of P.D. 198 was renumbered as Section 25 in the following manner:

Section 26 of the same decree P.D. 198 is hereby amended to read as Section 25 as follows: Section 25. Authorization.The district may exercise all the powers which are expressly granted by this Title or which are necessarily implied from or incidental to the powers and purposes herein stated. For the purpose of carrying out the objectives of this Act, a district is hereby granted the power of eminent domain, the exercise thereof shall, however, be subject to review by the Administration. Thus, Section 25 of P.D. 198 exempting the employees of water districts from the application of the Civil Service Law was removed from the statute books. This is not the first time that officials of the Department of Labor and Employment have taken the position that the Labor Arbiter here adopted. In Baguio Water District vs. Cresenciano B. Trajano, etc., et al. (127 SCRA 730 [1984]), the petitioner Water District sought review of a decision of the Bureau of Labor Relations which affirmed that of a MedArbiter calling for a certification election among the regular rank-andfile employees of the Baguio Water District (BWD). In granting the petition, the Court said: The Baguio Water District was formed pursuant to Title IILocal Water District Lawof P.D. No. 198, as amended. The BWD is by Sec. 6 of that decree a quasi-public corporation performing public service and supplying public wants. xxx xxx xxx We grant the petition for the following reasons: 1. Section 25 of P.D. No. 198 was repealed by Sec. 3 of P.D. No. 1479; Section 26 of P.E. No. 198 was amended to read as Sec. 25 by Sec. 4 of P.D. No. 1479. The amendatory decree took effect on June 11, 1978. xxx xxx xxx 3. The BWD is a corporation created pursuant to a special lawP.D. No. 198, as amended. As such its officers and employees are part of the Civil Service. (Sec. 1, Art. XII-B, *1973+ Constitution; P.D. No. 868.) The hiring and firing of employees of government-owned or controlled corporations are governed by the Civil Service Law and Civil Service Rules and Regulations. In National Housing Corporation vs. Juco, 134 SCRA 172, 176, We held: There should no longer be any question at this time that employees of government-owned or controlled corporations are governed by the civil service law and civil service rules and regulations. Section 1, Article XII-B of the [1973] Constitution specifically provides: The Civil Service embraces every branch, agency, subdivision, and instrumentality of the Government, including every government-owned or controlled corporation x x x. The 1935 Constitution had a similar provision in its Section 1, Article XII which stated: A Civil Service embracing all branches and subdivisions of the Government shall be provided by law. The inclusion of government-owned or controlled corporations within the embrace of the civil service shows a deliberate effort of the framers to plug an earlier loophole which allowed government-owned or controlled corporations to avoid the full consequences of the allencompassing coverage of the civil service system. The same explicit intent is shown by the addition of agency and instrumentality to branches and subdivisions of the Government. All offices and firms of the government are covered. The amendments introduced in 1973 are not idle exercises or meaningless gestures. They carry the strong message that civil service coverage is broad and all-embracing insofar as employment in the government in any of its governmental or corporate arms is concerned. xxx xxx xxx Section 1 of Article XII-B, 1973 Constitution uses the word every to modify the phrase government-owned or controlled corporation

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 Every means each one of a group, without exception. It means all possible and all, taken one by one. Of course, our decision in this case refers to a corporation created as a government-owned or controlled entity. It does not cover cases involving private firms taken over by the government in foreclosure or similar proceedings. We reserve judgment on these latter cases when the appropriate controversy is brought to this Court. (Italics ours) Significantly, Article IX(B), Section 2(1) of the 1987 Constitution provides that (t)he civil service embraces all branches, subdivisions, instrumentalities, and agencies of the government, including government-owned or controlled corporations with original charters. Inasmuch as PD No. 198, as amended, is the original charter of the petitioner, Tanjay Water District, and respondent Tarlac Water District and all water districts in the country, they come under the coverage of the civil service law, rules and regulations. (Sec. 35, Art VIII and Sec. 37, Art. IX of PD No. 807). In G.R. No. 63742, respondent Judge ruled that as the subject matter of Civil Case No. 8144 was water, the case should have been brought first to the National Water Resources Council in accordance with Articles 88 and 89 of PD No. 1067, and, as the parties are government instrumentalities (The Tanjay Water District and the Municipality of Pamplona), the dispute should be administratively settled in accordance with PD No. 242. Articles 88 and 89 of The Water Code (PD No. 1067, promulgated on January 25, 1977) provide as follows: ART. 88. The *Water Resources+ Council shall have original jurisdiction over all disputes relating to appropriation, utilization, exploitation, development, control, conservation and protection of waters within the meaning and context of the provisions of this Code. The decisions of the Council on water rights controversies shall be immediately executory and the enforcement thereof may be suspended only when a bond, in an amount fixed by the Council to answer for damages occasioned by the suspension or stay of execution, shall have been filed by the appealing party, unless the suspension is by virtue of an order of a competent court. All disputes shall be decided within sixty (60) days after the parties submit the same for decision or resolution. The Council shall have the power to issue writs of execution and enforce its decisions with the assistance of local or national police agencies. ART. 89. The decisions of the Council on water rights controversies may be appealed to the Court of First Instance of the province where the subject matter of the controversy is situated within fifteen (15) days from the date the party appealing receives a copy of the decision, on any of the following grounds: (1) grave abuse of discretion (2) question of law; and (3) questions of fact and law. (Italics supplied.) Inasmuch as Civil Case No. 8144 involves the appropriation, utilization and control of water, We hold that the jurisdiction to hear and decide the dispute in the first instance, pertains to the Water Resources Council as provided in PD No. 1067 which is the special law on the subject. The Court of First Instance (now Regional Trial Court) has only appellate jurisdiction over the case. P.D. No. 242 which was issued on July 9, 1973, prescribes administrative procedures for the settlement of: x x x all disputes, claims and controversies solely between or among the departments, bureaus, offices, agencies and instrumentalities of the National Government, including government-owned or controlled corporations but excluding constitutional offices or agencies, arising from the interpretation and application of statutes, contracts or agreements. by either the Secretary of Justice, or the Solicitor General, or the Government Corporate Counsel, depending on the parties involved and

whether the case raises pure questions of law or mixed questions of law and fact. P.D. No. 242 is inapplicable to this case because the controversy herein did not arise from the interpretation and application of statutes, contracts, or agreements of the parties herein. As previously stated, it involves the appropriation, utilization, and control of water. Our determination in the earlier cases (Baguio Water District vs. Trajano, 127 SCRA 730; Hagonoy Water District vs. NLRC, G.R. No. 81490, August 31, 1988) that water districts are government instrumentalities and that their employees belong to the civil service, disposes of Datuins petition in G.R. No. 84300. The National Labor Relations Commission has no jurisdiction over his complaint for illegal dismissal. WHEREFORE, both petitions in G.R. Nos. 63742 and 84300 are dismissed without prejudice to the petitioners in G.R. No. 63742 filing their complaint in the National Water Resources Council and the petitioner in G.R. No. 84300 seeking redress in the Civil Service Commission. No costs. SO ORDERED. Narvasa, Cruz, Gancayco and Medialdea, JJ., concur. Petitions dismissed. Notes.National Labor Relations Commission has no jurisdiction over monetary claims of contractual employees of a government-owned corporation, like Metropolitan Waterworks & Sewerage System. (Metropolitan Waterworks and Sewerage System vs. Hernandez, 143 SCRA 602.) Intracorporate controversies within the jurisdiction of the Securities and Exchange Commission (Rivera vs. Florendo, 154 SCRA 643.)

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