Anda di halaman 1dari 477

G.R. No.

L-48645 January 7, 1987 On their part, respondents moved for the dismissal of the complaint on the
grounds that the complainants are not and have never been employees of
"BROTHERHOOD" LABOR UNITY MOVEMENT OF THE PHILIPPINES, respondent company but employees of the independent contractor; that
ANTONIO CASBADILLO, PROSPERO TABLADA, ERNESTO BENGSON, respondent company has never had control over the means and methods
PATRICIO SERRANO, ANTONIO B. BOBIAS, VIRGILIO ECHAS, DOMINGO followed by the independent contractor who enjoyed full authority to hire
PARINAS, NORBERTO GALANG, JUANITO NAVARRO, NESTORIO and control said employees; and that the individual complainants are barred
MARCELLANA, TEOFILO B. CACATIAN, RUFO L. EGUIA, CARLOS SUMOYAN, by estoppel from asserting that they are employees of respondent company.
LAMBERTO RONQUILLO, ANGELITO AMANCIO, DANILO B. MATIAR, ET
AL., petitioners, While pending with the Court of Industrial Relations CIR pleadings and
vs. testimonial and documentary evidences were duly presented, although the
HON. RONALDO B. ZAMORA, PRESIDENTIAL ASSISTANT FOR LEGAL actual hearing was delayed by several postponements. The dispute was
AFFAIRS, OFFICE OF THE PRESIDENT, HON. AMADO G. INCIONG, taken over by the National Labor Relations Commission (NLRC) with the
UNDERSECRETARY OF LABOR, SAN MIGUEL CORPORATION, GENARO decreed abolition of the CIR and the hearing of the case intransferably
OLIVES, ENRIQUE CAMAHORT, FEDERICO OÑATE, ERNESTO VILLANUEVA, commenced on September 8, 1975.
ANTONIO BOCALING and GODOFREDO CUETO, respondents.
On February 9, 1976, Labor Arbiter Nestor C. Lim found for complainants
GUTIERREZ, JR., J.: which was concurred in by the NLRC in a decision dated June 28, 1976. The
amount of backwages awarded, however, was reduced by NLRC to the
The elemental question in labor law of whether or not an employer- equivalent of one (1) year salary.
employee relationship exists between petitioners-members of the
"Brotherhood Labor Unit Movement of the Philippines" (BLUM) and On appeal, the Secretary in a decision dated June 1, 1977, set aside the
respondent San Miguel Corporation, is the main issue in this petition. The NLRC ruling, stressing the absence of an employer-mployee relationship as
disputed decision of public respondent Ronaldo Zamora, Presidential borne out by the records of the case. ...
Assistant for legal Affairs, contains a brief summary of the facts involved:
The petitioners strongly argue that there exists an employer-employee
1. The records disclose that on July 11, 1969, BLUM filed a complaint with relationship between them and the respondent company and that they
the now defunct Court of Industrial Relations, charging San Miguel were dismissed for unionism, an act constituting unfair labor practice "for
Corporation, and the following officers: Enrique Camahort, Federico Ofiate which respondents must be made to answer."
Feliciano Arceo, Melencio Eugenia Jr., Ernesto Villanueva, Antonio Bocaling
Unrebutted evidence and testimony on record establish that the petitioners
and Godofredo Cueto of unfair labor practice as set forth in Section 4 (a),
sub-sections (1) and (4) of Republic Act No. 875 and of Legal dismissal. It are workers who have been employed at the San Miguel Parola Glass
Factory since 1961, averaging about seven (7) years of service at the time of
was alleged that respondents ordered the individual complainants to
disaffiliate from the complainant union; and that management dismissed their termination. They worked as "cargadores" or "pahinante" at the SMC
Plant loading, unloading, piling or palleting empty bottles and woosen shells
the individual complainants when they insisted on their union membership.
to and from company trucks and warehouses. At times, they accompanied
the company trucks on their delivery routes.
The petitioners first reported for work to Superintendent-in-Charge was temporarily suspended. Thereafter, the petitioners would return to
Camahort. They were issued gate passes signed by Camahort and were work at the glass plant.
provided by the respondent company with the tools, equipment and
Sometime in January, 1969, the petitioner workers — numbering one
paraphernalia used in the loading, unloading, piling and hauling operation.
hundred and forty (140) organized and affiliated themselves with the
Job orders emanated from Camahort. The orders are then transmitted to an petitioner union and engaged in union activities. Believing themselves
assistant-officer-in-charge. In turn, the assistant informs the warehousemen entitled to overtime and holiday pay, the petitioners pressed management,
and checkers regarding the same. The latter, thereafter, relays said orders to airing other grievances such as being paid below the minimum wage law,
the capatazes or group leaders who then give orders to the workers as to inhuman treatment, being forced to borrow at usurious rates of interest and
where, when and what to load, unload, pile, pallet or clean. to buy raffle tickets, coerced by withholding their salaries, and salary
deductions made without their consent. However, their gripes and
Work in the glass factory was neither regular nor continuous, depending grievances were not heeded by the respondents.
wholly on the volume of bottles manufactured to be loaded and unloaded,
as well as the business activity of the company. Work did not necessarily On February 6, 1969, the petitioner union filed a notice of strike with the
mean a full eight (8) hour day for the petitioners. However, work,at times, Bureau of Labor Relations in connection with the dismissal of some of its
exceeded the eight (8) hour day and necessitated work on Sundays and members who were allegedly castigated for their union membership and
holidays. For this, they were neither paid overtime nor compensation for warned that should they persist in continuing with their union activities they
work on Sundays and holidays. would be dismissed from their jobs. Several conciliation conferences were
scheduled in order to thresh out their differences, On February 12, 1969,
Petitioners were paid every ten (10) days on a piece rate basis, that is, union member Rogelio Dipad was dismissed from work. At the scheduled
according to the number of cartons and wooden shells they were able to conference on February 19, 1969, the complainant union through its officers
load, unload, or pile. The group leader notes down the number or volume of headed by National President Artemio Portugal Sr., presented a letter to the
work that each individual worker has accomplished. This is then made the respondent company containing proposals and/or labor demands together
basis of a report or statement which is compared with the notes of the with a request for recognition and collective bargaining.
checker and warehousemen as to whether or not they tally. Final approval
of report is by officer-in-charge Camahort. The pay check is given to the San Miguel refused to bargain with the petitioner union alleging that the
group leaders for encashment, distribution, and payment to the petitioners workers are not their employees.
in accordance with payrolls prepared by said leaders. From the total
On February 20, 1969, all the petitioners were dismissed from their jobs
earnings of the group, the group leader gets a participation or share of ten
(10%) percent plus an additional amount from the earnings of each and, thereafter, denied entrance to respondent company's glass factory
despite their regularly reporting for work. A complaint for illegal dismissal
individual.
and unfair labor practice was filed by the petitioners.
The petitioners worked exclusive at the SMC plant, never having been
The case reaches us now with the same issues to be resolved as when it had
assigned to other companies or departments of SMC plant, even when the
volume of work was at its minimum. When any of the glass furnaces begun.
suffered a breakdown, making a shutdown necessary, the petitioners work
The question of whether an employer-employee relationship exists in a 46; See also 27 AM. Jur. Independent Contractor, Sec. 5, 485 and Annex 75
certain situation continues to bedevil the courts. Some businessmen try to ALR 7260727)
avoid the bringing about of an employer-employee relationship in their
None of the above criteria exists in the case at bar.
enterprises because that judicial relation spawns obligations connected with
workmen's compensation, social security, medicare, minimum wage, Highly unusual and suspect is the absence of a written contract to specify
termination pay, and unionism. (Mafinco Trading Corporation v. Ople, 70 the performance of a specified piece of work, the nature and extent of the
SCRA 139). work and the term and duration of the relationship. The records fail to show
that a large commercial outfit, such as the San Miguel Corporation, entered
In determining the existence of an employer-employee relationship, the
elements that are generally considered are the following: (a) the selection into mere oral agreements of employment or labor contracting where the
same would involve considerable expenses and dealings with a large
and engagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employer's power to control the employee with number of workers over a long period of time. Despite respondent
company's allegations not an iota of evidence was offered to prove the same
respect to the means and methods by which the work is to be accomplished.
It. is the called "control test" that is the most important element or its particulars. Such failure makes respondent SMC's stand subject to
serious doubts.
(Investment Planning Corp. of the Phils. v. The Social Security System, 21
SCRA 924; Mafinco Trading Corp. v. Ople, supra,and Rosario Brothers, Inc. v. Uncontroverted is the fact that for an average of seven (7) years, each of the
Ople, 131 SCRA 72). petitioners had worked continuously and exclusively for the respondent
Applying the above criteria, the evidence strongly indicates the existence of company's shipping and warehousing department. Considering the length of
time that the petitioners have worked with the respondent company, there
an employer-employee relationship between petitioner workers and
respondent San Miguel Corporation. The respondent asserts that the is justification to conclude that they were engaged to perform activities
necessary or desirable in the usual business or trade of the respondent, and
petitioners are employees of the Guaranteed Labor Contractor, an
independent labor contracting firm. the petitioners are, therefore regular employees (Phil. Fishing Boat Officers
and Engineers Union v. Court of Industrial Relations, 112 SCRA 159 and RJL
The facts and evidence on record negate respondent SMC's claim. Martinez Fishing Corporation v. National Labor Relations Commission, 127
SCRA 454).
The existence of an independent contractor relationship is generally
established by the following criteria: "whether or not the contractor is As we have found in RJL Martinez Fishing Corporation v. National Labor
carrying on an independent business; the nature and extent of the work; the Relations Commission (supra):
skill required; the term and duration of the relationship; the right to assign
the performance of a specified piece of work; the control and supervision of ... [T]he employer-employee relationship between the parties herein is not
coterminous with each loading and unloading job. As earlier shown,
the work to another; the employer's power with respect to the hiring, firing
and payment of the contractor's workers; the control of the premises; the respondents are engaged in the business of fishing. For this purpose, they
have a fleet of fishing vessels. Under this situation, respondents' activity of
duty to supply the premises tools, appliances, materials and labor; and the
mode, manner and terms of payment" (56 CJS Master and Servant, Sec. 3(2), catching fish is a continuous process and could hardly be considered as
seasonal in nature. So that the activities performed by herein complainants,
i.e. unloading the catch of tuna fish from respondents' vessels and then the petitioners in their jobs are admittedly all supplied by respondent
loading the same to refrigerated vans, are necessary or desirable in the company. It is only the manpower or labor force which the alleged
business of respondents. This circumstance makes the employment of contractors supply, suggesting the existence of a "labor only" contracting
complainants a regular one, in the sense that it does not depend on any scheme prohibited by law (Article 106, 109 of the Labor Code; Section 9(b),
specific project or seasonable activity. (NLRC Decision, p. 94, Rule VIII, Book III, Implementing Rules and Regulations of the Labor Code).
Rollo).lwphl@itç In fact, even the alleged contractor's office, which consists of a space at
respondent company's warehouse, table, chair, typewriter and cabinet, are
so as it with petitioners in the case at bar. In fact, despite past shutdowns of provided for by respondent SMC. It is therefore clear that the alleged
the glass plant for repairs, the petitioners, thereafter, promptly returned to contractors have no capital outlay involved in the conduct of its business, in
their jobs, never having been replaced, or assigned elsewhere until the the maintenance thereof or in the payment of its workers' salaries.
present controversy arose. The term of the petitioners' employment appears
indefinite. The continuity and habituality of petitioners' work bolsters their The payment of the workers' wages is a critical factor in determining the
claim of employee status vis-a-vis respondent company, actuality of an employer-employee relationship whether between
respondent company and petitioners or between the alleged independent
Even under the assumption that a contract of employment had indeed been contractor and petitioners. It is important to emphasize that in a truly
executed between respondent SMC and the alleged labor contractor, independent contractor-contractee relationship, the fees are paid directly to
respondent's case will, nevertheless, fail. the manpower agency in lump sum without indicating or implying that the
Section 8, Rule VIII, Book III of the Implementing Rules of the Labor Code basis of such lump sum is the salary per worker multiplied by the number of
provides: workers assigned to the company. This is the rule inSocial Security System v.
Court of Appeals (39 SCRA 629, 635).
Job contracting. — There is job contracting permissible under the Code if the
following conditions are met: The alleged independent contractors in the case at bar were paid a lump
sum representing only the salaries the workers were entitled to, arrived at
(1) The contractor carries on an independent business and undertakes the by adding the salaries of each worker which depend on the volume of work
contract work on his own account under his own responsibility according to they. had accomplished individually. These are based on payrolls, reports or
his own manner and method, free from the control and direction of his statements prepared by the workers' group leader, warehousemen and
employer or principal in all matters connected with the performance of the checkers, where they note down the number of cartons, wooden shells and
work except as to the results thereof; and bottles each worker was able to load, unload, pile or pallet and see whether
they tally. The amount paid by respondent company to the alleged
(2) The contractor has substantial capital or investment in the form of tools,
independent contractor considers no business expenses or capital outlay of
equipment, machineries, work premises, and other materials which are
the latter. Nor is the profit or gain of the alleged contractor in the conduct of
necessary in the conduct of his business.
its business provided for as an amount over and above the workers' wages.
We find that Guaranteed and Reliable Labor contractors have neither Instead, the alleged contractor receives a percentage from the total earnings
substantial capital nor investment to qualify as an independent contractor of all the workers plus an additional amount corresponding to a percentage
under the law. The premises, tools, equipment and paraphernalia used by of the earnings of each individual worker, which, perhaps, accounts for the
petitioners' charge of unauthorized deductions from their salaries by the its rules and regulations as well as its right to recommend transfers and
respondents. dismissals of the piece workers. The inter-office memoranda submitted in
evidence prove the company's control over the petitioners. That respondent
Anent the argument that the petitioners are not employees as they worked SMC has the power to recommend penalties or dismissal of the piece
on piece basis, we merely have to cite our rulings in Dy Keh Beng v. workers, even as to Abner Bungay who is alleged by SMC to be a
International Labor and Marine Union of the Philippines (90 SCRA 161), as representative of the alleged labor contractor, is the strongest indication of
follows: respondent company's right of control over the petitioners as direct
"[C]ircumstances must be construed to determine indeed if payment by the employer. There is no evidence to show that the alleged labor contractor
piece is just a method of compensation and does not define the essence of had such right of control or much less had been there to supervise or deal
the relation. Units of time . . . and units of work are in establishments like with the petitioners.
respondent (sic) just yardsticks whereby to determine rate of compensation, The petitioners were dismissed allegedly because of the shutdown of the
to be applied whenever agreed upon. We cannot construe payment by the glass manufacturing plant. Respondent company would have us believe that
piece where work is done in such an establishment so as to put the worker this was a case of retrenchment due to the closure or cessation of
completely at liberty to turn him out and take in another at pleasure." operations of the establishment or undertaking. But such is not the case
Article 106 of the Labor Code provides the legal effect of a labor only here. The respondent's shutdown was merely temporary, one of its furnaces
contracting scheme, to wit: needing repair. Operations continued after such repairs, but the petitioners
had already been refused entry to the premises and dismissed from
... the person or intermediary shall be considered merely as an agent of the respondent's service. New workers manned their positions. It is apparent
employer who shall be responsible to the workers in the same manner and that the closure of respondent's warehouse was merely a ploy to get rid of
extent as if the latter were directly employed by him. the petitioners, who were then agitating the respondent company for
benefits, reforms and collective bargaining as a union. There is no showing
Firmly establishing respondent SMC's role as employer is the control
that petitioners had been remiss in their obligations and inefficient in their
exercised by it over the petitioners that is, control in the means and
jobs to warrant their separation.
methods/manner by which petitioners are to go about their work, as well as
in disciplinary measures imposed by it. As to the charge of unfair labor practice because of SMC's refusal to bargain
with the petitioners, it is clear that the respondent company had an existing
Because of the nature of the petitioners' work as cargadores or pahinantes,
collective bargaining agreement with the IBM union which is the recognized
supervision as to the means and manner of performing the same is
collective bargaining representative at the respondent's glass plant.
practically nil. For, how many ways are there to load and unload bottles and
wooden shells? The mere concern of both respondent SMC and the alleged There being a recognized bargaining representative of all employees at the
contractor is that the job of having the bottles and wooden shells brought to company's glass plant, the petitioners cannot merely form a union and
and from the warehouse be done. More evident and pronounced is demand bargaining. The Labor Code provides the proper procedure for the
respondent company's right to control in the discipline of petitioners. recognition of unions as sole bargaining representatives. This must be
Documentary evidence presented by the petitioners establish respondent followed.
SMC's right to impose disciplinary measures for violations or infractions of
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is GRANTED. The
San Miguel Corporation is hereby ordered to REINSTATE petitioners, with
three (3) years backwages. However, where reinstatement is no longer
possible, the respondent SMC is ordered to pay the petitioners separation
pay equivalent to one (1) month pay for every year of service.

SO ORDERED.

G.R. No. 87700 June 13, 1990

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L.


BORBON II, HERMINIA REYES, MARCELA PURIFICACION, ET
AL., petitioners, of its operation. In said contracts, it was expressly understood and agreed
vs. that the workers employed by the contractors were to be paid by the latter
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF and that none of them were to be deemed employees or agents of SanMig.
BRANCH 166, RTC, PASIG, and SAN MIGUEL CORPORATION, respondents. There was to be no employer-employee relation between the contractors
and/or its workers, on the one hand, and SanMig on the other.
Romeo C. Lagman for petitioners.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for
Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents. brevity) is the duly authorized representative of the monthly paid rank-and-
file employees of SanMig with whom the latter executed a Collective
Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989 (Annex A,
MELENCIO-HERRERA, J.: SanMig's Comment). Section 1 of their CBA specifically provides that
"temporary, probationary, or contract employees and workers are excluded
Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken
from the bargaining unit and, therefore, outside the scope of this
to task by petitioners in this special civil action for certiorari and Prohibition
Agreement."
for having issued the challenged Writ of Preliminary Injunction on 29 March
1989 in Civil Case No. 57055 of his Court entitled "San Miguel Corporation In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised
vs. SMCEU-PTGWO, et als." SanMig that some Lipercon and D'Rite workers had signed up for union
membership and sought the regularization of their employment with SMC.
Petitioners' plea is that said Writ was issued without or in excess of
The Union alleged that this group of employees, while appearing to be
jurisdiction and with grave abuse of discretion, a labor dispute being
contractual workers supposedly independent contractors, have been
involved. Private respondent San Miguel Corporation (SanMig. for short), for
continuously working for SanMig for a period ranging from six (6) months to
its part, defends the Writ on the ground of absence of any employer-
fifteen (15) years and that their work is neither casual nor seasonal as they
employee relationship between it and the contractual workers employed by
are performing work or activities necessary or desirable in the usual
the companies Lipercon Services, Inc. (Lipercon) and D'Rite Service
business or trade of SanMig. Thus, it was contended that there exists a
Enterprises (D'Rite), besides the fact that the Union is bereft of personality
"labor-only" contracting situation. It was then demanded that the
to represent said workers for purposes of collective bargaining. The Solicitor
employment status of these workers be regularized.
General agrees with the position of SanMig.
On 12 January 1989 on the ground that it had failed to receive any favorable
The antecedents of the controversy reveal that:
response from SanMig, the Union filed a notice of strike for unfair labor
Sometime in 1983 and 1984, SanMig entered into contracts for practice, CBA violations, and union busting (Annex D, Petition).
merchandising services with Lipercon and D'Rite (Annexes K and I, SanMig's
On 30 January 1989, the Union again filed a second notice of strike for unfair
Comment, respectively). These companies are independent contractors duly
labor practice (Annex F, Petition).
licensed by the Department of Labor and Employment (DOLE). SanMig
entered into those contracts to maintain its competitive position and in As in the first notice of strike. Conciliatory meetings were held on the second
keeping with the imperatives of efficiency, business expansion and diversity notice. Subsequently, the two (2) notices of strike were consolidated and
several conciliation conferences were held to settle the dispute before the h. preventing and/or disrupting the peaceful and normal operation of
National Conciliation and Mediation Board (NCMB) of DOLE (Annex G, plaintiff at the work places within the bargaining unit referred to in the CBA,
Petition). Annex 'C' hereof, to compel plaintiff to hire the employees or workers of
LIPERCON and D'RITE. (Annex H, Petition)
Beginning 14 February 1989 until 2 March 1989, series of pickets were
staged by Lipercon and D'Rite workers in various SMC plants and offices. Respondent Court found the Complaint sufficient in form and substance and
issued a Temporary Restraining Order for the purpose of maintaining
On 6 March 1989, SMC filed a verified Complaint for Injunction and the status quo, and set the application for Injunction for hearing.
Damages before respondent Court to enjoin the Union from:
In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss
a. representing and/or acting for and in behalf of the employees of SanMig's Complaint on the ground of lack of jurisdiction over the
LIPERCON and/or D'RITE for the purposes of collective bargaining; case/nature of the action, which motion was opposed by SanMig. That
b. calling for and holding a strike vote, to compel plaintiff to hire the Motion was denied by respondent Judge in an Order dated 11 April 1989.
employees or workers of LIPERCON and D'RITE; After several hearings on SanMig's application for injunctive relief, where
c. inciting, instigating and/or inducing the employees or workers of the parties presented both testimonial and documentary evidence on 25
LIPERCON and D'RITE to demonstrate and/or picket at the plants and offices March 1989, respondent Court issued the questioned Order (Annex A,
of plaintiff within the bargaining unit referred to in the CBA,...; Petition) granting the application and enjoining the Union from Committing
the acts complained of, supra. Accordingly, on 29 March 1989, respondent
d. staging a strike to compel plaintiff to hire the employees or workers of Court issued the corresponding Writ of Preliminary Injunction after SanMig
LIPERCON and D'RITE; had posted the required bond of P100,000.00 to answer for whatever
damages petitioners may sustain by reason thereof.
e. using the employees or workers of LIPERCON AND D'RITE to man the
strike area and/or picket lines and/or barricades which the defendants may In issuing the Injunction, respondent Court rationalized:
set up at the plants and offices of plaintiff within the bargaining unit referred
to in the CBA ...; The absence of employer-employee relationship negates the existence of
labor dispute. Verily, this court has jurisdiction to take cognizance of
f. intimidating, threatening with bodily harm and/or molesting the other plaintiff's grievance.
employees and/or contract workers of plaintiff, as well as those persons
lawfully transacting business with plaintiff at the work places within the The evidence so far presented indicates that plaintiff has contracts for
bargaining unit referred to in the CBA, ..., to compel plaintiff to hire the services with Lipercon and D'Rite. The application and contract for
employees or workers of LIPERCON and D'RITE; employment of the defendants' witnesses are either with Lipercon or D'Rite.
What could be discerned is that there is no employer-employee relationship
g. blocking, preventing, prohibiting, obstructing and/or impeding the free between plaintiff and the contractual workers employed by Lipercon and
ingress to, and egress from, the work places within the bargaining unit D'Rite. This, however, does not mean that a final determination regarding
referred to in the CBA .., to compel plaintiff to hire the employees or the question of the existence of employer-employee relationship has
workers of LIPERCON and D'RITE; already been made. To finally resolve this dispute, the court must
extensively consider and delve into the manner of selection and After an exchange of pleadings, this Court, on 12 October 1989, gave due
engagement of the putative employee; the mode of payment of wages; the course to the Petition and required the parties to submit their memoranda
presence or absence of a power of dismissal; and the Presence or absence simultaneously, the last of which was filed on 9 January 1990.
of a power to control the putative employee's conduct. This necessitates a
full-blown trial. If the acts complained of are not restrained, plaintiff would, The focal issue for determination is whether or not respondent Court
correctly assumed jurisdiction over the present controversy and properly
undoubtedly, suffer irreparable damages. Upon the other hand, a writ of
injunction does not necessarily expose defendants to irreparable damages. issued the Writ of Preliminary Injunction to the resolution of that question,
is the matter of whether, or not the case at bar involves, or is in connection
Evidently, plaintiff has established its right to the relief demanded. (p. 21, with, or relates to a labor dispute. An affirmative answer would bring the
Rollo) case within the original and exclusive jurisdiction of labor tribunals to the
exclusion of the regular Courts.
Anchored on grave abuse of discretion, petitioners are now before us
seeking nullification of the challenged Writ. On 24 April 1989, we issued a Petitioners take the position that 'it is beyond dispute that the controversy in
Temporary Restraining Order enjoining the implementation of the Injunction the court a quo involves or arose out of a labor dispute and is directly
issued by respondent Court. The Union construed this to mean that "we can connected or interwoven with the cases pending with the NCMB-DOLE, and
now strike," which it superimposed on the Order and widely circulated to is thus beyond the ambit of the public respondent's jurisdiction. That the
entice the Union membership to go on strike. Upon being apprised thereof, acts complained of (i.e., the mass concerted action of picketing and the
in a Resolution of 24 May 1989, we required the parties to "RESTORE reliefs prayed for by the private respondent) are within the competence of
the status quo ante declaration of strike" (p. 2,62 Rollo). labor tribunals, is beyond question" (pp. 6-7, Petitioners' Memo).

In the meantime, however, or on 2 May 1989, the Union went on strike. On the other hand, SanMig denies the existence of any employer-employee
Apparently, some of the contractual workers of Lipercon and D'Rite had relationship and consequently of any labor dispute between itself and the
been laid off. The strike adversely affected thirteen (13) of the latter's plants Union. SanMig submits, in particular, that "respondent Court is vested with
and offices. jurisdiction and judicial competence to enjoin the specific type of strike
staged by petitioner union and its officers herein complained of," for the
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) reasons that:
called the parties to conciliation. The Union stated that it would lift the
strike if the thirty (30) Lipercon and D'Rite employees were recalled, and A. The exclusive bargaining representative of an employer unit cannot strike
discussion on their other demands, such as wage distortion and to compel the employer to hire and thereby create an employment
appointment of coordinators, were made. Effected eventually was a relationship with contractual workers, especially were the contractual
Memorandum of Agreement between SanMig and the Union that "without workers were recognized by the union, under the governing collective
prejudice to the outcome of G.R. No. 87700 (this case) and Civil Case No. bargaining agreement, as excluded from, and therefore strangers to, the
57055 (the case below), the laid-off individuals ... shall be recalled effective bargaining unit.
8 May 1989 to their former jobs or equivalent positions under the same
terms and conditions prior to "lay-off" (Annex 15, SanMig Comment). In B. A strike is a coercive economic weapon granted the bargaining
representative only in the event of a deadlock in a labor dispute over
turn, the Union would immediately lift the pickets and return to work.
'wages, hours of work and all other and of the employment' of the conditions of their employment and the arrangement of those terms are
employees in the unit. The union leaders cannot instigate a strike to compel thus involved bringing the matter within the purview of a labor dispute.
the employer, especially on the eve of certification elections, to hire Further, the Union also seeks to represent those workers, who have signed
strangers or workers outside the unit, in the hope the latter will help re-elect up for Union membership, for the purpose of collective bargaining. SanMig,
them. for its part, resists that Union demand on the ground that there is no
employer-employee relationship between it and those workers and because
C. Civil courts have the jurisdiction to enjoin the above because this specie the demand violates the terms of their CBA. Obvious then is that
of strike does not arise out of a labor dispute, is an abuse of right, and representation and association, for the purpose of negotiating the
violates the employer's constitutional liberty to hire or not to hire. (SanMig's conditions of employment are also involved. In fact, the injunction sought by
Memorandum, pp. 475-476, Rollo). SanMig was precisely also to prevent such representation. Again, the matter
We find the Petition of a meritorious character. of representation falls within the scope of a labor dispute. Neither can it be
denied that the controversy below is directly connected with the labor
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes dispute already taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01-
"any controversy or matter concerning terms and conditions of employment 021-89; NCMB NCR NS-01-093-83).
or the association or representation of persons in negotiating, fixing,
maintaining, changing, or arranging the terms and conditions of Whether or not the Union demands are valid; whether or not SanMig's
employment, regardless of whether the disputants stand in the proximate contracts with Lipercon and D'Rite constitute "labor-only" contracting and,
relation of employer and employee." therefore, a regular employer-employee relationship may, in fact, be said to
exist; whether or not the Union can lawfully represent the workers of
While it is SanMig's submission that no employer-employee relationship Lipercon and D'Rite in their demands against SanMig in the light of the
exists between itself, on the one hand, and the contractual workers of existing CBA; whether or not the notice of strike was valid and the strike
Lipercon and D'Rite on the other, a labor dispute can nevertheless exist itself legal when it was allegedly instigated to compel the employer to hire
"regardless of whether the disputants stand in the proximate relationship of strangers outside the working unit; — those are issues the resolution of
employer and employee" (Article 212 [1], Labor Code, supra) provided the which call for the application of labor laws, and SanMig's cause's of action in
controversy concerns, among others, the terms and conditions of the Court below are inextricably linked with those issues.
employment or a "change" or "arrangement" thereof (ibid). Put differently,
and as defined by law, the existence of a labor dispute is not negative by the The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13
fact that the plaintiffs and defendants do not stand in the proximate relation SCRA 738) relied upon by SanMig is not controlling as in that case there was
of employer and employee. no controversy over terms, tenure or conditions, of employment or the
representation of employees that called for the application of labor laws. In
That a labor dispute, as defined by the law, does exist herein is evident. At that case, what the petitioning union demanded was not a change in
bottom, what the Union seeks is to regularize the status of the employees working terms and conditions, or the representation of the employees, but
contracted by Lipercon and D'Rite in effect, that they be absorbed into the that its members be hired as stevedores in the place of the members of a
working unit of SanMig. This matter definitely dwells on the working rival union, which petitioners wanted discharged notwithstanding the
relationship between said employees vis-a-vis SanMig. Terms, tenure and existing contract of the arrastre company with the latter union. Hence, the
ruling therein, on the basis of those facts unique to that case, that such a WHEREFORE, the Writ of certiorari is GRANTED and the Orders of
demand could hardly be considered a labor dispute. respondent Judge of 25 March 1989 and 29 March 1989 are SET ASIDE. The
Writ of Prohibition is GRANTED and respondent Judge is enjoined from
As the case is indisputably linked with a labor dispute, jurisdiction belongs to taking any further action in Civil Case No. 57055 except for the purpose of
the labor tribunals. As explicitly provided for in Article 217 of the Labor dismissing it. The status quo ante declaration of strike ordered by the Court
Code, prior to its amendment by R.A. No. 6715 on 21 March 1989, since the on 24 May 1989 shall be observed pending the proceedings in the National
suit below was instituted on 6 March 1989, Labor Arbiters have original and Conciliation Mediation Board-Department of Labor and Employment,
exclusive jurisdiction to hear and decide the following cases involving all docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No
workers including "1. unfair labor practice cases; 2. those that workers may costs.
file involving wages, hours of work and other terms and conditions of
employment; ... and 5. cases arising from any violation of Article 265 of this SO ORDERED.
Code, including questions involving the legality of striker and lockouts. ..."
Article 217 lays down the plain command of the law.

The claim of SanMig that the action below is for damages under Articles 19,
20 and 21 of the Civil Code would not suffice to keep the case within the
jurisdictional boundaries of regular Courts. That claim for damages is
interwoven with a labor dispute existing between the parties and would
have to be ventilated before the administrative machinery established for
the expeditious settlement of those disputes. To allow the action filed below
to prosper would bring about "split jurisdiction" which is obnoxious to the
orderly administration of justice (Philippine Communications, Electronics
and Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968,
24 SCRA 321).

We recognize the proprietary right of SanMig to exercise an inherent


management prerogative and its best business judgment to determine
whether it should contract out the performance of some of its work to
independent contractors. However, the rights of all workers to self-
organization, collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law (Section 3,
Article XIII, 1987 Constitution) equally call for recognition and protection.
Those contending interests must be placed in proper perspective and G.R. No. 87211 March 5, 1991
equilibrium.
JOVENCIO L. MAYOR petitioner,
vs.
HON. CATALINO MACARAIG, HON. GUILLERMO CARAGUE, HON. RIZALINA NARVASA, J.:p
CAJUCOM, HON. FRANKLIN DRILON, respondents. LOURDES A. SALES and
RICARDO OLAIREZ, petitioners-intervenors. Five (5) special civil actions are hereby jointly decided because they involve
one common, fundamental issue, the constitutionality of Republic Act No.
G.R. No. 90044 March 5, 1991 6715, effective March 21, 1989, in so far as it declares vacant "all positions
of the Commissioners, Executive Labor Arbiters and Labor Arbiters of the
PASCUAL V. REYES, petitioner, National Labor Relations Commission," and operates to remove the
vs. incumbents upon the appointment and qualification of their successors. The
HON. FRANKLIN DRILON, respondent. law is entitled, "AN ACT TO EXTEND PROTECTION TO LABOR, STRENGTHEN
G.R. No. 91547 March 5, 1991 THE CONSTITUTIONAL RIGHTS OF WORKERS TO SELF-ORGANIZATION,
COLLECTIVE BARGAINING AND PEACEFUL CONCERTED ACTIVITIES, FOSTER
CEFERINO E. DULAY, ROSARIO G. ENCARNACION and DANIEL LUCAS, INDUSTRIAL PEACE AND HARMONY, PROMOTE THE PREFERENTIAL USE OF
JR., petitioners, VOLUNTARY MODES OF SETTLING LABOR DISPUTES AND RE-ORGANIZE THE
vs. NATIONAL LABOR RELATIONS COMMISSION, AMENDING PRESIDENTIAL
HON. CATALINO MACARAIG, JR., as Executive Secretary, HON. GUILLERMO DECREE NO. 441, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE
N. CARAGUE, as Secretary of Budget and Management, HON. DIONISIO DE OF THE PHILIPPINES, APPROPRIATING FUNDS THEREFOR AND FOR OTHER
LA SERNA, as Acting Secretary of Labor & Employment, BARTOLOME PURPOSES." 1 The provision directly dealing with the reorganization of the
CARALE, VICENTE S.E. VELOSO III, ROMEO B. TUOMO, EDNA BONTO PEREZ, National Labor Relations Commission is Section 35. It reads as follows: 2
DOMINGO H. ZAPANTA, RUSTICO L. DIOKNO, LOURDES C. JAVIER, IRINEO
B. BARNALDO, ROGELIO I. RAYALA, ERNESTO G. LADRINO III, IRENEA E. Sec. 35. Equity of the Incumbent. — Incumbent career officials and rank-and-
CENIZA, BERNABE S. BATUHAN, MUSIB M. BUAT, L.B. GONZAGA, JR. and file employees of the National labor Relations Commission not otherwise
OSCAR ABELLA, respondents. affected by the Act shall continue to hold office without need of
reappointment. However, consistent with the need to professionalize the
G.R. No. 91730 March 5, 1991 higher levels of officialdom invested with adjudicatory powers and
functions, and to upgrade their qualifications, ranks, and salaries or
CONRADO B. MAGLAYA, petitioner,
emoluments, all positions of the Commissioners, Executive Labor Arbiters
vs.
and Labor Arbiters of the present National Labor Relations Commission are
HON. CATALINO MACARAEG, HON. GUILLERMO CARAGUE, HON. RIZALINA
hereby declared vacant. However, subject officials shall continue to
CAJOCUM, and the HONORABLE SECRETARY OF LABOR, respondents.
temporarily discharge their duties and functions until their successors shall
G.R. No. 94518 March 5, 1991 have been duly appointed and qualified.

ROLANDO D. GAMBITO, petitioner, The first of these five consolidated cases was filed by Labor Arbiter Jovencio
vs. Ll. Mayor on March 8, 1989. In the year that followed, eight other officers of
THE SECRETARY OF LABOR AND EMPLOYMENT and THE EXECUTIVE the Commission, as initiators of their own separate actions or as intervenors,
SECRETARY, respondents. joined Mayor in the attempt to invalidate the reorganization and to be
reinstated to their positions in the Government service.
G.R. No. 87211: Jovencio Mayor; and Intervenors Lourdes A. Sales and Memorandum-Order issued by then Secretary of Labor Franklin Drilon on
Ricardo Olairez August 17, 1989 to the effect that the offices of Executive Director and
Deputy Executive Director had been abolished by Section 35, in relation to
Jovencio Ll. Mayor, a member of the Philippine Bar for fifteen (15) years, was Section 5 of said Act, and "their functions transferred to the Chairman, aided
appointed Labor Arbiter in 1986 after he had, according to him, met the by the Executive Clerk.
prescribed qualifications and passed "a rigid screening process." Fearing that
he would be removed from office on account of the expected Reyes moved for reconsideration on August 29, 1989, but when no action
reorganization, he filed in this Court the action now docketed as G.R. No. was allegedly taken thereon, he instituted the action at bar, G.R. No. 90044.
87211. His fears proved groundless, however. He was in fact reappointed a Sagmit was afterwards granted leave to intervene in the action.
Labor Arbiter on March 8, 1990. Hence, as he himself says, the case became
G.R. No. 91547: Ceferino Dulay, Rosario G. Encarnacion, and Daniel M. Lucas
moot as to him.

Like Mayor, both intervenors Lourdes A. Sales and Ricardo N. Olairez were Petitioners Rosario G. Encarnacion and Daniel M. Lucas, Jr. were appointed
National Labor Relations Commissioners on October 20, 1986, after the
appointed Labor Arbiters in 1986, but unlike Mayor, were not among the
one hundred fifty-one (151) Labor Arbiters reappointed by the President on Commission was reorganized pursuant to Executive Order No. 47 of
President Aquino. Later, or more precisely on November 19, 1986, Lucas was
March 8, 1990.
designated Presiding Commissioner of the Commission's Second Division;
G.R. No. 90044; Pascual Y Reyes; and Intervenor Eugenio L Sagmit, Jr. and Commissioner Ceferino E. Dulay was appointed Presiding Commissioner
of the Third Division.
At the time of the effectivity of R.A. No. 6715, Pascual Y. Reyes was holding
the office of Executive Director of the National Labor Relations Commission Executive Order No. 252, issued by the President on July 25, 1987, amended
in virtue of an appointment extended to him on May 30, 1975. As specified Article 215 of the Labor Code by providing that "the Commissioners
by Administrative Order No. 10 of the Secretary of Labor, dated July 14, appointed under Executive Order No. 47 dated September 10, 1986 shall
1975, the functions of his office were "to take charge of all administrative hold office for a term of six (6) years . . . (but of those thus appointed) three
matters of the Commission and to have direct supervision overall units and shall hold office for four (4) years, and three for two (2) years . . . without
personnel assigned to perform administrative tasks;" and Article 213 of the prejudice to reappointment." Under Executive Order No. 252, the terms of
Labor Code, as amended, declared that the "Executive Director, assisted by a Encarnacion and Lucas would expire on October 23, 1992, and that of Dulay,
Deputy Executive Director, shall exercise the administrative functions of the on December 18, 1992.
Commission." Reyes states that he has been "a public servant for 42 years,"
On November 18, 1989, R.A. No. 6715 being then already in effect, the
and "is about to retire at sixty-five (65)," in 1991.
President extended to Encarnacion, Lucas and Dulay new appointments as
The petitioner-in-intervention, Eugenio I. Sagmit, Jr., was Reyes' Deputy Commissioners of the NLRC despite the fact that, according to them, they
Executive Director, appointed as such on October 27, 1987 after twenty-five had not been served with notice of the termination of their services as
(25) years of government service. incumbent commissioners, and no vacancy existed in their positions. Their
new appointments were submitted to Congress, but since Congress
Both Reyes and Sagmit were informed that they had been separated from
employment upon the effectivity of R.A. No. 6715, pursuant to a
adjourned on December 22, 1989 without approving their appointments, law;" that he was appointed Labor Arbiter on May 30, 1975 and "was
said appointments became functus officio. retained in such position despite the reorganization under the Freedom
Constitution of 1986 . . . (and) later promoted to and appointed by the
No other appointments were thereafter extended to Encarnacion and Dulay. President as Commissioner of the . . . (NLRC) First Division on October 23,
Lucas was however offered the position of Assistant Regional Director by 1986." He complains that he was effectively removed from his position as a
Secretary Drilon and then by Acting Secretary Dionisio de la Serna (by letter result of the designation of the full complement of Commissioners in and to
dated January 9, 1990 which referred to his appointment as such Assistant all Five Divisions of the NLRC by Administrative Order No. 161 dated
Regional Director supposedly "issued by the President on November 8, November 18, 1989, issued by Labor Secretary Drilon.
1989"). Lucas declined the offer, believing it imported a demotion.
G.R. No. 94518: Rolando D. Gambito
They all pray that their removal be pronounced unconstitutional and void
and they be declared Commissioners lawfully in office, or, alternatively, that Rolando Gambito passed the bar examinations in 1971, joined the
they be paid all salaries, benefits and emoluments accruing to them for the Government service in 1974, serving for sixteen years in the Department of
unexpired portions of their six-year terms and allowed to enjoy retirement Health, and as Labor Arbiter in the Department of Labor and Employment
benefits under applicable laws (pursuant to R.A. 910 and the Resolution re from October, 1986. He was not included in the list of newly appointed
Judge Mario Ortiz, G. R. No. 78951, June 28, 1988). Labor Arbiters released on March 8, 1990; and his attempt to obtain a
recosideration of his exclusion therefrom and bring about his reinstatement
Of the incumbent Commissioners as of the effectivity of R.A. 6715, six (6) as Labor Arbiter was unavailing.
were reappointed, namely: (1) Hon. Edna Bonto Perez (as Presiding
Commissioner, Second Division NCR]), (2) Domingo H. Zapanta (Associate The Basic Issue
Commissioner, Second Division), (3) Lourdes C. Javier (Presiding
Commissioner, Third Division [Luzon except NCR]), (4) Ernesto G. Ladrido III A number of issues have been raised and ventilated by the petitioners in
their separate pleadings. They may all be reduced to one basic question,
(Presiding Commissioner, Fourth Division [Visayas]), (5) Musib M. Buat
(Presiding Commissioner, Fifth Division [Mindanao]), and (6) Oscar N. Abella relating to the constitutionality of the provisions of Republic Act No. 6715
DECLARING VACANT "all positions of the Commissioners, Executive Labor
(Associate Commissioner, Fifth Division). Other members appointed to the
reorganized Commission were Vicente S.E. Veloso III, Romeo B. Putong, Arbiters and Labor Arbiters of the present National Labor Relations
Commission," 3 according to which the public respondents —
Rustico L. Diokno, Ireneo B. Bernardo, Rogelio I. Rayala, Irenea E. Ceniza,
Bernabe S. Batuhan, and Leon G. Gonzaga, Jr. Appointed Chairman was Hon. 1) considered as effectively separated from the service inter alia, all holders
Bartolome Carale, quondam Dean of the College of Law of the University of of said positions at the time of the effectivity of said Republic Act No. 6715,
the Philippines. including the positions of Executive Director and Deputy Executive
Director of the Commission, and
G.R. No. 91730: Conrado Maglaya

Petitioner Conrado Maglaya alleges that he has been "a member of the 2) consequently, thereafter caused the appointment of other persons to the
new positions specified in said statute: of Chairman Commissioners,
Philippine Bar for thirty-six (36) years of which 31 years . . . (had been)
devoted to public service, the last 24 years in the field of labor relations Executive Clerk, Deputy Executive Clerk, and Labor Arbiters of the
reorganized National Labor Relations Commission. The old positions were
declared vacant because, as the statute states, of "the need to powers and functions, and to upgrade their qualifications, ranks, and
professionalize the higher levels of officialdom invested with adjudicatory salaries or emoluments."
powers and functions, and to upgrade their qualifications, ranks, and
The Constitution does not, of course, ordain the abolition of the petitioners'
salaries or emoluments."
positions of their removal from their offices; and there is no claim that the
As everyone knows, security of tenure is a protected right under the petitioners' separation from the service is due to a cause other than RA
Constitution. The right is secured to all employees in privates as well as in 6715. The inquiry therefore should be whether or not RA 6715 has worked
public employment. "No officer or employee in the civil service," the such an abolition of the petitioners' offices, expressly or impliedly. This is the
Constitution declares, "shall be removed or suspended except for cause only mode by which, under the circumstances, the petitioners' removal from
provided by law." 4 There can scarcely be any doubt that each of the their positions may be defended and sustained.
petitioners — commissioner, administrative officer, or labor arbiter — falls
within the concept of an "officer or employee in the civil service" since the It is immediately apparent that there is no express abolition in RA 6715 of
the petitioners' positions. So, justification must be sought, if at all, in an
civil service "embraces all branches, subdivisions, instrumentalities, and
agencies of the Government, including government—owned or controlled implied abolition thereof; i.e., that resulting from an irreconcilable
inconsistency between the nature, duties and functions of the petitioners'
corporations with original charters." 5 The Commissioners thus had the right
to remain of office until the expiration of the terms for which they had been offices under the old rules and those corresponding thereof under the new
law. An examination of the relevant provisions of RA 6715, with a view to
appointed, unless sooner removed "for cause provided by law." So, too, the
Executive Director and Deputy Executive Director, and the Labor Arbiters discovering the changes thereby effected on the nature, composition,
powers, duties and functions of the Commission and the Commissioners,
had the right to retain their positions until the age of compulsory
retirement, unless sooner removed "for cause provided by law." None of the Executive Director, the Deputy Executive Director, and the labor Arbiters
under the prior legislation, fails to disclose such essential inconsistencies.
them could be deemed to be serving at the pleasure of the President.

Now, a recognized cause for several or termination of employment of a 1. Amendments as Regards the NLRC and the Commissioners
Government officer or employee is the abolition by law of his office as a First, as regards the National Labor Relations Commissioners.
result of reorganization carried out by reason of economy or to remove
redundancy of functions, or clear and explicit constitutional mandate for A. Nature and Composition of the Commission, Generally
such termination of employment. 6Abolition of an office is obviously not the
1. Prior to its amendment by RA 6715, Article 213 of the Labor Code
same as the declaration that that office is vacant. While it is undoubtedly a
envisaged the NLRC as being an integral part of the Department of labor and
prerogative of the legislature to abolish certain offices, it can not be
Employment. "There shall," it said, "be a National Labor Relations
conceded the power to simply pronounce those offices vacant and thereby
Commissionin the Department of Labor and Employment . . . ." RA 6715
effectively remove the occupants or holders thereof from the civil service.
would appear to have made the Commission somewhat more autonomous.
Such an act would constitute, on its face, an infringement of the
Article 213 now declares that, "There shall be a National labor Relations
constitutional guarantee of security of tenure, and will have to be struck
Commission which shall be attached to the Department of labor and
down on that account. It can not be justified by the professed "need to
Employment for program coordination only . . . ."
professionalize the higher levels of officialdom invested with adjudicatory
2. Tripartite representation was to a certain extent restored in the C. Official Stations, and Appellate Jurisdiction over Fixed Territory
Commission. The same Section 213, as amended, now provides that the
Chairman and fourteen (14) members composing the NLRC shall be chosen Other changes related to the official station of the Commission and its
divisions, and the territory over which the divisions could exercise exclusive
from the workers', employers' and the public sectors, as follows:
appellate jurisdiction.
Five (5) members each shall be chosen from among the nominees of the
1. Under the old law, the Commission en banc and its divisions had their
workers and employers organization, respectively. The Chairman and the
four (4) remaining members shall come from the public sector, with the main office in Metropolitan Manila; and appeals could be taken to them
from decisions of Labor Arbiters regardless of the regional office whence the
latter to be chosen from among the recommendees of the Secretary of
Labor and Employment. case originated.

2. Under the law now, the First and Second Divisions have their official
However, once they assume office," the members nominated by the workers
and employers organizations shall divest themselves of any affiliations with station in Metropolitan Manila and "handle cases coming from the National
Capital Region;" the Third Division has its main office also in Metropolitan
or interest in the federation or association to which they belong."
Manila but would have appellate jurisdiction over "cases from other parts of
B. Allocation of Powers Between NLRC En Banc and its Divisions Luzon;" and the Fourth and Fifth Divisions have their main offices in Cebu
and Cagayan de Oro City, and exercise jurisdiction over cases "from the
Another amendment was made in respect of the allocation of powers and Visayas and Mindanao," respectively; and the appellate authority of the
functions between the Commission en banc, on the one hand, and its divisions is exclusive "within their respective territorial jurisdiction."
divisions, on the other. Both under the old and the amended law, the
Commission was vested with rule-making and administrative authority, as D. Qualifications and Tenure of Commissioners
well as adjudicatory and other powers, functions and duties, and could
sit en banc or in divisions of three (3) members each. But whereas under the Revisions were also made by RA 6715 with respect to the qualifications and
tenure of the National Labor Relations Commissioners.
old law, the cases to be decided en banc and those by a division were
determined by rules laid down by the Commission with the approval of Prescribed by the old law as qualifications for commissioners — appointed
the ex officio, Chairman (the Secretary of labor) — said Commission, in other for a term of six (6) years — were that they (a) by members of the Philippine
words, then exerciseboth administrative and adjudicatory powers — the law bar, and (b) have at least five years' experience in handling labor-
now, as amended by RA 6715, provides that — management relations. 7
1) the Commission "shall sit en banc only for purposes of promulgating rules RA 6715, on the other hand, requires (a) membership in the bar, (b)
and regulations governing the hearing and disposition of cases before any of engagement in the practice of law for at least 15 years, (c) at least five years'
its divisions and regional branches and formulating policies affecting its experience or exposure in the field of labor-management relations, and (d)
administration and operations;" but preferably, residence in the region where the commissioner is to hold office.
2) it "shall exercise its adjudicatory and all other powers, functions and The commissioners appointed shall hold office during good behavior until
they reach the age of sixty-five (65) years, unless they are sooner removed
duties through its divisions."
for cause as provided by law or become incapacited to discharge the duties (1) Unfair labor practice cases;
of their office.
(2) Those that workers may file involving wages, hours of work and other
2. Amendments Regarding Executive Labor Arbiters and Labor Arbiters terms and conditions of employment;

A. Qualifications (3) All money claims of workers, including those based on non-payment or
underpayment of wages, overtime compensation, separation pay and other
The old provided for one hundred fifty (150) labor arbiters assigned to the benefits provided by law or appropriate agreement, except claims for
different regional offices or branches of the Department of Labor and employees' compensation, social security, medicare and maternity benefits;
Employment (including sub-regional branches or provincial extension units),
each regional branch being headed by an Executive Labor Arbiter. RA 6715 (4) Cases involving household services; and
does not specify any fixed number of labor arbiters, but simply provides that
(5) Cases arising from any violation of Article 265 of this Code, including
there shall be as many labor arbiters as may be necessary for the effective
and efficient operation of the Commission. questions involving the legality of strikes and lockouts.

Some changes were introduced by RA 6715, indicated by italics in the


The old law declared that Executive Labor Arbiters and Labor Arbiters should
be members of the Bar, with at least two (2) years experience in the field of enumeration which shortly follows. The exclusive, original jurisdiction of
Labor Arbiters now embraces the following involving all workers, whether
labor management relations. They were appointed by the President upon
recommendation of the Chairman, and were "subject to the Civil Service agricultural or non-agricultural:
Law, rules and regulations." (1) Unfair labor practice cases;
On the other hand, RA 6715 requires that the "Executive Labor Arbiters and (2) Termination disputes;
Labor Arbiters shall likewise be members of the Philippine Bar," but in
addition "must have been in the practice of law in the Philippines for at least (3) If accompanies with a claim for reinstatement, those cases that workers
seven (7) years, with at least three (3) years experience or exposure in the may file involving wages, rates of pay, hours of work and other terms and
field of labor-management relations." For "purposes of reappointment," conditions of employment;
however, "incumbent Executive Labor Arbiters and Labor Arbiters who have
(4) Claims for actual, moral, exemplary and other forms of damages arising
been engaged in the practice of law for at least five (5) years may be
from the employer-employee relations;8
considered as already qualified." They are appointed by the President, on
recommendation of the Secretary of Labor and Employment, and are (5) Cases arising from any violation of Article 264 of this Code, including
subject to the Civil Service Law, rules and regulations. questions involving the legality of strikes and lockouts;
B. Exclusive Original Jurisdiction (6) Except claims for employees compensation, social security, medicare and
maternity benefits, all other claims arising from employer-employee
Before the effectivity of RA 6715, the exclusive original jurisdiction of labor
relations, including those of persons in domestic or household
arbiters comprehended the following cases involving all workers, whether
agricultural or non-agricultural:
service, involving an amount exceeding five thousand pesos (P5,000.00), Labor Arbiters." In this function, the law says, he shall be "aided by the
whether or not accompanies with a claim for reinstatement. Executive Clerk of the Commission."

Now, as before, the Labor Arbiters are given thirty (30) calendar days after The Executive Clerk appears to be the officer who used to be known under
the submission of the case by the parties to decide the case, without the old law as the Executive Director. The office of Executive Director is
extension, except that the present statute stresses that "even in the absence nowhere mentioned in RA 6715. Said Executive Clerk is given the additional
of stenographic notes," the period to decide is still thirty days, without responsibility of assisting the Commission en banc and the First Division, in
extension. performing "such similar or equivalent functions and duties as are
discharged by the Clerk of Court . . . of the Court of Appeals." The position of
Furthermore, RA 6715 provides that "Cases arising from the interpretation Deputy Executive Clerks have also been created whose main role is to assist
or implementation of collective bargaining agreements and those arising the other divisions of the Commission (the second, third, fourth and fifth)
from the interpretation or enforcement of company personnel policies shall "in the performance of such similar or equivalent functions and duties as are
be disposed of by the Labor Arbiter by referring the same to the grievance discharged by the . . . Deputy Clerk(s) of the Court of Appeals."
machinery and voluntary arbitration as may be provided in said
agreements." Summing up —

3. Amendments as Regards the Executive Director and Deputy Executive 1. Republic Act No. 6715 did not abolish the NLRC, or change its essential
Director character as a supervisory and adjudicatory body. Under said Act, as under
the former law, the NLRC continues to act collegially, whether it performs
Prior to RA 6715, there was, as earlier stated, an Executive Director, assisted administrative or rule-making functions or exercises appellate jurisdiction to
by a Deputy Executive Director, who was charged with the "exercise (of) the review decisions and final orders of the Labor Arbiters. The provisions
administrative functions of the Commission." 9 More particularly, his chief conferring a somewhat greater measure of autonomy; requiring that its
functions were "to take charge of all administrative matters of the membership be drawn from tripartite sectors (workers, employees and the
Commission and to have direct supervision over all units and personnel public sector); changing the official stations of the Commission's divisions,
assigned to perform administrative tasks." 10 Although not so stated in the and even those prescribing higher or other qualifications for the positions of
law, in the performance of their functions, the Executive Director and the Commissioner which, if at all, should operate only prospectively, not to
Deputy Executive Director were obviously themselves subject to the mention the fact that the petitioners (in G.R. No. 91547) have asserted
supervision and control of the head of office, the ex officio Chairman of the without dispute that they possess the new qualifications — none of these
National Labor Relations Commission (the Secretary of Labor), or the can be said to work so essential or radical a revision of the nature, powers
Commission itself. and duties of the NLRC as to justify a conclusion that the Act in truth did not
Under RA 6715, the Secretary of Labor is no longer ex officio Chairman of merely declare vacant but actually abolished the offices of commissioners
the Commission. There has been created the office of Chairman, who "shall and created others in their place.
have the administrative supervision over the Commission and its regional 2. Similar considerations yield the same conclusion as far as the positions of
branches and all its personnel, including the Executive Labor Arbiters and Labor Arbiters are concerned, there being no essential inconsistency on that
score between Republic Act No. 6715 and the old law. The Labor Arbiters
continue to exercise the same basic power and function: the adjudication, in No. 910 and this Court's Resolution in Ortiz vs. Commission on Elections, G.R.
the first instance, of certain classes of labor disputes. Their original and No. 79857, 161 SCRA 812;
exclusive jurisdiction remains substantially the same under both the old law
This disposition does not involve or apply to respondent Hon. Bartolome
and the new. Again, their incumbents' constitutionally guaranteed security
of tenure cannot be defeated by the provision for higher or other Carale, who replaced the Secretary of Labor as ex officio Chairman of the
NLRC pursuant to RA 6715, none of the petitioners having been affected or
qualifications than were prescribed under the old law; said provision can
only operate prospectively and as to new appointees to positions regularly in any manner prejudiced by his appointment and incumbency as such;
vacated; and there is, besides, also no showing that the petitioning Arbiters 2. In G.R. No. 90044, the removal of petitioner Pascual Y. Reyes and
do not qualify under the new law. petitioner-in-intervention Eugenio L. Sagmit, Jr. as NLRC Executive Director
and Deputy Executive Director, respectively, is likewise declared
3. The position titles of "Executive Clerk" and "Deputy Executive Clerk(s)"
provided for in RA 6715 are obviously not those of newly-created offices, unconstitutional and void, and they are ordered reinstated as Executive
Clerk and Deputy Executive Clerk, respectively, unless they opt for
but new appellations or designations given to the existing positions of
Executive Director and Deputy Executive Director. There is no essential retirement, in either case with full back salaries, emoluments and benefits
from the date of their removal to that of their reinstatement; and
change from the prescribed and basically administrative duties of these
positions and, at the same time, no mention in the Act of the former titles, 3. In G.R. Nos. 87211, and 94518, petitioners-intervenors Lourdes A. Sales
from which the logical conclusion is that what was intended was merely a and Ricardo Olairez and petitioner Rolando D. Gambito, having also been
change in nomenclature, not an express or implied abolition. Neither does illegally removed as Labor Arbiters, are ordered reinstated to said positions
the Act specify the qualifications for Executive Clerk and Deputy Executive with full back salaries, emoluments and benefits from the dates of their
Clerks. There is no reason to suppose that these could be higher than those removal up to the time they are reinstated.
for Executive Director and Deputy Executive Director, or that anything
inheres in these positions that would preclude their incumbents from being No pronouncement as to costs.
named Executive Clerk and Deputy Executive Clerks.
SO ORDERED.
WHEREFORE, the petitions are, as they must be, GRANTED , and the
following specific dispositions are hereby RENDERED:

1. In G.R. No. 91547, and G.R. No. 91730, the removal of petitioners Rosario
G. Encarnacion, Daniel M. Lucas, Jr., Ceferino E. Dulay, and Conrado Maglaya
as Commissioners of the NLRC is ruled unconstitutional and void; however,
to avoid displacement of any of the incumbent Commissioners now serving,
it not appearing that any of them is unfit or has given cause for removal, and
conformably to the alternative prayer of the petitioners themselves, it is
ORDERED that said petitioners be paid all salaries, benefits and emoluments G.R. No. 91636 April 23, 1992
accruing to them for the unexpired portions of their six-year terms and
allowed to enjoy retirement benefits under applicable laws, pursuant to RA
PETER JOHN D. CALDERON, petitioner, The power of the Commission on Appointments (CA for brevity) to confirm
vs. appointments, contained in the aforequoted paragraph 1 of Sec. 16, Art. VII,
BARTOLOME CARALE, in his capacity as Chairman of the National Labor was first construed in Sarmiento III vs. Mison 2 as follows:
Relations Commission, EDNA BONTO PEREZ, LOURDES C. JAVIER, ERNESTO
G. LADRIDO III, MUSIB M. BUAT, DOMINGO H. ZAPANTA, VICENTE S.E. . . . it is evident that the position of Commissioner of the Bureau of Customs
(a bureau head) is not one of those within the first group of appointments
VELOSO III, IRENEO B. BERNARDO, IRENEA E. CENIZA, LEON G. GONZAGA,
JR., ROMEO B. PUTONG, ROGELIO I. RAYALA, RUSTICO L. DIOKNO, where the consent of the Commission on Appointments is required. As a
matter of fact, as already pointed out, while the 1935 Constitution includes
BERNABE S. BATUHAN and OSCAR N. ABELLA, in their capacity as
Commissioners of the National Labor Relations Commission, and "heads of bureaus" among those officers whose appointments need the
consent of the Commission on Appointments, the 1987 Constitution, on the
GUILLERMO CARAGUE, in his capacity as Secretary of Budget and
Management, respondents. other hand, deliberately excluded the position of "heads of bureaus" from
appointments that need the consent (confirmation) of the Commission on
Appointments.

PADILLA, J.: . . . Consequently, we rule that the President of the Philippines acted within
her constitutional authority and power in appointing respondent Salvador
Controversy is focused anew on Sec. 16, Art. VII of the 1987 Constitution Mison, Commissioner of the Bureau of Customs, without submitting his
which provides: nomination to the Commission on Appointments for confirmation. . . .
Sec. 16. The President shall nominate and, with the consent of the . . . In the 1987 Constitution, however, as already pointed out, the clear and
Commission on Appointments, appoint the heads of the executive expressed intent of its framers was to exclude presidential appointments
departments, ambassadors, other public ministers and consuls, or officers of from confirmation by the Commission on Appointments, except
the armed forces from the rank of colonel or naval captain, and other appointments to offices expressly mentioned in the first sentence of Sec. 16,
officers whose appointments are vested in him in this Constitution. He shall Art. VII. Consequently, there was no reason to use in the third sentence of
also appoint all other officers of the Government whose appointments are Sec. 16, Article VII the word "alone" after the word "President" in providing
not otherwise provided for by law, and those whom he may be authorized that Congress may by law vest the appointment of lower-ranked officers in
by law to appoint. The Congress may, by law, vest the appointment of other the President alone, or in the courts, or in the heads of departments,
officers lower in rank in the President alone, in the courts, or in the heads of because the power to appoint officers whom he (the president) may be
departments, agencies, commissions, or boards. authorized by law to appoint is already vested in the President, without
The President shall have the power to make appointments during the recess need of confirmation by the Commission on Appointments, in the second
of the Congress, whether voluntary or compulsory, but such appointments sentence of the same Sec. 16, Article VII." (emphasis supplied)
shall be effective only until disapproval by the Commission on Appointments Next came Mary Concepcion Bautista v. Salonga, 3 this time involving the
or until the next adjournment of the Congress. 1 appointment of the Chairman of the Commission on Human Rights.
Adhering to the doctrine in Mison, the Court explained:
. . . Since the position of Chairman of the Commission on Human Rights is 1. Confirmation by the Commission on Appointments is required only for
not among the positions mentioned in the first sentence of Sec. 16, Art. VII presidential appointees mentioned in the first sentence of Section 16, Article
of the 1987 Constitution, appointments to which are to be made with the VII, including, those officers whose appointments are expressly vested by
confirmation of the Commission on Appointments, it follows that the the Constitution itself in the president (like sectoral representatives to
appointment by the President of the Chairman of the CHR is to be made Congress and members of the constitutional commissions of Audit, Civil
without the review or participation of the Commission on Appointments. To Service and Election).
be more precise, the appointment of the Chairman and Members of the
2. Confirmation is not required when the President appoints other
Commission on Human Rights is not specifically provided for in the
Constitution itself, unlike the Chairmen and Members of the Civil Service government officers whose appointments are not otherwise provided for by
law or those officers whom he may be authorized by law to appoint (like the
Commission, the Commission on Elections and the Commission on Audit,
whose appointments are expressly vested by the Constitution in the Chairman and Members of the Commission on Human Rights). Also, as
observed in Mison, when Congress creates inferior offices but omits to
president with the consent of the Commission on Appointments. The
president appoints the Chairman and Members of The Commission on provide for appointment thereto, or provides in an unconstitutional manner
for such appointments, the officers are considered as among those whose
Human Rights pursuant to the second sentence in Section 16, Art. VII, that
is, without the confirmation of the Commission on Appointments because appointments are not otherwise provided for by law.
they are among the officers of government "whom he (the President) may Sometime in March 1989, RA 6715 (Herrera-Veloso Law), amending the
be authorized by law to appoint." And Section 2(c), Executive Order No. 163, Labor Code (PD 442) was approved. It provides in Section 13 thereof as
5 May 1987, authorizes the President to appoint the Chairman and follows:
Members of the Commission on Human Rights.
xxx xxx xxx
Consistent with its rulings in Mison and Bautista, in Teresita Quintos Deles,
et al. v. The Commission on Constitutional Commissions, et al., 4 the power of The Chairman, the Division Presiding Commissioners and other
confirmation of the Commission on Appointments over appointments by the Commissioners shall all be appointed by the President, subject to
President of sectoral representatives in Congress was upheld because: confirmation by the Commission on Appointments. Appointments to any
vacancy shall come from the nominees of the sector which nominated the
. . . Since the seats reserved for sectoral representatives in paragraph 2, predecessor. The Executive Labor Arbiters and Labor Arbiters shall also be
Section 5, Art. VI may be filled by appointment by the President by express appointed by the President, upon recommendation of the Secretary of Labor
provision of Section 7, Art. XVIII of the Constitution, it is indubitable that and Employment, and shall be subject to the Civil Service Law, rules and
sectoral representatives to the House of Representatives are among the regulations. 5
"other officers whose appointments are vested in the President in this
Constitution," referred to in the first sentence of Section 16, Art. VII whose Pursuant to said law (RA 6715), President Aquino appointed the Chairman
appointments are subject to confirmation by the Commission on and Commissioners of the NLRC representing the public, workers and
Appointments. employers sectors. The appointments stated that the appointees may
qualify and enter upon the performance of the duties of the office. After
From the three (3) cases above-mentioned, these doctrines are deducible: said appointments, then Labor Secretary Franklin Drilon issued
Administrative Order No. 161, series of 1989, designating the places of provided for by the law and to those whom the President may be authorized
assignment of the newly appointed commissioners. by law to appoint, no confirmation by the Commission on Appointments is
required.
This petition for prohibition questions the constitutionality and legality of
the permanent appointments extended by the President of the Philippines Had it been the intention to allow Congress to expand the list of officers
to the respondents Chairman and Members of the National Labor Relations whose appointments must be confirmed by the Commission on
Commission (NLRC), without submitting the same to the Commission on Appointments, the Constitution would have said so by adding the phrase
Appointments for confirmation pursuant to Art. 215 of the Labor Code as "and other officers required by law" at the end of the first sentence, or the
amended by said RA 6715. phrase, "with the consent of the Commission on Appointments" at the end
of the second sentence. Evidently, our Constitution has significantly omitted
Petitioner insists on a mandatory compliance with RA 6715 which has in its to provide for such additions.
favor the presumption of validity. RA 6715 is not, according to petitioner, an
encroachment on the appointing power of the executive contained in The original text of Section 16 of Article VII of the present Constitution as
Section 16, Art. VII, of the Constitution, as Congress may, by law, require embodied in Resolution No. 517 of the Constitutional Commission reads as
confirmation by the Commission on Appointments of other officers follows:
appointed by the President additional to those mentioned in the first
sentence of Section 16 of Article VII of the Constitution. Petitioner claims "The President shall nominate and, with the consent of the Commission on
Appointments, shall appoint the heads of the executive departments and
that the Mison and Bautista rulings are not decisive of the issue in this case
for in the case at bar, the President issued permanent appointments to the bureaus, ambassadors, other public ministers and consuls, or officers of the
armed forces from the rank of captain or commander, and all other officers
respondents without submitting them to the CA for confirmation despite
passage of a law (RA 6715) which requires the confirmation by the of the Government whose appointments are not herein otherwise provided
for by law, and those whom he may be authorized by law to appoint. The
Commission on Appointments of such appointments.
Congress may by law vest the appointment of inferior officers in the
The Solicitor General, on the other hand, contends that RA 6715 which President alone, in the courts or in the heads of the department."
amended the Labor Code transgressesSection 16, Article VII by expanding
the confirmation powers of the Commission on Appointments without Three points should be noted regarding sub-section 3 of Section 10 of Article
VII of the 1935 Constitution and in the original text of Section 16 of Article
constitutional basis. Mison and Bautista laid the issue to rest, says the
Solicitor General, with the following exposition: VII of the present Constitution as proposed in Resolution No. 517.

First, in both of them, the appointments of heads of bureaus were required


As interpreted by this Honorable Court in the Mison case, confirmation by
the Commission on Appointments is required exclusively for the heads of to be confirmed by the Commission on Appointments.
executive departments, ambassadors, public ministers, consuls, officers of Second, in both of them, the appointments of other officers, "whose
the armed forces from the rank of colonel or naval captain, and other appointments are not otherwise provided for by law to appoint" are
officers whose appointments are vested in the President by the Constitution, expressly made subject to confirmation by the Commission on
such as the members of the various Constitutional Commissions. With Appointments. However, in the final version of Resolution No. 517, as
respect to the other officers whose appointments are not otherwise embodied in Section 16 of Article VII of the present Constitution, the
appointment of the above mentioned officers (heads of bureaus; other Second, all other officers of the Government whose appointments are not
officers whose appointments are not provided for by law; and those whom otherwise provided for by law;
he may be authorized by law to appoint) are excluded from the list of those
Third, those whom the president may be authorized by law to appoint;
officers whose appointments are to be confirmed by the Commission on
Appointments. This amendment, reflected in Section 16 of Article VII of the Fourth, officers lower in rank whose appointments the Congress may by law
Constitution, clearly shows the intent of the framers to exclude such vest in the President alone. 7
appointments from the requirement of confirmation by the Commission on
Appointments. Mison also opined:

Third, under the 1935 Constitution the word "nominate" qualifies the entire In the course of the debates on the text of Section 16, there were two (2)
Subsection 3 of Section 10 of Article VII thereof. major changes proposed and approved by the Commission. These were (1)
the exclusion of the appointments of heads of bureaus from the
Respondent reiterates that if confirmation is required, the three (3) stage requirement of confirmation by the Commission on Appointments; and (2)
process of nomination, confirmation and appointment operates. This is only the exclusion of appointments made under the second sentence of the
true of the first group enumerated in Section 16, but the word nominate section from the same requirement. . . .
does not any more appear in the 2nd and 3rd sentences. Therefore, the
president's appointment pursuant to the 2nd and 3rd sentences needs no The second sentence of Sec. 16, Art. VII refers to all other officers of the
confirmation. 6 government whose appointments are not otherwise provided for by law and
those whom the President may be authorized by law to appoint.
The only issue to be resolved by the Court in the present case is whether or
not Congress may, by law, require confirmation by the Commission on Indubitably, the NLRC Chairman and Commissioners fall within the second
Appointments of appointments extended by the president to government sentence of Section 16, Article VII of the Constitution, more specifically
officers additional to those expressly mentioned in the first sentence of Sec. under the "third groups" of appointees referred to in Mison, i.e. those
16, Art. VII of the Constitution whose appointments require confirmation by whom the President may be authorized by law to appoint. Undeniably, the
the Commission on Appointments. Chairman and Members of the NLRC are not among the officers mentioned
in the first sentence of Section 16, Article VII whose appointments requires
To resolve the issue, we go back to Mison where the Court stated: confirmation by the Commission on Appointments. To the extent that RA
6715 requires confirmation by the Commission on Appointments of the
. . . there are four (4) groups of officers whom the President shall appoint.
These four (4) groups, to which we will hereafter refer from time to time, appointments of respondents Chairman and Members of the National Labor
Relations Commission, it is unconstitutional because:
are:

First, the heads of the executive departments, ambassadors, other public 1) it amends by legislation, the first sentence of Sec. 16, Art. VII of the
Constitution by adding thereto appointments requiring confirmation by the
ministers and consuls, officers of the armed forces from the rank of colonel
or naval captain, and other officers whose appointments are vested in him in Commission on Appointments; and
this Constitution;
2) it amends by legislation the second sentence of Sec. 16, Art. VII of the continuance in office," found in Section 9, Article VIII of the Constitution,
Constitution, by imposing the confirmation of the Commission on referring to the salaries of judicial officers.
Appointments on appointments which are otherwise entrusted only with
xxx xxx xxx
the President.

Deciding on what laws to pass is a legislative prerogative. Determining their The rule is recognized elsewhere that the legislature cannot pass any
declaratory act, or act declaratory of what the law was before its passage, so
constitutionality is a judicial function. The Court respects the laudable
intention of the legislature. Regretfully, however, the constitutional infirmity as to give it any binding weight with the courts. A legislative definition of a
word as used in a statute is not conclusive of its meaning as used elsewhere;
of Sec. 13 of RA 6715 amending Art. 215 of the Labor Code, insofar as it
requires confirmation of the Commission on Appointments over otherwise, the legislature would be usurping a judicial function in defining a
term. (11 Am. Jur., 914, emphasis supplied).
appointments of the Chairman and Member of the National Labor Relations
Commission (NLRC) is, as we see it, beyond redemption if we are to render The legislature cannot, upon passing law which violates a constitutional
fealty to the mandate of the Constitution in Sec. 16, Art. VII thereof. provision, validate it so as to prevent an attack thereon in the courts, by a
Supreme Court decisions applying or interpreting the Constitution shall form declaration that it shall be so construed as not to violate the constitutional
inhibition. (11 Am., Jur., 919, emphasis supplied).
part of the legal system of the Philippines. 8 No doctrine or principle of law
laid down by the Court in a decision rendered en banc or in division may be We have already said that the Legislature under our form of government is
modified or reversed except by the Court sitting en banc. 9 assigned the task and the power to make and enact laws, but not to
. . . The interpretation upon a law by this Court constitutes, in a way, a part interpret them. This is more true with regard to the interpretation of the
basic law, the Constitution, which is not within the sphere of the Legislative
of the law as of the date that law was originally passed, since this Court's
construction merely establishes the contemporaneous legislative intent that department. If the Legislature may declare what a law means, or what a
specific portion of the Constitution means, especially after the courts have in
the law thus construed intends to effectuate. The settled rule supported by
numerous authorities is a restatement of the legal maxim "legis interpretado actual case ascertained its meaning by interpretation and applied it in a
decision, this would surely cause confusion and instability in judicial
legis vim obtinent" — the interpretation placed upon the written law by a
competent court has the force of law. 10 processes and court decisions. Under such a system, a final court
determination of a case based on a judicial interpretation of the law or of
The rulings in Mison, Bautista and Quintos-Deles have interpreted Art. VII, the Constitution may be undermined or even annulled by a subsequent and
Sec. 16 consistently in one manner. Can legislation expand a constitutional different interpretation of the law or of the Constitution by the Legislative
provision after the Supreme Court has interpreted it? department that would be neither wise nor desirable, being clearly violative
of the fundamental principles of our constitutional system of government,
In Endencia and Jugo vs. David, 11 the Court held: particularly those governing the separation of powers. 14 (Emphasis
By legislative fiat as enunciated in Section 13, Republic Act No. 590, supplied)
Congress says that taxing the salary of a judicial officer is not a decrease of
compensation. This is a clear example of interpretation or ascertainment of
the meaning of the phrase "which shall not be diminished during their
Congress, of course, must interpret the Constitution, must estimate the assembly may then consider either a return to the 1935 Constitutional
scope of its constitutional powers when it sets out to enact legislation and it provisions or the adoption of a hybrid system between the 1935 and 1987
must take into account the relevant constitutional prohibitions. 15 constitutional provisions. Until then, it is the duty of the Court to apply the
1987 Constitution in accordance with what it says and not in accordance
. . . The Constitution did not change with public opinion. with how the legislature or the executive would want it interpreted.
It is not only the same words, but the same in meaning . . . and as long as it WHEREFORE, the petition is DISMISSED. Art. 215 of the Labor Code as
it speaks not only in the same words, but with the same meaning and intent amended by RA 6715 insofar as it requires the confirmation of the
with which it spoke when it came from the hands of its framers, and was Commission on Appointments of appointments of the Chairman and
voted and adopted by the people . . . 16 Members of the National Labor Relations Commission (NLRC) is hereby
The function of the Court in passing upon an act of Congress is to "lay the declared unconstitutional and of no legal force and effect.
article of the Constitution which is invoked beside the statute which is SO ORDERED.
challenged and to decide whether the latter squares with the former" and to
"announce its considered judgment upon the question." 17 Narvasa, C.J., Melencio-Herrera, Paras, Feliciano, Bidin, Griño-Aquino,
Medialdea, Regalado, Davide, Jr., Romero and Nocon, JJ., concur.
It can not be overlooked that Sec. 16, Art. VII of the 1987 Constitution was
deliberately, not unconsciously, intended by the framers of the 1987 Bellosillo, J., took no part.
Constitution to be a departure from the system embodied in the 1935
Constitution where the Commission on Appointments exercised the power
of confirmation over almost all presidential appointments, leading to many
cases of abuse of such power of confirmation. Subsection 3, Section 10, Art.
VII of the 1935 Constitution provided:

3. The President shall nominate and with the consent of the Commission on Separate Opinions
Appointments, shall appoint the heads of the executive departments and
bureaus, officers of the Army from the rank of colonel, of the Navy and Air
Forces from the rank of captain or commander, and all other officers of the GUTIERREZ, JR., concurring:
Government whose appointments are not herein otherwise provided for,
and those whom he may be authorized by law to appoint; . . . When the issues in this petition were first raised in Sarmiento III
v. Mison (156 SCRA 549 [1987]), I joined Justice Cruz in a dissent because I
The deliberate limitation on the power of confirmation of the Commission felt that the interpretation of Section 16, Article VII by the majority of the
on Appointments over presidential appointments, embodied in Sec. 16, Art. Court results in absurd or irrational consequences. The framers could not
VII of the 1987 Constitution, has undoubtedly evoked the displeasure and have intended what the majority ruled to be the meaning of the provision.
disapproval of members of Congress. The solution to the apparent problem, When the question was again raised in Bautista v. Salonga (172 SCRA 160
if indeed a problem, is not judicial or legislative but constitutional. A future
constitutional convention or Congress sitting as a constituent (constitutional)
[1989]), I reiterated my dissent and urged a re-examination of the doctrine everytime a high government official is appointed without confirmation by
stated in Sarmiento v. Mison. the Commission on Appointments, another petition is filed with this Court.

The issue is again before us. Even as I continue to believe that the majority I, therefore, VOTE with the majority to DISMISS the PETITION.
was wrong in the Sarmiento andBautista cases, I think it is time to finally
accept the majority opinion as the Court's ruling on the matter and one CRUZ, J., dissenting:
which everybody should respect. There will be no end to litigation if, I dissent on the basis of my dissent in Sarmiento v. Mison, which I believe
everytime a high government official is appointed without confirmation by should be re-examined instead of being automatically re-affirmed simply
the Commission on Appointments, another petition is filed with this Court. because of its original adoption. I do not believe we should persist in error
I, therefore, VOTE with the majority to DISMISS the PETITION. on the ground merely of adherence to judicial precedent, however unsound.

CRUZ, J., dissenting:

I dissent on the basis of my dissent in Sarmiento v. Mison, which I believe


should be re-examined instead of being automatically re-affirmed simply
because of its original adoption. I do not believe we should persist in error
on the ground merely of adherence to judicial precedent, however unsound.

Separate Opinion

GUTIERREZ, JR., J., concurring:

When the issues in this petition were first raised in Sarmiento III
v. Mison (156 SCRA 549 [1987]), I joined Justice Cruz in a dissent because I
felt that the interpretation of Section 16, Article VII by the majority of the
Court results in absurd or irrational consequences. The framers could not
have intended what the majority ruled to be the meaning of the provision.
When the question was again raised in Bautista v. Salonga (172 SCRA 160
[1989]), I reiterated my dissent and urged a re-examination of the doctrine
stated in Sarmiento v. Mison.

The issue is again before us. Even as I continue to believe that the majority
was wrong in the Sarmiento andBautista cases, I think it is time to finally
accept the majority opinion as the Court's ruling on the matter and one
which everybody should respect. There will be no end to litigation if,

G.R. No. 106231 November 16, 1994


HAWAIIAN-PHILIPPINE COMPANY, petitioner, that the sugar farm workers within petitioner's milling district have never
vs. availed of the benefits due them under the law.
REYNALDO J. GULMATICO, Labor Arbiter, Regional Arbitration Branch No.
Under Section 9 of R.A 809, otherwise known as the Sugar Act of 1952, it is
VI, AND NATIONAL FEDERATION OF SUGAR WORKERS-FOOD AND
GENERAL TRADES representing all the sugar farm workers of the provided, to wit:
HAWAIIAN PHILIPPINE MILLING DISTRICT, respondents. Sec. 9. In addition to the benefits granted by the Minimum Wage Law, the
Angara, Abella, Concepcion, Regala & Cruz for petitioner. proceeds of any increase in participation granted to planters under this Act
and above their present share shall be divided between the planter and his
Manlapao, Ymballa and Chaves for private respondent. laborers in the following proportions;

Sixty per centum of the increase participation for the laborers and forty per
centum for the planters. The distribution of the share corresponding to the
BIDIN, J.: laborers shall be made under the supervision of the Department of Labor.
This petition for certiorari and prohibition with preliminary injunction seeks xxx xxx xxx
to annul the Order dated June 29, 1992 issued by public respondent Labor
Arbiter Reynaldo J. Gulmatico denying petitioner's motion for "Claims on (Emphasis supplied.)
R.A. 809" in RAB VI Case No. 06-07-10256-89, the dispositive portion of
which reads, in part: On July 31, 1989, petitioner filed a "Motion to Dismiss," followed by a
"Supplemental Motion to Dismiss" on September 19, 1989. Petitioner
WHEREFORE, premises considered, the motion to dismiss dated July 31, contended that public respondent Labor Arbiter has no jurisdiction to
1989 and the supplement thereto dated September 19, 1989 filed by entertain and resolve the case, and that respondent union has no cause of
respondent company together with the motion to dismiss filed by action against petitioner.
respondent Ramon Jison dated August 27, 1990 and Francisco Jison dated
On August 23, 1989, respondent union filed an "Opposition to Motion to
September 20, 1990, respectively, are hereby DENIED.
Dismiss."
xxx xxx xxx
On October 3,1989, petitioner applied a "Reply to Opposition" followed by a
(Rollo, p. 59) "Citation of Authorities in Support of Motion to Dismiss."

The antecedent facts are as follows: On December 20, 1989, respondent union filed an amended complaint
additionally impleading as complainants Efren Elaco, Bienvenido Gulmatico,
On July 4, 1989, respondent union, the National Federation of Sugar Alberto Amacio, Narciso Vasquez, Mario Casociano and all the other farm
Workers-Food and General Trades (NFSW-FGT) filed RAB VI Case No. 06-07- workers of the sugar planters milling with petitioner from 1979 up to the
10256-89 against herein petitioner Hawaiian-Philippine Company for claims present, and as respondents, Jose Maria Regalado, Ramon Jison, Rolly
under Republic Act 809 (The Sugar Act of 1952). Respondent union claimed Hernaez, Rodolfo Gamboa, Francisco Jison and all other sugar planters
milling their canes with petitioner from 1979 up to the present.
On August 27, 1990, Ramon Jison, one of the respondents impleaded in the 3. If accompanied with a claim for reinstatement, those cases that workers
amended complaint, filed a "Motion to Dismiss and/or to Include Necessary may file involving wages, rates of pay, hours of work and other terms and
Parties," praying for the inclusion as co-respondents of the Asociacion de conditions of employment;
Hacenderos de Silan-Saravia, Inc. and the Associate Planters of Silay-Saravia,
Inc. 4. Claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relations;
On June 29, 1992, public respondent promulgated the assailed Order
denying petitioner's Motion to Dismiss and Supplemental Motion to Dismiss. 5. Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts; and
Hence, this petition filed by Hawaiian-Philippine Company.
6. Except claims for employees' compensation, social security, medicare
Petitioner reasserts the two lesson earlier raised in its Motion to Dismiss from maternity benefits, all other claims arising from employer-employee
which public respondent unfavorably resolved in the assailed Order. relations, including those of persons in domestic or household service,
involving an amount exceeding Five Thousand Pesos (P5,000.00), whether or
These two issues are first, whether public respondent Labor Arbiter has not accompanied with a claim for reinstatement. (Emphasis supplies)
jurisdiction to hear and decide the case against petitioner; and the second,
whether respondent union and/or the farm workers represented by it have a In support of the contention that the Labor Arbiter has no jurisdiction to
cause of action against petitioner. hear and decide the case against petitioner, the latter cites the ruling in San
Miguel Corporation vs. NLRC, 161 SCRA 719 [1988], wherein it was held that
Petitioner contends that the complaint filed against it cannot be categorized a single unifying element runs through the cases and disputes falling under
under any of the cases falling within the jurisdiction of the Labor Arbiter as the jurisdiction of the Labor Arbiter and that is that all the enumerated
enumerated in Article 217 of the Labor Code, as amended, considering that cases and disputes arise out of or are in connection with an employer-
no employer-employee relationship exists between petitioner milling employee relationship, or some aspect or incident of such relationship.
company and the farm workers represented by respondent union. Article Likewise, in Federation of Free Farmers vs. Court of Appeals, 107 SCRA 411
217 of the Labor Code provides: [1981], this Court held that:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as . . . . From the beginning of the sugar industry, the centrals have never had
otherwise provided under this Code, the Labor Arbiters shall have original any privity with the plantation laborers, since they had their own laborers to
and exclusive jurisdiction to hear and decide, within thirty (30) calendar days take care of. . . . Nowhere in Republic Act 809 (the Sugar Act of 1952) can we
after the submission of the case by the parties for decision without find anything that creates any relationship between the laborers of the
extension, even in the absence of stenographic notes, the following cases planters and the centrals. . . .
involving all workers, whether agricultural or non-agricultural:
. . . Under no principle of law or equity can we impose on the central . . . any
1. Unfair labor practice cases; liability to the plantation laborers. . . . (Emphasis supplied)
2. Termination disputes;
On the strength of the aforecited authorities, petitioner contends that it is planters and secondarily on the Department of Labor, but surely never on
not a proper party and has no involvement in the case filed by respondent the central.
union as it is not the employer of the respondent sugar workers.
Whatever liability there exists between favor of the plantation laborers
Furthermore, to bolster its contention, petitioner cites the Rules and should be pinned on the PLANTERS, their respective employers. (Emphasis
Regulations Implementing RA 809 issued by the then Wage Administration supplied)
Service pursuant to the Administrative Order of the Labor Secretary dated
October 1, 1952. Section 1 thereof states: On the other hand, public respondent and respondent union maintain the
position that privity exists between petitioner and the sugar workers.
Sec. 1. The payment of the proceeds derived from the sixty per centum of Actually, public respondent, in resolving petitioner's Motion to Dismiss,
any increase in the participation due the laborers shall be directly paid to skirted the issue of whether an employer-employee relationship indeed
the individual laborer concerned at the end of each milling season by his exists between petitioner milling company and the sugar workers. He did
respective planter under the Supervision of the Secretary of Labor or his duly not categorically rule thereon but instead relied on the observation that
authorized representative by means of payrolls prepared by said planter. when petitioner delivered to its planters the quedans representing its share,
(Emphasis supplied) petitioner did not first ascertain whether the shares of all workers or
claimants were fully paid/covered pursuant to LOI No. 854, and that
In addition, under Letter of Instruction No. 854 dated May 1, 1979, it is petitioner did not have the necessary certification from the Department of
provided: Labor attesting to such fact of delivery. In view of these observations, public
1. Payment subject to supervision. The workers' share shall be paid directly respondent subscribed to the possibility that petitioner may still have a
by the planter concerned to the workers or claimants entitled thereto liability vis-a-vis the workers' share. Consequently, in order that the workers
subject to the supervision of the Minister of Labor or his duly designated would not have to litigate their claim separately, which would be
representative. tantamount to tolerating the splitting of a cause of action, public respondent
held that petitioner should still be included in this case as an indispensable
The responsibility for the payment of the sugar workers' benefits under R.A. party without which a full determination of this case would not be obtained.
809 was categorically ruled upon in the Federation of Free
Farmers case, supra., to wit: We find for petitioner.

. . . the matter of paying the plantation laborers of the respective planters The Solicitor General, in its adverse Comment, correctly agreed with
becomes exclusively the concern of the planters, the laborers and the petitioner's contention that while the jurisdiction over controversies
Department of Labor. Under no principle of law or equity can we impose on involving agricultural workers has been transferred from the Court of
the Central — here VICTORIAS any liability to the respective plantation Agrarian Relations to the Labor Arbiters under the Labor Code as amended,
laborers, should any of their respective planters-employers fail to pay their the said transferred jurisdiction is however, not without limitations. The
legal share. After all, since under the law it is the Department of Labor dispute or controversy must still fall under one of the cases enumerated
which is the office directly called upon to supervise such payment, it is but under Article 217 of the Labor Code, which cases, as ruled in San Miguel,
reasonable to maintain that if any blame is to be fixed for the unfortunate supra., arise out of or are in connection with an employer-employee
situation of the unpaid laborers, the same should principally be laid on the relationship.
In the case at bar, it is clear that there is no employer-employee relationship In the case at bar, it is disputed that petitioner milling company has already
between petitioner milling company and respondent union and/or its distributed to its planters their respective shares. Consequently, petitioner
members-workers, a fact which, the Solicitor General notes, public has fulfilled its part and has nothing more to do with the subsequent
respondent did not dispute or was silent about. Absent the jurisdictional distribution by the planters of the workers' share.
requisite of an employer-employee relationship between petitioner and
Public respondent's contention that petitioner is an indispensable party is
private respondent, the inevitable conclusion is that public respondent is
without jurisdiction to hear and decide the case with respect to petitioner. not supported by the applicable provisions of the Rules of Court. Under
Section 7, Rule 3 thereof, indispensable parties are "parties in interest"
Anent the issue of whether respondent union and/or its members-workers without whom no final determination of the action can be obtained. In this
have a cause of action against petitioner, the same must be resolved in the case, petitioner cannot be deemed as a party in interest since there is no
negative. To have a cause of action, the claimant must show that he has a privity or legal obligation linking it to respondent union and/or its members-
legal right and the respondent a correlative duty in respect thereof, which workers.
the latter violated by some wrongful act or omission (Marquez vs. Varela, 92
Phil. 373 [1952]). In the instant case, a simple reading of Section 9 of R.A. In order to further justify petitioner's compulsory joinder as a party to this
case, public respondent relies on petitioners' lack of certification from the
809 and Section 1 of LOI 845 as aforequoted, would show that the payment
of the workers' share is a liability of the planters-employers, and not of the Department of Labor of its delivery of the planters' shares as evidence of an
alleged "conspicuous display of concerted conspiracy between the
milling company/sugar central. We thus reiterate Our ruling on this matter,
as enunciated in Federation of Free Farmers, supra., to wit: respondent sugar central (petitioner) and its adherent planters to deprive
the workers or claimants of their shares in the increase in participation of
. . . . Nowhere in Republic Act No. 809 can we find anything that creates any the adherent planters." (Rollo, p. 56)
relationship between the laborers of the planters and the centrals. Under
The assertion is based on factual conclusions which have yet to be proved.
the terms of said Act, the old practice of the centrals issuing the quedans to
the respective PLANTERS for their share of the proceeds of milled sugar per And even assuming for the sake of argument that public respondent's
conclusions are true, respondent union's and/or its workers' recourse lies
their milling contracts has not been altered or modified. In other words, the
language of the Act does not in any manner make the central the insurer on with the Secretary of Labor, upon whom authority is vested under RA 809 to
supervise the payment of the workers' shares. Any act or omission involving
behalf of the plantation laborers that the latter's respective employers-
planters would pay them their share. . . . the legal right of the workers to said shares may be acted upon by the Labor
Secretary either motu proprio or at the instance of the workers. In this case
. . . . Accordingly, the only obligation of the centrals (under Section 9 of the however, no such action has been brought by the subject workers, thereby
Act), like VICTORIAS, is to give to the respective planters, like PLANTERS raising the presumption that no actionable violation has been committed.
herein, the planters' share in the proportion stipulated in the milling
contract which would necessarily include the portion of 60% pertaining to Public respondent is concerned that the respondent planters may easily put
up the defense that the workers' share is with petitioner milling company,
the laborers. Once this has been done, the central is already out of the
picture. . . . (Emphasis supplied) giving rise to multiplicity of suits. The Solicitor General correctly postulates
that the planters cannot legally set up the said defense since the payment of
the workers' share is a direct obligation of the planters to their workers that
cannot be shifted to the miller/central. Furthermore, the Solicitor General
notes that there is nothing in RA 809 which suggests directly or indirectly
that the obligation of the planter to pay the workers' share is dependent
upon his receipt from the miller of his own share. If indeed the planter did
not receive his just and due share from the miller, he is not without legal
remedies to enforce his rights. The proper recourse against a reneging miller
or central is for the planter to implead the former not as an indispensable
party but as a third party defendant under Section 12, Rule 6 of the Rules of
Court. In such case, herein petitioner milling company would be a proper
third party dependent because it is directly liable to the planters (the
original defendants) for all or part of the workers' claim. However, the
planters involved in this controversy have not filed any complaint of such a
nature against petitioner, thereby lending credence to the conclusion that
petitioner has fulfilled its part vis-a-vis its obligation under RA 809.

WHEREFORE, premises considered, the petition is GRANTED. Public


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

SO ORDERED.

G.R. No. 124193 March 6, 1998

WILLIAM DAYAG, EDUARDO CORTON, EDGARDO CORTON, LEOPOLDO


NAGMA, ALOY FLORES, ROMEO PUNAY and EDWIN DAYAG, petitioners,
vs.
HON. POTENCIANO S. CANIZARES, JR., NATIONAL LABOR RELATIONS petitioners were regularly assigned was in Cebu City and that, in consonance
COMMISSION and YOUNG'S CONSTRUCTION CORPORATION, respondents. with Section 1(a) of Rule IV of the New Rules of Procedure of the NLRC, 1 the
case should have been filed in Cebu City. Young submitted in evidence a
certificate of registration of business name showing his company's address
ROMERO, J.: as "Corner Sudlon-España Streets, Pari-an, Cebu City"; its business permit
issued by the Office of the Mayor of Cebu City and a certification by the
On March 11, 1993, petitioners William Dayag, Edwin Dayag, Eduardo Philippine National Police-Cebu City Police Station 2 that petitioners had
Corton, Edgardo Corton, Leopoldo Nagma, Aloy Flores, and Romeo Punay been booked therein for qualified theft upon the complaint of Young's
filed a complaint for illegal dismissal, non-payment of wages, overtime pay, Construction.
premium pay, holiday pay, service incentive leave, 13th month pay, and
actual, moral and exemplary damages against Alfredo Young, a building Petitioners opposed the same, arguing that all of them, except for Punay,
contractor doing business under the firm name Young's Construction. They were, by that time, residents of Metro Manila and that they could not afford
filed the complaint with the National Capital Region Arbitration Branch of trips to Cebu City. Besides, they claimed that respondent had its main office
the NLRC which docketed the same as NLRC-NCR-Case No. 00-03-01891-93. at Corinthian Gardens in Quezon City. Young, in reply, declared that the
The case was subsequently assigned to Labor Arbiter Potenciano Canizares, Corinthian Gardens address was not his principal place of business, but
Jr. actually his residence, which he also used as a correspondent office for his
construction firm.
Petitioners alleged that they were hired in 1990 by Young to work as tower
crane operators at the latter's construction site at Platinum 2000 in San Agreeing that petitioners' workplace when the cause of action accrued was
Juan, Metro Manila. In November 1991, they were transferred to Cebu City Cebu City, the labor arbiter, on September 8, 1993, granted Young's motion
to work at the construction of his Shoemart Cebu project. Petitioners and ordered the transmittal of the case to the regional arbitration branch of
worked in Cebu until February 1993, except for Punay who stayed up to Region VII. Petitioners promptly appealed said order to the NLRC, which,
September 29, 1992 only and Nagma, until October 21, 1992. however, dismissed the same on January 31, 1995, for lack of merit.

On January 30, 1993, William Dayag asked for permission to go to Manila to Citing Nestle Philippines, Inc. vs. NLRC 2 and Cruzvale,
attend to family matters. He was allowed to do so but was not paid for the Inc. vs. Laguesma 3 petitioners moved for a reconsideration of the January
period January 23-30, 1993, allegedly due to his accountability for the loss of 31, 1995 resolution of the Commission. Acting favorably on said motion, the
certain construction tools. Eduardo Corton had earlier left on January 16, Commission, on August 25, 1995, annulled and set aside its resolution of
1993, purportedly due to harassment by Young. In February 1993, Edgardo January 31, 1995, and remanded the case to the original arbitration branch
Corton, Aloy Flores and Edwin Dayag also left Cebu for Manila, allegedly for of the National Capital Region for further proceedings. This prompted
the same reason. Thereafter, petitioners banded together and filed the Young, in turn, to file his own motion for reconsideration seeking the
complaint previously mentioned. reversal of the August 25, 1995 resolution of the Commission. Finding the
two above-cited cases to be inapplicable to instant case, the Commission
Instead of attending the initial hearings set by the labor arbiter, Young filed, made a volte-face and reconsidered its August 25, 1995 resolution. It
on July 6, 1993, a motion to transfer the case to the Regional Arbitration reinstated the resolution of January 31, 1995, directing the transfer of the
Branch, Region VII of the NLRC. He claimed that the workplace where case to Cebu City. In addition, it ruled that no further motion of a similar
nature would be entertained. Hence, the recourse to this Court by justice, technicalities may be disregarded in order to resolve the case.
petitioners, who raise the following as errors: Litigations should, as much as possible, be decided on the merits and not on
technicalities. 6 Lastly, petitioners were able to file an opposition to the
1. THE LABOR ARBITER A QUO ERRED IN ISSUING THE DISPUTED ORDER motion to transfer venue which, undisputedly, was considered by the labor
DATED SEPTEMBER 8, 1993 WHEN, OBVIOUSLY, THE SAID MOTION TO arbiter when he issued the disputed order of September 8, 1993. There is,
TRANSFER VENUE WAS FILED IN VIOLATION OF SECTIONS 4 AND 5 OF RULE hence, no showing that petitioners have been unduly prejudiced by the
15 OF THE REVISED RULES OF COURT. motion's failure to give notice of hearing.
2. PUBLIC RESPONDENTS ERRED IN ISSUING THE DISPUTED JUDGMENT Given the foregoing, it seems improper to nullify Young's motion on a mere
WHEN, OBVIOUSLY, THE RESPONDENT, BY FILING ITS POSITION PAPER, HAS technicality. Petitioners' averments should be given scant consideration to
WAIVED ITS RIGHT TO QUESTION THE VENUE OF THE INSTANT CASE. give way to the more substantial matter of equitably determining the rights
3. THE PUBLIC RESPONDENTS ERRED IN CONCLUDING THAT THE and obligations of the parties. It need not be emphasized that rules of
WORKPLACE OF THE COMPLAINANTS IS AT CEBU CITY AND IN DECLARING procedure must be interpreted in a manner that will help secure and not
THAT THE PROPER VENUE IS AT CEBU CITY. defeat justice. 7

Petitioner contends that the labor arbiter acted with grave abuse of Likewise, petitioners harp on Young's so-called "waiver" of his right to
discretion when it entertained Young's motion to transfer venue since it did contest the venue of the instant case. They argue that Young is estopped
not specify the time and date when it would be heard by the labor arbiter. from questioning the venue herein as his motion to transfer venue was
They raise the suppletory application of the Rules of Court, specifically actually a position paper, a close scrutiny of the same purportedly showing
Sections 4 and 5 of Rule 15, 4 in relation to Section 3 of Rule I of the New that he admitted and denied certain allegations found in petitioners'
Rules of Procedure of the NLRC, in support of their contention. complaint.

We find no merit in petitioners' argument. In a long line of decisions, 5 this Petitioners' contention rings hollow. Even if the questioned motion was at
Court has consistently ruled that the application of technical rules of the same time a position paper, Section 1(c) of Rule IV provides: "(w)hen
procedure in labor cases may be relaxed to serve the demands of substantial improper venue is not objected to before or at the time of the filing of
justice. As provided by Article 221 of the Labor Code "rules of evidence position papers, such question shall be deemed waived" (Emphasis
prevailing in courts of law or equity shall not be controlling and it is the spirit supplied). Consequently, there is no waiver of improper venue if a party
and intention of this Code that the Commission and its members and the questions venue simultaneously with the filing of a position paper.
Labor Arbiters shall use every and all reasonable means to ascertain the Moreover, nowhere in the New Rules of Procedure of the NLRC is there a
facts in each case speedily and objectively and without regard to requirement that a party must object solely to venue, on penalty of waiving
technicalities of law or procedure, all in the interest of due process." the same. In fact, Section 1(d) provides that:
Furthermore, while it is true that any motion that does not comply with the The venue of an action may be changed or transferred to a different
requirements of Rule 15 should not be accepted for filing and, if filed, is not Regional Arbitration Branch other than where the complaint was filed by
entitled to judicial cognizance, this Court has likewise held that where a rigid written agreement of the parties or when the Commission or Labor Arbiter
application of the rule will result in a manifest failure or miscarriage of
before whom the case is pending so orders, upon motion by the proper to assure convenience for the plaintiff and his witnesses and to promote the
party in meritorious cases (Emphasis supplied). ends of justice. With more reason does the principle find applicability in
cases involving labor and management because of the doctrine well-
Young's acts are in consonance with this provision, for he seasonably made entrenched in our jurisdiction that the State shall afford full protection to
representations to transfer the venue of the action in the proper motion. labor. The Court held that Section 1(a), Rule IV of the NLRC Rules of
Finally, while it is true that objections to venue are deemed waived if the Procedure on Venue was merely permissive. In its words:
respondent, through conduct, manifests satisfaction with the venue until This provision is obviously permissive, for the said section uses the word
after the trial, or abides by it until the matter has proceeded to a "may," allowing a different venue when the interests of substantial justice
hearing, 8 no waiver of the defense of venue on the ground of estoppel by demand a different one. In any case, as stated earlier, the Constitutional
conduct can be attributed to Young, who consistently and persistently protection accorded to labor is a paramount and compelling factor, provided
contested the same even before trial. the venue chosen is not altogether oppressive to the employer.
Similarly, petitioners' reliance on Nestle 9 and Cruzvale 10 is likewise The rationale for the rule is obvious. The worker, being the economically-
misplaced. While Nestle ruled that Rule IV of the New Rules of Procedure of disadvantaged party—whether as complainant/petitioner or as respondent,
the NLRC does not constitute a complete rule on venue in cases cognizable as the case may be, the nearest governmental machinery to settle the
by labor arbiters, Section 2, Rule 4 of the Rules of Court 11 having suppletory dispute must be placed at his immediate disposal, and the other party is not
effect, it also held that the foregoing provision of the Rules of Court applies to be given the choice of another competent agency sitting in another place
only where the petitioners are labor unions or where a single act of an as this will unduly burden the former. 13 In fact, even in cases where venue
employer gives rise to a cause of action common to many of its employees has been stipulated by the parties, this Court has not hesitated to set aside
working in different branches or workplaces of the former. It is not denied the same if it would lead to a situation so grossly inconvenient to one party
that petitioners herein are not represented by a union; nor were they as to virtually negate his claim. Again, in Sulpicio Lines, this Court,
assigned to different workplaces by Young. Likewise, Cruzvale is inapplicable citing Sweet Lines vs. Teves, 14 held that:
to the case at bar, the issue involved therein being the propriety of the DOLE
Region IV Office's taking cognizance of a petition for certification election An agreement will not be held valid where it practically negates the action of
when the company's place of business was in Cubao, Quezon City, while the the claimant, such as the private respondents herein. The philosophy
workplace of the petitioning union was elsewhere. The instant case does not underlying the provisions on transfer of venue of actions is the convenience
involve any certification election; nor are the workplace of the employees of the plaintiffs as well as his witnesses and to promote the ends of justice.
and place of business of the employer different. Considering the expense and trouble a passenger residing outside Cebu City
would incur to prosecute a claim in the City of Cebu, he would probably
Young cannot, however, derive comfort from the foregoing, this petition decide not to file the action at all. The condition will thus defeat, instead of
having been overtaken by events. In the recent case of Sulpicio Lines, enhance, the ends of justice. Upon the other hand, petitioner had branches
Inc. vs. NLRC 12 this Court held that the question of venue essentially or offices in the respective ports of call of the vessels and could afford to
pertains to the trial and relates more to the convenience of the parties litigate in any of these places. Hence, the filing of the suit in the CFI of
rather than upon the substance and merits of the case. It underscored the Misamis Oriental, as was done in the instant case will not cause
fact that the permissive rules underlying provisions on venue are intended inconvenience to, much less prejudice petitioner.
In the case at hand, the ruling specifying the National Capital Region
Arbitration Branch as the venue of the present action cannot be considered
oppressive to Young. His residence in Corinthian Gardens also serves as his
correspondent office. Certainly, the filing of the suit in the National Capital
Region Arbitration Branch in Manila will not cause him as much
inconvenience as it would the petitioners, who are now residents of Metro
Manila, if the same was heard in Cebu. Hearing the case in Manila would
clearly expedite proceedings and bring about the speedy resolution of
instant case.

WHEREFORE, premises considered, the resolution of February 12, 1996, of


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

SO ORDERED.

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

NATIONAL UNION OF BANK EMPLOYEES, In Its Own Right And In Behalf Of


CBTC EMPLOYEES Affiliated With It; CBTC EMPLOYEES UNION, In Its Own
Right And Interest And In Behalf Of All CBTC Rank And File Employees
Including Its Members, BENJAMIN GABAT, BIENVENIDO MORALEDA,
ELICITA GAMBOA, FAUSTINO TEVES, SALVADOR LISING, and NESTOR DE
LOS SANTOS, petitioners, As a consequence, the union went to the then Court of First Instance of
vs. Manila, presided over by the respondent Judge, on a complaint for specific
THE HON. JUDGE ALFREDO M. LAZARO, CFI-MANILA BRANCH XXXV; performance, damages, and preliminary injunction against the private
COMMERCLKL BANK AND TRUST COMPANY OF THE PHILIPPINES; BANK OF respondents. Among other things, the complaint charged:
THE PHILIPPINE ISLANDS; AYALA CORPORATION; MANUEL J. MARQUEZ;
xxx xxx xxx
ENRIQUE ZOBEL; ALBERTO VILLA-ABRILLE; VICENTE A. PACIS, JR.; and
DEOGRACIAS A. FERNANDO, respondents. 51. In entering in to such arrangement for the termination of the CURRENT
CBA, and the consequent destruction to existing rights, interests and
benefits thereunder,CBTC is liable for wilful injury to the contract and
SARMIENTO, J.: property rights thereunder as provided in Article 2220 of the Civil Code of
the Philippines;
The sole issue in this special civil action for certiorari is whether or not the
courts may take cognizance of claims for damages arising from a labor 52. By arranging for the termination of the CURRENT CBA in the manner
controversy. above described, CBTC committed breach of said contract in bad faith, in
that CBTC had taken undue advantage of its own employees, by concealing
The antecedent facts are not disputed. and hiding the negotiations towards an agreement on the sales and merger,
On July 1, 1977, the Commercial Bank and Trust Company, a Philippine when it was under a statutory duty to disclose and bargain on the effects
banking institution, entered into a collective bargaining agreement with the thereof, according to law;
Commercial Bank and Trust Company Union, representing the rank and file xxx xxx xxx
of the bank with a membership of over one thousand employees, and an
affiliated local of the National Union of Bank Employees, a national labor 54. In virtually suppressing the collective bargaining rights of plaintiffs under
organization. the law and as provided in the CURRENT CBA, through shadow bargaining,
calculated delay, suspension of negotiations, concealment of bargainable
The agreement was effective until June 30, 1980, with an automatic renewal issues and high-handed dictation, the CBTC and its defendant officials, as
clause until the parties execute a new agreement. well as the BANK OF P.I. and its defendant officials, were all actuated by a
On May 20, 1980, the union, together with the National Union of Bank dishonest purpose to secure an undue advantage; on the part of the CBTC it
Employees, submitted to the bank management proposals for the was to avoid fresh and additional contractual commitments, which would
renegotiation of a new collective bargaining agreement. The following day, substantially lessen and diminish the profitability of the sale; and on the part
however, the bank suspended negotiations with the union. The bank had of the BANKOF P.I., it was to avoid having to face higher compensation rates
meanwhile entered into a merger with the Bank of the Philippine Islands, of CBTC employees in the course of integration and merger which could
another Philippine banking institution, which assumed all assets and force the upgrading of the benefit package for the personnel of the merged
liabilities thereof. operations, and thereby pushed personnel costs upwards; substantial
outlays and costs thereby entailed were all deftly avoided and evaded,
through the expedient of deliberate curtailment and suppression of (a) To interfere with, restrain or coerce employees in the exercise of their
contractual bargaining rights; right to self-organization;

55. All the other defendants have actively cooperated with and abetted the xxx xxx xxx
CBTC and its defendant officers in negotiating, contriving and effecting the
above arrangements for the attainment of its dishonest purpose, for abuse (g) To violate the duty to bargain collectively as prescribed by this Code;
of its rights, and for taking undue advantage of its very own employees, xxx xxx xxx
through the secret sale and scheduled merger; the collective participation
therein evinces machination, deceit, wanton attitude, bad faith, and The act complained of is broad enough to embrace either provision. Since it
oppressive intent, wilfully causing loss or injury to plaintiffs in a manner that involves collective bargaining — whether or not it involved an accompanying
is contrary to law, morals, good customs and public policy, in violation of violation of the Civil Code — it may rightly be categorized as an unfair labor
Articles 21 and 28 of the Civil Code; 1 practice. The civil implications thereof do not defeat its nature as a
fundamental labor offense.
xxx xxx xxx
As we stated, the damages (allegedly) suffered by the petitioners only form
Predictably, the private respondents moved for the dismissal of the case on part of the civil component of the injury arising from the unfair labor
the ground, essentially, of lack of jurisdiction of the court. practice. Under Article 247 of the Code, "the civil aspects of all cases
On November 26, 1980, the respondent Judge issued an order, dismissing involving unfair labor practices, which may include claims for damages and
other affirmative relief, shall be under the jurisdiction of the labor arbiters. 4
the case for lack of jurisdiction. According to the court, the complaint
partook of an unfair labor practice dispute notwithstanding the incidental The petitioners' claimed injury as a consequence of the tort allegedly
claim for damages, jurisdiction over which is vested in the labor arbiter. This committed by the private respondents, specifically, the Bank of the
order, as well as a subsequent one denying reconsideration, is now alleged Philippine Islands, under Article 1314 of the Civil Code, 5 does not
as having been issued 'in excess of his jurisdiction amounting to a grave necessarily give the courts jurisdiction to try the damage suit. Jurisdiction is
abuse of discretion." conferred by law 6 and not necessarily by the nature of the action. Civil
controversies are not the exclusive domain of the courts. In the case at bar,
We sustain the dismissal of the case, which is, as correctly held by the
respondent court, an unfair labor practice controversy within the original Presidential Decree No. 442, as amended by Batas Blg. 70, has vested such a
jurisdiction upon the labor arbiters, a jurisdiction the courts may not
and exclusive jurisdiction of the labor arbiters and the exclusive appellate
jurisdiction of the National Labor Relations Commission. The claim against assume.
the Bank of Philippine Islands — the principal respondent according to the Jurisdiction over unfair labor practice cases, moreover, belongs generally to
petitioners — for allegedly inducing the Commercial Bank and Trust the labor department of the government, never the courts. In Associated
Company to violate the existing collective bargaining agreement in the Labor Union v. Gomez, 7 we said:
process of re-negotiation, consists mainly of the civil aspect of the unfair
labor practice charge referred to under Article 247 2 of the Labor Code. A rule buttressed upon statute and reason that is frequently reiterated in
jurisprudence is that labor cases involving unfair practice are within the
Under Article 248 3 of the Labor Code, it shall be an unfair labor practice:
exclusive jurisdiction of the CIR. By now, this rule has ripened into dogma. It As far back as Associated Labor Union vs. Gomez [L-25999, February 9, 1967,
thus commands adherence, not breach. 19 SCRA 304] the exclusive jurisdiction of the Court of Industrial Relations in
disputes of this character was upheld. "To hold otherwise," as succinctly
The fact that the Bank of the Philippine Islands is not a party to the stated by the ponente, Justice Sanchez, "is to sanction split jurisdiction-
collective bargaining agreement, for which it "cannot be sued for unfair which is obnoxious to the orderly administration of justice." Then, in
labor practice at the time of the action," 8 cannot bestow on the respondent Progressive Labor Association vs. Atlas Consolidated Mining and
court the jurisdiction it does not have. In Cebu Portland Cement Co. v. Development Corporation [L-27585, May 29, 1970, 33 SCRA 349] decided
Cement Workers' Union, 9 we held: three years later, Justice J.B.L. Reyes, speaking for the Court, stressed that to
xxx xxx xxx rule that such demand for damages is to be passed upon by the regular
courts of justice, instead of leaving the matter to the Court of Industrial
There is no merit in the allegation. In the first place, it must be remembered Relations, 'would be to sanction split jurisdiction, which is prejudicial to the
that jurisdiction is conferred by law; it is not determined by the existence of orderly administration of justice'. Thereafter, this Court, in the cases of
an action in another tribunal. In other words, it is not filing of an unfair labor Leoquinco vs. Canada Dry Bottling Co. [L-28621, February 22, 1971, 37 SCRA
case in the Industrial Court that divests the court of first instance jurisdiction 535] and Associated Labor Union v. Cruz ([L-28978, September 22, 1971, 41
over actions properly belonging to the former. It is the existence of a SCRA 12], with the opinions coming from the same distinguished jurist,
controversy that properly falls within the exclusive jurisdiction of the adhered to such a doctrine. The latest case in point, as noted at the outset,
Industrial Court and to which the civil action is linked or connected that is the Goodrich Employees Association decision [L-30211, October 5, 1976,
removes said civil case from the competence of the regular courts. It is for 73 SCRA 297].
this reason that civil actions found to be intertwined with or arising out of, a
dispute exclusively cognizable by the Court of Industrial Relations were xxx xxx xxx
dismissed, even if the cases were commenced ahead of the unfair labor The petitioners' reliance upon Calderon v. Court of Appeals 12 is not well-
practice proceeding, and jurisdiction to restrain picketing was decreed to taken. Calderon has since lost its persuasive force, beginning with our ruling
belong to the Court of Industrial Relations although no unfair labor practice in PEPSI-COLA BOTTLING COMPANY v. MARTINEZ, 13 EBON v. DE
case has as yet been instituted. For the court of first instance to lose GUZMAN, 14 and AGUSAN DEL NORTE ELECTRIC COOP., INC. v. SUAREZ, 15 and
authority to pass upon a case, therefore, it is enough that unfair labor following the promulgation of Presidential Decree No. 1691, restoring the
practice case is in fact involved in or attached to the action, such fact of jurisdiction to decide money claims unto the labor arbiters.
course being established by sufficient proof. 10
Neither does the fact that the Bank of the Philippine Islands "was not an
xxx xxx xxx employer at the time the act was committed' abate a recourse to the labor
Furthermore, to hold that the alleged tortious act now attributed to the arbiter. It should be noted indeed that the Bank of the Philippine Islands
Bank of the Philippine Islands may be the subject of a separate suit is to assumed "all the assets and liabilities" 16 of the Commercial Bank and Trust
sanction split jurisdiction long recognized to be an offense against the Company. Moreover, under the Corporation Code:
orderly administration of justice. As stated in Nolganza v. Apostol: 11 xxx xxx xxx
xxx xxx xxx
5. The surviving or consolidated corporation shall be responsible and liable
for all the liabilities and obligations of each of the constituent corporations
in the same manner as if such surviving or consolidated corporation had
itself incurred such liabilities or obligations; and any claim, action or
proceeding pending by or against any of such constituent corporations may
be prosecuted by or against the surviving or consolidated corporation, as the
case may be. Neither the rights of creditors nor any lien upon the property
of any of such constituent corporations shall be impaired by such merger or
consolidation. 17

xxx xxx xxx

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

WHEREFORE, the petition is DISMISSED. No costs.

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

LORENZO C. DY, ZOSIMO DY, SR., WILLIAM IBERO, RICARDO GARCIA AND
RURAL BANK OF AYUNGON, INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND EXECUTIVE LABOR
ARBITER ALBERTO L. DALMACION, AND CARLITO H. Bank of Ayungon, and additional causes of action for underpayment of
VAILOCES, respondents. salary and non-payment of living allowance.

Marcelino C. Maximo and Ramon Barrameda for petitioners. In his complaint and position paper, Vailoces asserted that Lorenzo Dy, after
obtaining control of the majority stock of the bank by buying the shares of
Carlito H. Vailoces for private respondent. Marcelino Maximo, called an illegal stockholders' meeting and elected a
Board of Directors controlled by him; that after its illegal constitution, said
Board convened on July 2, 1983 and passed a resolution dismissing him as
NARVASA, J.: manager, without giving him the opportunity to be heard first; that his
dismissal was motivated by Lorenzo Dy's desire to take over the
Petitioners assail in this Court the resolution of the National Labor Relations
management and control of the bank, not to mention the fact that he (Dy)
Commission (NLRC) dismissing their appeal from the decision of the
harbored ill feelings against Vailoces on account of the latter's filing of a
Executive Labor Arbiter 1 in Cebu City which found private respondent to
complaint for violation of the corporation code against him and another
have been illegally dismissed by them.
complaint for compulsory recognition of natural child with damages against
Said private respondent, Carlito H. Vailoces, was the manager of the Rural Zosimo Dy, Sr. 4
Bank of Ayungon (Negros Oriental), a banking institution duly organized
In their answer, Lorenzo Dy, et al. denied the charge of illegal dismissal. They
under Philippine laws. He was also a director and stockholder of the bank.
pointed out that Vailoces' position was an elective one, and he was not re-
On June 4, 1983, a special stockholders' meeting was called for the purpose elected as bank manager because of the Board's loss of confidence in him
of electing the members of the bank's Board of Directors. Immediately after brought about by his absenteeism and negligence in the performance of his
the election the new Board proceeded to elect the bank's executive officers. duties; and that the Board's action was taken to protect the interest of the
bank and was "designed as an internal control measure to secure the check
Pursuant to Article IV of the bank's by-laws, 2 providing for the election by and balance of authority within the organization." 5
the entire membership of the Board of the executive officers of the bank,
i.e., the president, vice-president, secretary, cashier and bank manager, in The Executive Labor Arbiter found that Vailoces was:
that board meeting of June 4, 1983, petitioners Lorenzo Dy, William Ibero
(a) Illegally dismissed, first not because of absenteeism and negligence, but
and Ricardo Garcia were elected president, vice-president and corporate
of the resentment of petitioners against Vailoces which arose from the
secretary, respectively. Vailoces was not re-elected as bank
latter's filing of the cases for recognition as natural child against Zosimo Dy,
manager, 3 Because of this development, the Board, on July 2, 1983, passed
Sr. and for violation of the corporation code against Lorenzo Dy; and second,
Resolution No. 5, series of 1983, relieving him as bank manager.
because he was not afforded the due process of law when he was dismissed
On August 3, 1983, Vailoces filed a complaint for illegal dismissal and during the Board meeting of July 2, 1983 the validity of which is seriously
damages with the Ministry of Labor and Employment against Lorenzo Dy doubted;
and Zosimo Dy, Sr. The complaint was amended on September 22, 1983 to
(b) Not paid his cost of living allowance; and
include additional respondents-William Ibero, Ricardo Garcia and the Rural
(c) Underpaid with only P500 monthly salary,
and consequently ordered the individual petitioners — Lorenzo Dy and case as certified by Julia Pepito in an affidavit subscribed before the Senior
Zosimo Dy-but not the Bank itself, to: Labor Arbitration Specialist. The appeal was filed only on February 17, 1984.

(a) Pay Vailoces jointly and severally, the sum of P111,480.60 representing Considering that it was a law partner of the respondents' counsel who
his salary differentials, cost of living allowances, back wages from date of received on January 11, 1984 the registered letter, his actual receipt thereof
dismissal up to the date of the decision (November 29, 1983), moral and completes the service. ... And even assuming that such was not a valid
exemplary damages, and attorney's fees; and service, since the respondents received another copy of the decision on
January 30, 1984, through their newly engaged counsel, it is therefore our
(b) Reinstate Vailoces to his position as bank manager, with additional opinion that the appeal herein was filed out of time, whether the time is
backwages from December 1, 1983 on the adjusted salary rate of P620.00 r reckoned from the receipt by Atty. Elesteria or Atty. Zerna, and, for this
month until he is actually reinstated, plus cost-of-living allowance. 6 reason, we can not give due course to his appeal. 8
Lorenzo Dy, et al. appealed to the NLRC, assigning error to the decision of In this Court, petitioners assail said ruling as an arbitrary deprivation of their
the Labor Arbiter on various grounds, among them: that Vailoces was not right to appeal through unreasonable adherence to procedural technicality.
entitled to notice of the Board meeting of July 2, 1983 which decreed his They argue that they should not be bound by the service of the Labor
relief because he was no longer a member of the Board on said date; that he Arbiter's decision by Atty. Elesteria on January 11, 1984 or by Atty. Zerna on
nonetheless had the opportunity to refute the charges against him and seek January 30, 1984, because neither lawyer was authorized to accept service
a formal investigation because he received a copy of the minutes of said for their counsel Atty. Tubio, and that their 10 day period of appeal should
meeting while he was still the bank manager (his removal was to take effect be counted from February 10, 1984 when they actually received the copy of
only on August 15, 1983), instead of which he simply abandoned the work the decision from Atty. Zerna. On the merits, they assert that the Arbiter's
he was supposed to perform up to the effective date of his relief; and that finding of illegal dismissal was without evidentiary basis, that it was error to
the matter of his relief was within the adjudicatory powers of the Securities impose the obligation to pay damages upon the individual petitioners,
and Exchange Commission. 7 instead of the Rural Bank of Ayungon, which was Vailoces' real employer,
The NLRC, however bypassed the issues raised and simply dismissed the and that the damages awarded are exorbitant and oppressive.
appeal for having been filed late. It ruled that: While the comment of Vailoces traverses the averments of the petition, that
The record shows that a copy of the decision sent by registered mail to of the Solicitor General on behalf of public respondents perceives the matter
respondents' counsel, Atty. Edmund Tubio, was received on January 11, 1984 as an intracorporate controversy of the class described in Section 5, par. (c),
by a certain Atty. Ramon Elesteria, a law office partner of Atty. Tubio. ... This of Presidential Decree No. 902-A, namely:
fact is corroborated by the certification issued by the Postmaster of (c) Controversies in the election or appointments of directors, trustees,
Dumaguete City... Moreover, the same is admitted by no less than Atty. officers or managers of such corporations, partnerships or associations.
Ramon Elesteria himself in his affidavit. It further appears in the record that
on January 30, 1984 a certain Atty. Francisco Zerna, a new lawyer engaged explicitly declared to be within the original and exclusive jurisdiction of the
by the respondents for the appeal, received a copy of the decision in this Securities and Exchange Commission, and recommends that the questioned
resolution of the NLRC as well as the decision of the Labor Arbiter be set vacancy in the Board shall be filled by a majority vote of the stockholders at
aside as null and void. 9 a meeting specially called for the purpose. Thus, he concludes, the Board
meeting on September 5, 1981 was tainted with irregularity on account of
In truth, the issue of jurisdiction is decisive and renders unnecessary the presence of illegally elected directors without whom the results could
consideration of the other questions raised. have been different.
There is no dispute that the position from which private respondent Vailoces Tan invoked the same allegations in his complaint filed with the SEC. So
claims to have been illegally dismissed is an elective corporate office. He much so, that on December 17, 1981, the SEC (Case No. 2145) rendered a
himself acquired that position through election by the bank's Board of Partial Decision annulling the election of the three directors and ordered the
Directors at the organizational meeting of November 17, 1979. 10 He lost convening of a stockholders' meeting for the purpose of electing new
that position because the Board that was elected in the special stockholders' members of the Board. The correctness of d conclusion is not for us to pass
meeting of June 4, 1983 did not re-elect him. And when Vailoces, in his upon in this case. Tan was present at said meeting and again sought the
position paper submitted to the Labor Arbiter, impugned said stockholders' issuance of injunctive relief from the SEC.
meeting as illegally convoked and the Board of Directors thereby elected as
illegally constituted, 11 he made it clear that at the heart of the matter was The foregoing indubitably show that, fundamentally, the controversy is intra-
the validity of the directors' meeting of June 4, 1983 which, by not re- corporate in nature. It revolves around the election of directors, officers or
electing him to the position of manager, in effect caused termination of his managers of the PSBA, the relation between and among its stockholders,
services. and between them and the corporation. Private respondent also contends
that his "ouster" was a scheme to intimidate him into selling his shares and
The case thus falls squarely within the purview of Section 5, par. (c), No. to deprive him of his just and fair return on his investment as a stockholder
902-A just cited. In PSBA vs. Leaño, 12 this Court, confronted with a similar received through his salary and allowances as Executive Vice-President. Vis-
controversy, ruled that the Securities and Exchange Commission, not the a-vis the NLRC, these matters fall within the jurisdiction of the SEC.
NLRC, has jurisdiction: Presidential Decree No. 902-A vests in the Securities and Exchange
It was at a Board regular monthly meeting held on August 1, 1981, that Commission:
three directors were elected to fill vacancies. And, it was at the regular ... Original and exclusive jurisdiction to hear and decide cases involving:
Board meeting of September 5, 1981 that all corporate positions were
declared vacant in order to effect a reorganization, and at the ensuing a) Devices or schemes employed by or any acts, of the board of directors,
election of officers, Tan was not re-elected as Executive Vice-President. business associates, its officers or partners, amounting to fraud and
misrepresentation) which may be detrimental to the interest of the public
Basically, therefore, the question is whether the election of directors on and/or of the stockholders, partners, members of associations or
August 1, 1981 and the election of officers on September 5, 1981, which organizations registered with the Commission.
resulted in Tan's failure to be re-elected, were validly held. This is the crux of
the question that Tan has raised before the SEC. Even in his position paper b) Controversies arising out of intracorporate or partnership relations,
before the NLRC, Tan alleged that the election on August 1, 1981 of the between and among stockholders, members or associates; between any of
three directors was in contravention of the PSBA By-Laws providing that any all of them and the corporation, partnership or association of which they are
stockholders, members or associates, respectively; and between such the ruling in the cited case of Sibonghanoy. It is to be regretted, however,
corporation, partnership or association and the state insofar as it concerns that the holding in said case had been applied to situations which were
their individual franchise or right to exist as such entity; obviously not contemplated therein. The exceptional circumstances involved
in Sibonghanoy which justified the departure from the accepted concept of
c) Controversies in the election or appointments of directors, trustees, non-waivability of objection to jurisdiction has been ignored and, instead a
officers or managers of such corporations, partnership or associations. blanket doctrine had been repeatedly upheld that rendered the supposed
This is not a case of dismissal. The situation is that of a corporate office ruling in Sibonghanoy not as the exception, but rather the general rule,
having been declared vacant, and of Tan's not having been elected virtually overthrowing altogether the time-honored principle that the issue
thereafter. The matter of whom to elect is a prerogative that belongs to the of jurisdiction is not lost by waiver or by estoppel.
Board, and involves the exercise of deliberate choice and the faculty of xxx xxx xxx
discriminative selection. Generally speaking, the relationship of a person to
corporation, whether as officer or as agent or employee, is not determined It is neither fair nor legal to bind a party by the result of a suit or proceeding
by the nature of the services performed, but by the incidents of the which was taken cognizance of in a court which lacks jurisdiction over the
relationship as they actually exist. same irrespective of the attendant circumstances. The equitable defense of
estoppel requires knowledge or consciousness of the facts upon which it is
Respondent Vailoces' invocation of estoppel as against petitioners with based . The same thing is true with estoppel by conduct which may be
respect to the issue of jurisdiction is unavailing. In the first place, it is not asserted only when it is shown, among others, that the representation must
quite correct to state that petitioners did not raise the point in the lower have been made with knowledge of the facts and that the party to whom it
tribunal. Although rather off handedly, in their appeal to the NLRC they was made is ignorant of the truth of the matter (De Castro vs. Gineta, 27
called attention to the Labor Arbiter's lack of jurisdiction to rule on the SCRA 623). The filing of an action or suit in a court that does not possess
validity of the meeting of July 2, 1983, but the dismissal of the appeal for jurisdiction to entertain the same may not be presumed to be deliberate
alleged tardiness effectively precluded consideration of that or any other and intended to secure a ruling which could later be annulled if not
question raised in the appeal. More importantly, estoppel cannot be invoked favorable to the party who filed such suit or proceeding in a court that lacks
to prevent this Court from taking up the question of jurisdiction, which has jurisdiction to take cognizance of the same, such act may not at once be
been apparent on the face of the pleadings since the start of litigation deemed sufficient basis of estoppel. It could have been the result of an
before the Labor Arbiter. It is well settled that the decision of a tribunal not honest mistake or of divergent interpretation of doubtful legal provisions. If
vested with appropriate jurisdiction is null and void. Thus, in Calimlim vs. any fault is to be imputed to a party taking such course of action, part of the
Ramirez, 13 this Court held: blame should be placed on the court which shall entertain the suit, thereby
A rule that had been settled by unquestioned acceptance and upheld in lulling the parties into believing that they pursued their remedies in the
decisions so numerous to cite is that the jurisdiction of a court over the correct forum. Under the rules, it is the duty of the court to dismiss an
subject matter of the action is a matter of law and may not be conferred by action 'whenever it appears that court has no jurisdiction over the subject
consent or agreement of the parties. The lack of jurisdiction of a court may matter.' (Section 2, Rule 9, Rules of Court) Should the Court render a
be raised at any stage of the proceedings, even on appeal. This doctrine has judgment without jurisdiction, such judgment may be impeached or
been qualified by recent pronouncements which stemmed principally from
annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years complaint for illegal dismissal, etc., basis of said decision and Resolution, is
from the finality of the same (Art. 1144, par. 3, Civil Code). ordered dismissed, without prejudice to private respondent's seeking
recourse in the appropriate forum.
To be sure, petitioners failed to raise the issue of jurisdiction in their petition
before this Court. But this, too, is no hindrance to the Court's considering SO ORDERED.
said issue.

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

These considerations make inevitable the conclusion that the judgment of


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

WHEREFORE, the questioned decision of the Labor Arbiter and the G.R. No. 79762 January 24, 1991
Resolution of the NLRC dismissing petitioners' appeal from said decision are
hereby set aside because rendered without jurisdiction. The amended
FORTUNE CEMENT CORPORATION, petitioner, On June 21, 1983, Lagdameo filed with the National Labor Relations
vs. Commission (NLRC), National Capital Region, a complaint for illegal dismissal
NATIONAL LABOR RELATIONS COMMISSION (First Division) and ANTONIO against FCC (NLRC-NCR Case No. 1-228-85) alleging that his dismissal was
M. LAGDAMEO, respondents. done without a formal hearing and investigation and, therefore, without due
process (p. 63, Rollo).
De Leon, Diokno & Associates Law Offices for petitioner.
On August 5, 1985, FCC moved to dismiss Lagdameo's complaint on the
Romarie G. Villonco and George C. Nograles for private respondent. ground that his dismiss as a corporate officer is a purely intra-corporate
controversy over which the Securities and Exchange Commission (SEC) has
original and exclusive jurisdiction.
GRIÑO-AQUINO, J.:p
The Labor Arbiter granted the motion to dismiss (p. 22, Rollo). On appeal,
This is a petition for certiorari with prayer to annul the resolution dated May however, the NLRC set aside the Labor Arbiter's order and remanded the
29, 1987 of respondent National Labor Relations Commission (NLRC) case to the Arbitration Branch "for appropriate proceedings" (NLRC
reversing the order dated December 3, 1985 of the Labor Arbiter which Resolution dated April 30, 1987). The NLRC denied FCC's motion for
dismissed private respondent Antonio M. Lagdameo's (Lagdameo for reconsideration (p. 5, Rollo). Dissatisfied, FCC filed this petition for certiorari.
brevity) complaint for Illegal Dismissal (NLRC NCR Case No. 1-228-85) against
petitioner Fortune Cement Corporation (FCC for brevity) for lack of We find merit in the petition.
jurisdiction. The sole issue to be resolved is whether or not the NLRC has jurisdiction
Lagdameo is a registered stockholder of FCC. over a complaint filed by a corporate executive vice-president for illegal
dismissal, resulting from a board resolution dismissing him as such officer.
On October 14, 1975, at the FCC Board of Directors' regular monthly
meeting, he was elected Executive Vice-President of FCC effective November Section 5 of Presidential Decree No. 902-A vests in the SEC original and
1, 1975 (p. 3, Rollo). exclusive jurisdiction over this controversy:

Some eight (8) years later, or on February 10, 1983, during a regular Sec. 5. In addition to the regulatory and adjudicative functions of the
meeting, the FCC Board resolved that all of its incumbent corporate officers, Securities and Exchange Commission over corporations, partnerships and
including Lagdameo, would be "deemed" retained in their respective other forms of associations registered with it as expressly granted under
positions without necessity of yearly reappointments, unless they resigned existing laws and decrees, it shall have original and exclusive jurisdiction to
or were terminated by the Board (p. 4, Rollo). hear and decide cases involving:

At subsequent regular meetings held on June 14 and 21, 1983, the FCC a) Devices and schemes employed by or any acts, of the board of
Board approved and adopted a resolution dismissing Lagdameo as Executive directors, business associates, its officers or partners, amounting to fraud
Vice-President of the company, effective immediately, for loss of trust and and misrepresentation which may be detrimental to the interest of the
confidence (p. 4, Rollo). public and/or stockholders, partners, members of associations or
organization registered with the Commission;
b) Controversies arising out of intra-corporate or partnership relations, corporation's Board of Directors, although he also lost the same as a
between and among stockholders, members, or associates; between any or consequence of the latter's resolution.
all of them and the corporation, partnership or association of which they are
Indeed the election, appointment and/or removal of an executive vice-
stockholders, members or associates, respectively; and between such
corporation, partnership or association and the state insofar as it concerns president is a prerogative vested upon a corporate board.
their individual franchise or right to exist as such entity; And it must be, not only because it is a practice observed in petitioner
c) Controversies in the election or appointments of directors, trustees, Fortune Cement Corporation, but more so, because of an express mandate
of law. (p. 65, Rollo.)
officers or managers of such corporations, partnership or associations."
(Section 5, P.D. 902-A; Emphasis supplied.) The Solicitor General pointed out that "a corporate officer's dismissal is
always a corporate act and/or intra-corporate controversy and that nature is
In reversing the decision of Labor Arbiter Porfirio E. Villanueva, respondent
NLRC held: not altered by the reason or wisdom which the Board of Directors may have
in taking such action." The dispute between petitioner and Lagdameo is of
. . . . It is not disputed that complainant Lagdameo was an employee of the class described in Section 5, par. (c) of Presidential Decree No. 902-A,
respondent Fortune Cement Corporation, being then the Executive Vice- hence, within the original and exclusive jurisdiction of the SEC. The Solicitor
President. For having been dismissed for alleged loss of trust and General recommended that the petition be granted and NLRC-NCR Case No.
confidence, complainant questioned his dismissal on such ground and the 1-228-85 be dismissed by respondent NLRC for lack of jurisdiction (p.
manner in which he was dismissed, claiming that no investigation was 95, Rollo).
conducted, hence, there was and is denial of due process. Predicated on the
In PSBA vs. Leaño (127 SCRA 778), this Court, confronted with a similar
above facts, it is clear to Us that a labor dispute had arisen between the
appellant and the respondent corporation, a dispute which falls within the controversy, ruled that the SEC, not the NLRC, has jurisdiction:
original and exclusive jurisdiction of the NLRC. A labor dispute as defined in This is not a case of dismissal. The situation is that of a corporate office
the Labor Code includes any controversy or matter concerning terms or having been declared vacant, and of Tan's not having been elected
conditions of employment or the association or representation of persons in thereafter. The matter of whom to elect is a prerogative that belongs to the
negotiating, fixing, maintaining, changing or arranging the terms and Board, and involves the exercise of deliberate choice and the faculty of
conditions of employment regardless of whether or not the disputants stand discriminative selection. Generally speaking, the relationship of a person to
in the proximate relations of employers and employees." (pp. 16-17, Rollo). a corporation, whether as officer or as agent or employee is not determined
by the nature of the services performed, but by the incidents of the
The Solicitor General, declining to defend public respondent in its pleading
entitled "Manifestation in Lieu of Comment," aptly observed: relationship as they actually exist.

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

The issue of the SEC's power or jurisdiction is decisive and renders


unnecessary a consideration of the other questions raised by Lagdameo.
Thus did this Court rule in the case of Dy vs. National Labor Relations
Commission (145 SCRA 211) which involved a similar situation:

It is of no moment that Vailoces, in his amended complaint, seeks other


reliefs which would seemingly fall under the jurisdiction of the Labor Arbiter,
because a closer look at these — underpayment of salary and non-payment
of living allowance — shows that they are actually part of the perquisites of
his elective position, hence, intimately linked with his relations with the
corporation. The question of remuneration, involving as it does, a person
who is not a mere employee but a stockholder and officer, an integral part, it
might be said, of the corporation, is not a simple labor problem but a matter
that comes within the area of corporate affairs and management, and is in
fact a corporate controversy in contemplation of the Corporation Code.
(Emphasis ours.)

WHEREFORE, the questioned Resolution of the NLRC reversing the decision


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

SO ORDERED.
G.R. No. 118088 November 23, 1995

MAINLAND CONSTRUCTION, CO., INC., and/or LUCITA LU CARABUENA,


ROBERT L. CARABUENA, ELLEN LU CARABUENA, and MARTIN
LU, petitioners,
vs. Employees Compensation Commission (ECC) were deducted from his
MILA MOVILLA, ERNESTO MOVILLA, JR., MILA JUDITH C. MOVILLA, JUDE monthly earnings by his said employer. 2
BRIX C. MOVILLA, JONARD ELLERY C. MOVILLA, AND MAILA JONAH M.
On April 12, 1987, during petitioner corporation's annual meeting of
QUIMBO, surviving heirs of ERNESTO MOVILLA, and THE HONORABLE
COMMISSIONER of the NATIONAL LABOR RELATIONS COMMISSION-5TH stockholders, the following were elected members of the Board of
Directors, viz.: Robert L. Carabuena, Ellen L. Carabuena, Lucita Lu Carabuena,
DIVISION,respondents.
Martin G. Lu and Ernesto L. Movilla.

On the same day, an organizational meeting was held and the Board of
HERMOSISIMA, JR., J.: Directors elected Ernesto Movilla as Administrative Manager. 3 He occupied
the said position up to the time of his death.
Petitioners urge this Court to set aside the Decision of the National Labor
Relations Commission (NLRC), dated May 30, 1994, in NLRC-CA No. On April 2, 1991, the Department of Labor and Employment (DOLE)
M-000949-92 for having been rendered with grave abuse of discretion conducted a routine inspection on petitioner corporation and found that it
amounting to lack of jurisdiction. This reversed the decision of the Labor committed such irregularities in the conduct of its business as:
Arbiter in case No. RAB-11-10-99883-91. Petitioners' motion for
1. Underpayment of wages under R.A. 6727 and RTWPB-XI-01;
reconsideration of the NLRC decision was denied in a Resolution, dated
August 31, 1994. 2. Non-implementation of Wage Order No. RTWPB-XI-02;
Mainland Construction Co., Inc. is a domestic corporation, duly organized 3. Unpaid wages for 1989 and 1990;
and existing under Philippine laws, having been issued a certificate of
registration by the Securities and Exchange Commission (SEC) on July 26, 4. Non-payment of holiday pay and service incentive leave pay; and
1977, under Registry Number 74691. Its principal line of business is the
5. Unpaid 13th month pay (remaining balance for 1990). 4
general construction of roads and bridges and the operation of a service
shop for the maintenance of equipment. Respondents on the other hand, On the basis of this finding, petitioner corporation was ordered by DOLE to
are the surviving heirs of complainant, Ernesto Movilla, who died during the pay to its thirteen employees, which included Movilla, the total amount of
pendency of the action with the Labor Arbiter. P309,435.89, representing their salaries, holiday pay, service incentive leave
pay differentials, unpaid wages and 13th month pay.
Records show that Ernesto Movilla, who was a Certified Public Accountant
during his lifetime, was hired as such by Mainland in 1977. Thereafter, he All the employees listed in the DOLE's order were paid by petitioner
was promoted to the position of Administrative Officer with a monthly corporation, except Ernesto Movilla.
salary of P4,700.00. 1
On October 8, 1991, Ernesto Movilla filed a case against petitioner
Ernesto Movilla, recorded as receiving a fixed salary of P4,700.00 a month, corporation and/or Lucita, Robert, and Ellen, all surnamed Carabuena, for
was registered with the Social Security System (SSS) as an employee of unpaid wages, separation pay and attorney's fees, with the Department of
petitioner Corporation. His contributions to the SSS, Medicare and Labor and Employment, Regional Arbitration, Branch XI, Davao City.
On February 29, 1992, Ernesto Movilla died while the case was being tried 4. Indemnity in the sum of P3,000.00; and,
by the Labor Arbiter and was promptly substituted by his heirs, private
respondents herein, with the consent of the Labor Arbiter. 5. Attorney's fees equivalent to 10% of the total award. 6

The pivotal issue in this case is which of the two agencies of the government
The Labor Arbiter rendered judgment on June 26, 1992, dismissing the
complaint on the ground of lack of jurisdiction. Specifically, the Labor Arbiter — the NLRC or the SEC — has jurisdiction over the controversy.
made the following ratiocination: As we stated earlier, it is of course the contention of petitioners that the
It is clear that in the case at bar, the controversy presented by complainant is NLRC committed grave abuse of discretion when it nullified the decision of
the Labor Arbiter which dismissed the complaint of Movilla for unpaid
intra-corporate in nature and is within the jurisdiction of the Securities and
Exchange Commission, pursuant to P.D. 902-A (Phil. School of Business wages, separation pay and attorney's fees on the ground of lack of
jurisdiction. Petitioners take the position that, since Ernesto Movilla was a
Administration, et al. v. Leano, G.R. No. L-58468, February 24, 1984; Dy et al.
v. NLRC, et al., G.R. No. L-68544, October 27, 1986). What Movilla is claiming corporate officer, the controversy as to his compensation is within the
jurisdiction of the SEC as mandated by P.D. 902-A and not with the NLRC.
against respondents are his alleged unpaid salaries and separation pay as
Administrative Manager of the corporation for which position he was We find for the respondents, it appearing that petitioners' contention is
appointed by the Board of Directors. His claims therefore fall under the bereft of merit.
jurisdiction of the Securities and Exchange Commission because this is not a
simple labor problem; but a matter that comes within the area of corporate In order that the SEC can take cognizance of a case, the controversy must
affairs and management, and is in fact a corporate controversy in pertain to any of the following relationships: a) between the corporation,
contemplation of the Corporation Code. (Fortune Cement Corporation v. partnership or association and the public; b) between the corporation,
NLRC, et al., G.R. No. 79762, January 24, 1991). 5 partnership or association and its stockholders, partners, members or
officers;
Aggrieved by this decision, respondents appealed to the National Labor c) between the corporation, partnership or association and the State as far
Relations Commission (NLRC). The NLRC ruled that the issue in the case was as its franchise, permit or license to operate is concerned; and d) among the
one which involved a labor dispute between an employee and petitioner stockholders, partners or associates themselves. 7 The fact that the parties
corporation and, thus, the NLRC had jurisdiction to resolve the case. The involved in the controversy are all stockholders or that the parties involved
dispositive portion of the NLRC decision reads: are the stockholders and the corporation does not necessarily place the
WHEREFORE, the assailed decision is Reversed and Set Aside. Respondents dispute within the ambit of the jurisdiction of SEC. The better policy to be
followed in determining jurisdiction over a case should be to consider
are ordered to pay the heirs of complainant the following:
concurrent factors such as the status or relationship of the parties or the
1. Unpaid salaries from January 1989 to September 1991 in the sum of nature of the question that is the subject of their controversy. 8 In the
P155,100.00; absence of any one of these factors, the SEC will not have jurisdiction.
Furthermore, it does not necessarily follow that every conflict between the
2. Separation pay in the sum of P65,800.00; corporation and its stockholders would involve such corporate matters as
3. Moral damages in the sum of P10,000.00;
only the SEC can resolve in the exercise of its adjudicatory or quasi- The claims for unpaid salaries/monetary benefits and separation pay, are
judicial powers. 9 not a corporate conflict as respondents presented them to be. If
complainant is not an employee, respondent should have contested the
In the case at bench, the claim for unpaid wages and separation pay filed by DOLE inspection report, What they did was to exclude complainant from the
the complainant against petitioner corporation involves a labor dispute. It order of payment . . . and worse, he was not both given responsibilities and
does not involve an intra-corporate matter, even when it is between a paid his salaries for the succeeding months . . . . This is a clear case of
stockholder and a corporation. It relates to an employer-employee constructive dismissal without due process . . . 12
relationship which is distinct from the corporate relationship of one with the
other. Moreover, there was no showing of any change in the duties being The existence of an employer-employee relationship is a factual question
performed by complainant as an Administrative Officer and as an and public respondent's findings are accorded great weight and respect as
Administrative Manager after his election by the Board of Directors. What the same are supported by substantial evidence. 13 Hence, we uphold the
comes to the fore is whether there was a change in the nature of his conclusion of public respondent that Ernesto Movilla was an employee of
functions and not merely the nomenclature or title given to his job. petitioner corporation.

Indeed, Ernesto Movilla worked as an administrative officer of the company It is pertinent to note that petitioner corporation is not prohibited from
for several years and was given a fixed salary every month. To further sustain hiring its corporate officers to perform services under a circumstance which
this assertion Movilla also submitted a joint affidavit executed by Juanito S. will make him an employee. 14 Moreover, although a director of a
Malubay and Delia S. Luciano, Project Engineer and Personnel-In-Charge, corporation is not, merely by virtue of his position, its employee, said
respectively, of petitioner corporation, attesting that they personally knew director may act as an employee or accept duties that make him also an
Movilla and that he was employed in the company. A Premium Certification employee. 15
issued by an authorized representative of petitioners was also presented to
Since Ernesto Movilla's complaint involves a labor dispute, it is the NLRC,
show his actual monthly earnings as well as his monthly contributions to the
SSS, Medicare and ECC. 10 Movilla's registration in the SSS by petitioner under Article 217 of the Labor Code of the Philippines, which has jurisdiction
over the case at bench.
corporation added strength to the conclusion that he was petitioner
corporation's employee as coverage by the said law is predicated on the WHEREFORE, the petition is DISMISSED for lack of showing of any grave
existence of an employer-employee relationship. 11 Furthermore, petitioner abuse of discretion on the part of public respondent NLRC. The assailed
corporation failed to present evidence which showed that, after his election decision of public respondent is thus AFFIRMED.
as Administrative Manager, he was excluded from the coverage of the SSS,
Medicare and ECC. SO ORDERED.

He also presented, appearing to be relevant to the issue, the result of the G.R. No. 121143 January 21, 1997
investigation conducted by DOLE which found that petitioner corporation
PURIFICACION G. TABANG, petitioner,
has transgressed several labor standard laws against its employees.
vs.
As correctly ruled by the NLRC: NATIONAL LABOR RELATIONS COMMISSION and PAMANA GOLDEN CARE
MEDICAL CENTER FOUNDATION, INC., respondents.
On June 6, 1993, petitioner filled a complaint for illegal dismissal and non-
payment of wages, allowances and 13th month pay before the labor arbiter.
REGALADO, J.:
Respondent corporation moved for the dismissal of the complaint on the
This is a petition for certiorari which seeks to annul the resolution of the ground of lack of jurisdiction over the subject matter. It argued that
National Labor Relations Commission (NLRC), dated June 26, 1995, petitioner's position as Medical Director and Hospital Administrator was
affirming in toto the order of the labor arbiter, dated April 26, 1994, which interlinked with her position as member of the Board of Trustees, hence, her
dismissed petitioner's complaint for illegal dismissal with money claims for dismissal is an intra-corporate controversy which falls within the exclusive
lack of jurisdiction. jurisdiction of the Securities and Exchange Commission (SEC).
The records show that petitioner Purificacion Tabang was a founding Petitioner opposed the motion to dismiss, contending that her position as
member, a member of the Board of Trustees, and the corporate secretary of Medical Director and Hospital Administrator was separate and distinct from
private respondent Pamana Golden Care Medical Center Foundation, Inc., a her position as member of the Board of Trustees. She claimed that there is
non-stock corporation engaged in extending medical and surgical services. no intra-corporate controversy involved since she filed the complaint in her
On October 30, 1990, the Board of Trustees issued a memorandum capacity as Medical Director and Hospital Administrator, or as an employee
appointing petitioner as Medical Director and Hospital Administrator of of private respondent.
private respondent's Pamana Golden Care Medical Center in Calamba, On April 26, 1994, the labor arbiter issued an order dismissing the complaint
Laguna. for lack of jurisdiction. He ruled that the case falls within the jurisdiction of
Although the memorandum was silent as to the amount of remuneration for the SEC, pursuant to Section 5 of Presidential Decree No.
the position, petitioner claims that she received a monthly retainer fee of 902-A. 1
five thousand pesos (P5,000.00) from private respondent, but the payment Petitioner's motion for reconsideration was treated as an appeal by the
thereof was allegedly stopped in November, 1991. labor arbiter who consequently ordered the elevation of the entire records
As medical director and hospital administrator, petitioner was tasked to run of the case to public respondent NLRC for appellate review. 2
the affairs of the aforesaid medical center and perform all acts of On appeal, respondent NLRC affirmed the dismissal of the case on the
administration relative to its daily operations. additional ground that "the position of a Medical Director and Hospital
On May 1, 1993, petitioner was allegedly informed personally by Dr. Ernesto Administrator is akin to that of an executive position in a corporate ladder
Naval that in a special meeting held on April 30, 1993, the Board of Trustees structure." hence, petitioner's removal from the said position was an intra-
passed a resolution relieving her of her position as Medical Director and corporate controversy within the original and exclusive jurisdiction of the
Hospital Administrator, and appointing the latter and Dr. Benjamin Donasco SEC. 3
as acting Medical Director and acting Hospital Administrator, respectively. Aggrieved by the decision, petitioner filed the instant petition which we find,
Petitioner averred that she thereafter received a copy of said board however, to be without merit.
resolution.
We agree with the findings of the NLRC that it is the SEC which has Accordingly, jurisdiction over the same is vested in the SEC, and not in the
jurisdiction over the case at bar. The charges against herein private Labor Arbiter or the NLRC.
respondent partake of the nature of an intra-corporate controversy.
Moreover, the allegation of petitioner that her being a member of the Board
Similarly, the determination of the rights of petitioner and the concomitant
liability of private respondent arising from her ouster as a medical director of Trustees was not one of the considerations for her appointment is belied
by the tenor of the memorandum itself. It states: "We hope that you will
and/or hospital administrator, which are corporate offices, is an intra-
corporate controversy subject to the jurisdiction of the SEC. uphold and promote the mission of our foundation," 10 and this cannot be
construed other than in reference to her position or capacity as a corporate
Contrary to the contention of petitioner, a medical director and a hospital trustee.
administrator are considered as corporate officers under the by-laws of
A corporate officer's dismissal is always a corporate act, or an intra-
respondent corporation. Section 2(i), Article I thereof states that one of the
powers of the Board of Trustees is "(t)o appoint a Medical Director, corporate controversy, and the nature is not altered by the reason or
wisdom with which the Board of Directors may have in taking such
Comptroller/Administrator, Chiefs of Services and such other officers as it
may deem necessary and prescribe their powers and duties." 4 action. 11 Also, an intra-corporate controversy is one which arises between a
stockholder and the corporation. There is no distinction, qualification, nor
The president, vice-president, secretary and treasurer are commonly any exemption whatsoever. The provision is broad and covers all kinds of
regarded as the principal or executive officers of a corporation, and modern controversies between stockholders and corporations. 12
corporation statutes usually designate them as the officers of the
corporation. 5 However, other offices are sometimes created by the charter With regard to the amount of P5,000,00 formerly received by herein
petitioner every month, the same cannot be considered as compensation for
or by-laws of a corporation, or the board of directors may be empowered
under the by-laws of a corporation to create additional offices as may be her services rendered as Medical Director and Hospital Administrator. The
vouchers 13 submitted by petitioner show that the said amount was paid to
necessary. 6 It has been held that an "office'' is created by the charter of the
corporation and the officer is elected by the directors or stockholders. 7 On her by PAMANA, Inc., a stock corporation which is separate and distinct from
herein private respondent. Although the payments were considered
the other hand, an "employee" usually occupies no office and generally is
employed not by action of the directors or stockholders but by the advances to Pamana Golden Care, Calamba branch, there is no evidence to
show that the Pamana Golden Care stated in the vouchers refers to herein
managing officer of the corporation who also determines the compensation
to be paid to such employee. 8 respondent Pamana Golden Care Medical Center Foundation, Inc.

Pamana Golden Care is a division of Pamana, Inc., while respondent Pamana


In the case at bar, considering that herein petitioner, unlike an ordinary
employee, was appointed by respondent corporation's Board of Trustees in Golden Care Medical Center Foundation, Inc. is a non-stock, non-profit
corporation. It is stated in the memorandum of petitioner that Pamana, Inc.
its memorandum of October 30, 1990, 9 she is deemed an officer of the
corporation. Perforce, Section 5(c) of Presidential Decree No. 902-A, which is a stock and profit corporation selling pre-need plan for education, pension
and health care. The health care plan is called Pamana Golden Care Plan and
provides that the SEC exercises exclusive jurisdiction over controversies in
the election appointment of directors, trustees, officers or managers of the holders are called Pamana Golden Care Card Holders or, simply, Pamana
Members. 14
corporations, partnerships or associations, applies in the present dispute.
It is an admitted fact that herein petitioner is a retained physician of
Pamana, Inc., whose patients are holders of the Pamana Golden Care Card.
In fact, in her complaint 15 filed before the Regional Trial Court of Calamba,
herein petitioner is asking among others, for professional fees and/or
retainer fees earned for her treatment of Pamana Golden Care card
holders. 16 Thus, at most, said vouchers can only be considered as proof of
payment of retainer fees made by Pamana, Inc. to herein petitioner as a
retained physician of Pamana Golden Care.

Moreover, even assuming that the monthly payment of P5,000.00 was a


valid claim against respondent corporation, this would not operate to
effectively remove this case from the jurisdiction of the SEC. In the case
ofCagayan de Oro Coliseum, Inc. vs. Office of the Minister of Labor and
Employment, etc., et al., 17 we ruled that "(a)lthough the reliefs sought by
Chavez appear to fall under the jurisdiction of the labor arbiter as they are
claims for unpaid salaries and other remunerations for services rendered, a
close scrutiny thereof shows that said claims are actually part of the
perquisites of his position in, and therefore interlinked with, his relations
with the corporation. In Dy, et al., vs. NLRC, et al., the Court said: "(t)he
question of remuneration involving as it does, a person who is not a mere
employee but a stockholder and officer, an integral part, it might be said, of
the corporation, is not a simple labor problem but a matter that comes
within the area of corporate affairs and management and is in fact a
corporate controversy in contemplation of the Corporation Code."

WHEREFORE, the questioned resolution of the NLRC is hereby AFFIRMED,


without prejudice to petitioner's taking recourse to and seeking relief
through the appropriate remedy in the proper forum.

SO ORDERED.

G.R. No. 144767 March 21, 2002

DILY DANY NACPIL, petitioner,


vs.
INTERNATIONAL BROADCASTING CORPORATION, respondent.
KAPUNAN, J.: On August 21, 1998, the Labor Arbiter rendered a Decision stating that
petitioner had been illegally dismissed. The dispositive portion thereof
This is a petition for review on certiorari under Rule 45, assailing the reads:
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 WHEREFORE, in view of all the foregoing, judgment is hereby rendered in
Dany Nacpil's motion for reconsideration. The Court of Appeals reversed the favor of the complainant and against all the respondents, jointly and
decisions promulgated by the Labor Arbiter and the National Labor Relations severally, ordering the latter:
Commission (NLRC), which consistently ruled in favor of petitioner.
1. To reinstate complainant to his former position without diminution of
Petitioner states that he was Assistant General Manager for salary or loss of seniority rights, and with full backwages computed from the
Finance/Administration and Comptroller of private respondent time of his illegal dismissal on May 16, 1997 up to the time of his actual
Intercontinental Broadcasting Corporation (IBC) from 1996 until April 1997. reinstatement which is tentatively computed as of the date of this decision
According to petitioner, when Emiliano Templo was appointed to replace IBC on August 21, 1998 in the amount of P1,231,750.00 (i.e., P75,000.00 a
President Tomas Gomez III sometime in March 1997, the former told the month x 15.16 months = P1,137,000.00 plus 13 th month pay equivalent to
Board of Directors that as soon as he assumes the IBC presidency, he would 1/12 of P 1,137,000.00 = P94,750.00 or the total amount of P 1,231,750.00).
terminate the services of petitioner. Apparently, Templo blamed petitioner, Should complainant be not reinstated within ten (10) days from receipt of
along with a certain Mr. Basilio and Mr. Gomez, for the prior this decision, he shall be entitled to additional backwages until actually
mismanagement of IBC. Upon his assumption of the IBC presidency, Templo reinstated.
allegedly harassed, insulted, humiliated and pressured petitioner into
2. Likewise, to pay complainant the following:
resigning until the latter was forced to retire. However, Templo refused to
pay him his retirement benefits, allegedly because he had not yet secured a) P 2 Million as and for moral damages;
the clearances from the Presidential Commission on Good Government and
the Commission on Audit. Furthermore, Templo allegedly refused to b) P500,000.00 as and for exemplary damages; plus and (sic)
recognize petitioner's employment, claiming that petitioner was not the
c) Ten (10%) percent thereof as and for attorney's fees.
Assistant General Manager/Comptroller of IBC but merely usurped the
powers of the Comptroller. Hence, in 1997, petitioner filed with the Labor SO ORDERED.3
Arbiter a complaint for illegal dismissal and non-payment of
benefits.1âwphi1.nêt 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
Instead of filing its position paper, IBC filed a motion to dismiss alleging that with Article 223 of the Labor Code. 4 IBC then filed a motion for
the Labor Arbiter had no jurisdiction over the case. IBC contended that reconsideration that was likewise denied in a Resolution dated April 26,
petitioner was a corporate officer who was duly elected by the Board of 1999.5
Directors of IBC; hence, the case qualifies as an intra-corporate dispute
falling within the jurisdiction of the Securities and Exchange Commission IBC then filed with the Court of Appeals a petition for certiorari under Rule
(SEC). However, the motion was denied by the Labor Arbiter in an Order 65, which petition was granted by the appellate court in its Decision dated
dated April 22, 1998.2 November 23, 1999. The dispositive portion of said decision states:
WHEREFORE, premises considered, the petition for Certiorari is GRANTED. a) Devices or schemes employed by or any acts of the board of directors,
The assailed decisions of the Labor Arbiter and the NLRC are REVERSED and business associates, its officers or partners, amounting to fraud and
SET ASIDE and the complaint is DISMISSED without prejudice. misrepresentation which may be detrimental to the interest of the public
and/or of the stockholders, partners, members of associations or
SO ORDERED.6 organizations registered with the Commission;
Petitioner then filed a motion for reconsideration, which was denied by the b) Controversies arising out of intra-corporate or partnership relations,
appellate court in a Resolution dated August 31, 2000. between and among stockholders, members or associates; between any or
Hence, this petition. all of them and the corporation, partnership or association of which they are
stockholders, members or associates, respectively; and between such
Petitioner Nacpil submits that: corporation, partnership or association and the State insofar as it concerns
their individual franchise or right to exist as such entity;
I.
c) Controversies in the election or appointment of directors, trustees,
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER WAS
officers, or managers of such corporations, partnerships or associations;
APPOINTED BY RESPONDENT'S BOARD OF DIRECTORS AS COMPTROLLER.
THIS FINDING IS CONTRARY TO THE COMMON, CONSISTENT POSITION AND d) Petitions of corporations, partnerships, or associations to be declared in
ADMISSION OF BOTH PARTIES. FURTHER, RESPONDENT'S BY-LAWS DOES the state of suspension of payments in cases where the corporation,
NOT INCLUDE COMPTROLLER AS ONE OF ITS CORPORATE OFFICERS. partnership or association possesses property to cover all of its debts but
foresees the impossibility of meeting them when they respectively fall due
II.
or in cases where the corporation, partnership or association has no
THE COURT OF APPEALS WENT BEYOND THE ISSUE OF THE CASE WHEN IT sufficient assets to cover its liabilities, but is under the Management
SUBSTITUTED THE NATIONAL LABOR RELATIONS COMMISSION'S DECISION Committee created pursuant to this decree. (Emphasis supplied.)
TO APPLY THE APPEAL BOND REQUIREMENT STRICTLY IN THE INSTANT CASE.
The Court has consistently held that there are two elements to be
THE ONLY ISSUE FOR ITS DETERMINATION IS WHETHER NLRC COMMITTED
considered in determining whether the SEC has jurisdiction over the
GRAVE ABUSE OF DISCRETION IN DOING THE SAME. 7
controversy, to wit: (1) the status or relationship of the parties; and (2) the
The issue to be resolved is whether the Labor Arbiter had jurisdiction over nature of the question that is the subject of their controversy. 8
the case for illegal dismissal and non-payment of benefits filed by petitioner.
Petitioner argues that he is not a corporate officer of the IBC but an
The Court finds that the Labor Arbiter had no jurisdiction over the same.
employee thereof since he had not been elected nor appointed as
Under Presidential Decree No. 902-A (the Revised Securities Act), the law in Comptroller and Assistant Manager by the IBC's Board of Directors. He
force when the complaint for illegal dismissal was instituted by petitioner in points out that he had actually been appointed as such on January 11, 1995
1997, the following cases fall under the exclusive of the SEC: by the IBC's General Manager, Ceferino Basilio. In support of his argument,
petitioner underscores the fact that the IBC's 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 subject of a controversy cognizable by the SEC under Section 5(c) of P.D.
the labor courts.10 902-A which includes controversies involving both election
and appointment of corporate directors, trustees, officers, and
Petitioner's argument is untenable. Even assuming that he was in fact managers.18 Had petitioner been an ordinary employee, such board action
appointed by the General Manager, such appointment was subsequently would not have been required.
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 Thus, the Court of Appeals correctly held that:
By-Laws is of no moment, because the IBC's Board of Directors is
Since complainant's appointment was approved unanimously by the Board
empowered under Section 25 of the Corporation Code 12 and under the
corporation's By-Laws to appoint such other officers as it may deem 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
necessary. The By-Laws of the IBC categorically provides:
jurisdiction of the SEC as contemplated by Section 5 of P.D. 902-A. The rule is
XII. OFFICERS 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,
The officers of the corporation shall consist of a President, a Vice-President, not to the NLRC.19
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 As to petitioner's argument that the nature of his functions is
officers shall be elected by majority vote of the Board of Directors and shall recommendatory thereby making him a mere managerial officer, the Court
have such powers and duties as shall hereinafter provide (Emphasis has previously held that the relationship of a person to a corporation,
supplied).13 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
The Court has held that in most cases the "by-laws may and usually do they actually exist.20
provide for such other officers,"14 and that where a corporate office is not
specifically indicated in the roster of corporate offices in the by-laws of a It is likewise of no consequence that petitioner's complaint for illegal
corporation, the board of directors may also be empowered under the by- dismissal includes money claims, for such claims are actually part of the
laws to create additional officers as may be necessary. 15 perquisites of his position in, and therefore linked with his relations with,
the corporation. The inclusion of such money claims does not convert the
An "office" has been defined as a creation of the charter of a corporation, issue into a simple labor problem. Clearly, the issues raised by petitioner
while an "officer" as a person elected by the directors or stockholders. On against the IBC are matters that come within the area of corporate affairs
the other hand, an "employee" occupies no office and is generally employed and management, and constitute a corporate controversy in contemplation
not by action of the directors and stockholders but by the managing officer of the Corporation Code.21
of the corporation who also determines the compensation to be paid to
such employee.16 Petitioner further argues that the IBC failed to perfect its appeal from the
Labor Arbiter's Decision for its non-payment of the appeal bond as required
As petitioner's appointment as comptroller required the approval and under Article 223 of the Labor Code, since compliance with the requirement
formal action of the IBC's Board of Directors to become valid, 17 it is clear of posting of a cash or surety bond in an amount equivalent to the monetary
therefore holds that petitioner is a corporate officer whose dismissal may be
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 IBC's petition for certiorari, and in deciding the case on the
merits.

The IBC's 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. 1âwphi1.nêt

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 SEC's jurisdiction over all cases
enumerated in Section 5 of P.D. 902-A has been transferred to the Regional
G.R. No. 141093 February 20, 2001
Trial Courts.25
PRUDENTIAL BANK and TRUST COMPANY, petitioner,
WHEREFORE, the petition is hereby DISMISSED and the Decision of the
vs.
Court of Appeals in CA-G.R. SP No. 52755 is AFFIRMED.
CLARITA T. REYES, respondent.
SO ORDERED.
GONZAGA-REYES, J.:
Before the Court is a petition for review on certiorari of the Decision,1 dated Not satisfied, the Bank appealed to the NLRC which, as mentioned at the
October 15, 1999 of the Court of Appeals in C.A.-G.R. SP No. 30607 and of its outset, reversed the Labor Arbiter's decision in its Resolution dated 24
Resolution, dated December 6, 1999 denying petitioner's motion for March 1997. Private respondent sought reconsideration which, however,
reconsideration of said decision. The Court of Appeals reversed and set was denied by the NLRC in its Resolution of 28 July 1998. Aggrieved, private
aside the resolution2 of the National Labor Relations Commission (NLRC) in respondent commenced on October 28, 1998, a petition for certiorari before
NLRC NCR CA No.009364-95, reversing and setting aside the labor arbiter's the Supreme Court.5 The subject petition was referred to the Court of
decision and dismissing for lack of merit private respondent's complaint. 3 Appeals for appropriate action and disposition per resolution of this Court
dated November 25, 1998, in accordance with the ruling in St. Marlin
The case stems from NLRC NCR Case No.00-06-03462-92, which is a Funeral Homes vs. NLRC.6
complaint for illegal suspension and illegal dismissal with prayer for moral
and exemplary damages, gratuity, fringe benefits and attorney's fees filed by In its assailed decision, the Court of Appeals adopted the following
Clarita Tan Reyes against Prudential Bank and Trust Company (the Bank) antecedent facts leading to Reyes's dismissal as summarized by the NLRC:
before the labor arbiter. Prior to her dismissal, private respondent Reyes
held the position of Assistant Vice President in the foreign department of "The auditors of the Bank discovered that two checks, No.011728-7232-146,
in the amount of US$109,650.00, and No. 011730-7232-146, in the amount
the Bank, tasked with the duties, among others, to collect checks drawn
against overseas banks payable in foreign currency and to ensure the of US$115,000.00, received by the Bank on April 6, 1989, drawn ,by the
Sanford Trading against Hongkong and Shanghai Banking Corporation,
collection of foreign bills or checks purchased, including the signing of
transmittal letters covering the same. Jurong Branch, Singapore, in favor of Filipinas Tyrom, were not sent out for
collection to Hongkong Shanghai Banking Corporation on the alleged order
After proceedings duly undertaken by the parties, judgment was rendered of the complainant until the said checks became stale.
by labor Arbiter Cornelio L. Linsangan, the dispositive portion of which
The Bank created a committee to investigate the findings of the auditors
reads:
involving the two checks which were not collected and became stale.
"WHEREFORE, finding the dismissal of complainant to be without factual
On March 8, 1991, the president of the Bank issued a memorandum to the
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 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
(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 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
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 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
unpaid fringe benefits. Attorney's fees equivalent to ten (10%) percent of
the total award should likewise be paid by respondent. constrained to make a general denial of any misfeasance or malfeasance on
her part and asked that a formal investigation be made.
SO ORDERED."4
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 f) About fifteen (15) months after the HSBC checks were received by the
testimonies of several witnesses. Bank, the said checks were discovered in the course of an audit conducted
by the Bank's auditors. Atty. Pablo Magno, the Bank's legal counsel, advised
The Committee's findings were: complainant to send the checks for collection despite the lapse of fifteen
'a) The two (2) HSBC checks were received by the Foreign Department on 6 (15) months.
April 1989. On the same day, complainant authorized the crediting of the g) Complainant, however, deliberately withheld Atty. Magno's advice from
account of Filipinas Tyrom in the amount of P4,780,102.70 corresponding to her superior, the Senior Vice-President, Mr. Renato Santos and falsely
the face value of the checks, (Exhibits 6, 22 to 22-A and 23 to 23-A). On the informed the latter that Atty . Magno advised that a demand letter be sent
following day, a transmittal letter was prepared by Ms. Cecilia Joven, a instead, thereby further delaying the collection of the HSBC checks.
remittance clerk then assigned in the Foreign Department, for the purpose
of sending out the two (2) HSBC checks for collection. She then requested h) On 10 July 1990, the HSBC checks were finally sent for collection, but
complainant to sign the said transmittal letters (Exhibits 1, 7 and 25; TSN, 11 were returned on 16 July 1990 for the reason 'account closed' (Exhibits 2-A
March 1993, pp. 42-52), as it is complainant who gives her instructions and 3-A).'
directly concerning the transmittal of foreign bills purchased. All other
After a review of the Committee's findings, the Board of Directors of the
transmittal letters are in fact signed by complainant.
Bank resolved not to re-elect complainant any longer to the position of
b) After Ms. Joven delivered the transmittal letters and the checks to the assistant president pursuant to the Bank's By-laws.
Accounting Section of the Foreign Department, complainant instructed her
to withdraw the same for the purpose of changing the addressee thereon On July 19, 1991, complainant was informed of her termination of
employment from the Bank by Senior Vice President Benedicto L. Santos, in
from American Express Bank to Bank of Hawaii (ibid.) under a special
collection scheme (Exhibits 4 and 5 to 5-B). a letter the text of which is quoted in full:

'Dear Mrs. Reyes:


c) After complying with complainant's instruction, Ms. Joven then returned
to complainant for the latter to sign the new transmittal letters. However, After a thorough investigation and appreciation of the charges against you as
complainant told Ms. Joven to just hold on to the letters and checks and contained in the Memorandum of the President dated March 8, 1991, the
await further instructions (ibid.). Thus, the new transmittal letters remained Fact Finding Committee which was created to investigate the commission
unsigned. (See Exhibits 5 to 5-B). and/or omission of the acts alluded therein, has found the following:
d) In June 1989, Ms. Joven was transferred to another department. Hence, 1. You have deliberately held the clearing of Checks Nos. 11728 and 11730
her duties, responsibilities and functions, including the responsibility over of Hongkong and Shanghai Banking Corporation in the total amount of
the two (2) HSBC checks, were turned over to another remittance clerk, Ms. US$224,650.00 by giving instructions to the collection clerk not to send the
Analisa Castillo (Exhibit 14; TSN, 4 June 1993, pp. 27-29). checks for collection. In view thereof, when the said checks were finally sent
e) When asked by Ms. Castillo about the two (2) HSBC checks, Ms. Joven 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
relayed to the latter complainant's instruction (Exhibit 14; TSN, 4 June 1993,
p. 42).
checks have not been paid by Filipinas Tyrom, which as payee of the checks, the clearly unfounded suit against the respondent's officers, complainant is
had been credited with their peso equivalent; liable to pay moral and exemplary damages and attorney's fees." 7

2. You tried to influence the decision of Atty. Pablo P. Magno, Bank legal The Court of Appeals found that the NLRC committed grave abuse of
counsel, by asking him to do something allegedly upon instructions of a discretion in ruling that the dismissal of Reyes is valid. In effect, the Court of
Senior Vice President of the Bank or else lose his job when in truth and in Appeals reinstated the judgment of the labor arbiter with modification as
fact no such instructions was given; and follows:

3. You deliberately withheld from Mr. Santos, Senior Vice President, the "WHEREFORE, in the light of the foregoing, the decision appealed from is
advice given by the legal counsel of the Bank which Mr. Santos had asked hereby REVERSED and SET ASIDE. In lieu thereof, judgment is hereby
you to seek. As a matter of fact, you even relayed a false advice which rendered ordering respondent Bank as follows:
delayed further the sending of the two checks for collection. Likewise, you
refused to heed the advice of the Bank's legal counsel to send the checks for 1. To pay petitioner full backwages and other benefits from July 19, 1991 up
to the finality of this judgment;
collection.

These findings have given rise to the Bank's loss of trust and confidence in 2. To pay petitioner separation pay equivalent to one (1) month salary for
every year of service in lieu of reinstatement; and
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 3. To pay attorney's fee equivalent to ten (10%) percent of the total award.
resolved not to re-elect you to the position of Assistant Vice President of the
Bank. Accordingly, your services are terminated effective immediately. In SO ORDERED."8
relation thereto, your monetary and retirement benefits are forfeited except
Hence, the Bank's recourse to this Court contending in its memorandum
those that have vested in you.'
that:
In her position paper, complainant alleged that the real reason for her
"IN SETTING ASIDE THE DECISION DATED 24 MARCH 1997 AND THE
dismissal was her filing of the criminal cases against the bank president, the
RESOLUTION DATED 28 JULY 1998 OF THE NLRC AND REINSTATING WITH
vice president and the auditors of the Bank, such filing not being a valid
MODIFICATION THE DECISION DATED 20 JULY 1995 OF LABOR ARBITER
ground for her dismissal. Furthermore, she alleged that it would be self-
CORNELIO L. LINSANGAN, THE HONORABLE COURT OF APPEALS SERIOUSLY
serving for the respondent to state that she was found guilty of gross
ERRED, IN VIEW OF THE FOLLOWING:
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 I.
given the chance to refute the charges mentioned in the letter of dismissal.
Hence, she was illegally dismissed. IT IS THE SEC (NOW THE REGIONAL TRIAL COURT) AND NOT THE NLRC
WHICH HAS ORIGINAL AND EXCLUSIVE JURISDICTION OVER CASES
On the other hand, respondent argues that there were substantial bases for INVOLVING THE REMOVAL FROM OFFICE OF CORPORATE OFFICERS.
the bank to lose its trust and confidence on the complainant and,
accordingly, had just cause for terminating her services. Moreover, for filing II.
EVEN ASSUMING ARGUENDO THAT THE NLRC HAS JURISDICTION, THERE and the Court of Appeals. While it is true that jurisdiction over the subject
WAS SUBSTANTIAL EVIDENCE OF RESPONDENT'S MISCONDUCT JUSTIFYING matter of a case may be raised at any time of the proceedings, this rule
THE BANK'S LOSS OF TRUST AND CONFIDENCE ON (sic) HER. presupposes that laches or estoppel has not supervened. In this
regard, Bañaga vs. Commission on the Settlement of Land Problems, 11 is
III. most enlightening. The Court therein stated:
EVEN ASSUMING ARGUENDO THAT RESPONDENT WAS ENTITLED TO "This Court has time and again frowned upon the undesirable practice of a
BACKWAGES, THE HONORABLE COURT OF APPEALS ERRED IN AWARDING party submitting his case for decision and then accepting the judgment, only
UNLIMITED AND UNQUALIFIED BACKWAGES THEREBY GOING FAR BEYOND if favorable, and attacking it for lack of jurisdiction when adverse. Here, the
THE LABOR ARBITER'S DECISION LIMITING THE SAME TO THREE YEARS, principle of estoppel lies. Hence, a party may be estopped or barred from
WHICH DECISION RESPONDENT HERSELF SOUGHT TO EXECUTE." 9 raising the question of jurisdiction for the first time in a petition
In sum, the resolution of this petition hinges on (1) whether the NLRC has before the Supreme Court when it failed to do so in the early stages of the
jurisdiction over the complaint for illegal dismissal; (2) whether complainant proceedings."
Reyes was illegally dismissed; and (3) whether the amount of back wages Undeterred, the Bank also contends that estoppel cannot lie considering
awarded was proper. that "from the beginning, petitioner Bank has consistently asserted in all its
On the first issue, petitioner seeks refuge behind the argument that the pleadings at all stages of the proceedings that respondent held the position
dispute is an intra-corporate controversy concerning as it does the non- of Assistant Vice President, an elective position which she held by virtue of
election of private respondent to the position of Assistant Vice-President of her having been elected as such by the Board of Directors." As far as the
the Bank which falls under the exclusive and original, jurisdiction of the records before this Court reveal however, such an assertion was made only
Securities and Exchange Commission (now the Regional Trial Court) under in the appeal to the NLRC and raised again before the Court of Appeals, not
Section 5 of Presidential Decree No. 902-A. More specifically, petitioner for purposes of questioning jurisdiction but to establish that private
contends that complainant is a corporate officer, an elective position under respondent's tenure was subject to the discretion of the Board of Directors
the corporate by-laws and her non-election is an intra-corporate controversy and that her non-reelection was a mere expiration of her term. The Bank
cognizable by the SEC invoking lengthily a number of this Court's decisions. 10 insists that private respondent was elected Assistant Vice President
sometime in 1990 to serve as such for only one year. This argument will not
Petitioner Bank can no longer raise the issue of jurisdiction under the do either and must be rejected.
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 It appears that private respondent was appointed Accounting Clerk by the
the Labor Arbiter was adverse to it, the Bank appealed to the NLRC. When Bank on July 14, 1963. From that position she rose to become supervisor.
the NLRC decided in its favor, the bank said nothing about jurisdiction. Even Then in 1982, she was appointed Assistant Vice-President which she
before the Court of Appeals, it never questioned the proceedings on the occupied until her illegal dismissal on July 19, 1991. The bank's contention
ground of lack of jurisdiction. It was only when the Court of Appeals ruled in that she merely holds an elective position and that in effect she is not a
favor of private respondent did it raise the issue of jurisdiction. The Bank regular employee is belied by the nature of her work and her length of
actively participated in the proceedings before the Labor Arbiter, the NLRC 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 adduce convincing evidence to prove bad faith and malice. It bears
of the Bank, she is tasked, among others, to collect checks drawn against emphasizing that respondent Bank's witnesses merely corroborate Joven's
overseas banks payable in foreign currency and to ensure the collection of testimony.
foreign bills or checks purchased, including the signing of transmittal letters
covering the same. It has been stated that "the primary standard of 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
determining regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual trade 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
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 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
even the reason for hiring them." 13 As Assistant Vice-President of the
Foreign Department of the Bank she performs tasks integral to the for an employee's dismissal, it must be substantial and not arbitrary, and
must be founded on clearly established facts sufficient to warrant 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 employee's separation from work (Labor vs. NLRC, 248 SCRA 183).
fine, as a regular employee, she is entitled to security of tenure; that is, her SECOND. Respondent Bank's charge of deliberate withholding of the two
services may be terminated only for a just or authorized cause. 14 This being dollar checks finds no support in the testimony of Atty. Jocson, Chairman of
in truth a case of illegal dismissal, it is no wonder then that the Bank the Investigating Committee. On cross examination, Atty. Jocson testified
endeavored to the very end to establish loss of trust and confidence and that the documents themselves do not show any direct withholding (pp.
serious misconduct on the part of private respondent but, as will be 186-187, Rollo). There being conflict in the statement of witnesses, the court
discussed later, to no avail. must adopt the testimony which it believes to be true (U.S. vs. Losada, 18
Phil. 90).
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 THIRD. Settled is the rule that when the conclusions of the Labor Arbiter are
private respondent warranting her dismissal. On this point, the Court of sufficiently substantiated by the evidence on record, the same should be
Appeals disagreed and set aside the findings of the NLRC that Reyes respected by appellate tribunals since he is in a better position to assess and
deliberately withheld the release of the two dollar checks; that she is guilty evaluate the credibility of the contending parties (Ala Mode Garments,
of conflict of interest that she waived her right to due process for not Inc. vs. NLRC, 268 SCRA 497). In this regard, the Court quotes with approval
attending the hearing; and that she was dismissed based on loss of trust and the following disquisition of Labor Arbiter Linsangan, thus:
confidence. We quote pertinent portions of the decision, to wit:
This Office has repeatedly gone over the records of the case and
"FIRST: Respondent Bank heavily relied on the testimony and affidavit of painstakingly examined the testimonies of respondent bank's witnesses.
Remittance Clerk Joven' in trying to establish loss of confidence. However, One thing was clearly established: that the legality of complainant's
Joven's allegation that petitioner instructed her to hold the subject two dismissal based on the first ground stated in respondent's letter of
dollar checks amounting to $224,650.00 falls short of the requisite proof to termination (exh. 25-J, supra) will rise or fall on the credibility of Miss Joven
warrant petitioner's dismissal. Except for Joven's bare assertion to withhold who undisputedly is the star witness for the bank. It will be observed that
the dollar checks per petitioner's instruction, respondent Bank failed to the testimonies of the bank's other witnesses, Analiza Castillo, Dante Castor
and Antonio Ragasa pertaining to the non-release of the dollar checks and her side on the controversy. As to what prompted her to make her letter of
their corresponding transmittal letters were all anchored on what was told explanation was not even mentioned.
them by Ms. Joven, that is: she was instructed by complainant to hold the
On the other hand, the actions taken by the complainant were spontaneous.
release of subject checks. In a nutshell, therefore, the issue boils down to
who between complainant and Ms. Joven is more credible. When complainant was informed by Mr. Castor and Ms. Castillo regarding
the non-release of the checks sometime in November, 1989 she immediately
After painstakingly examining the testimonies of Ms. Joven and respondent's reported the matter to Vice President Santos, Head of the Foreign
other witnesses' this Office finds the evidence still wanting in proof of Department. And as earlier mentioned, complainant went to the residence
complainant's guilt. This Office had closely observed the demeanor of Ms. of Ms. Joven to confront her. In this regard, Celestino Bonito, complainant's
Joven while testifying on the witness stand and was not impressed by her driver, stated in his affidavit, thus:
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. '1. Sometime on November 15, 1989 at about 7:00 o'clock in the evening,
Mrs. Clarita Tan Reyes and I were in the residence of one Ms. Cecille Joven,
In the first place, the said instruction constitutes a gross violation of the
bank's standard operating procedure. Moreover, Ms. Joven was fully aware then a Processing Clerk in the Foreign Department of Prudential Bank;
that the instruction, if carried out, will greatly prejudice her employer bank. 2. Ms. Cecille Joven, her mother, myself, and Mrs. Clarita Tan Reyes were
It was incumbent upon Ms. Joven not only to disobey the instruction but seated in the sala when the latter asked the former, Ms. Cecille Joven, how it
even to report the matter to management, if same was really given to her by came about that the two dollar checks which she was then holding with the
complainant. transmittal letters, were found in a plastic envelope kept day-to-day by the
former;
Our doubt on the veracity of Ms. Joven's allegation even deepens as we
consider the fact that when the non-release of the checks was discovered by 3. Hesitatingly, Cecille Joven said: "Eh, Mother (Mrs. Tan Reyes had been
Ms. Castillo the former contented herself by continuously not taking any intimately called Mother in the Bank) akala ko bouncing checks yon mga
action on the two dollar checks. Worse, Ms. Joven even impliedly told by yon.
Ms. Castillo (sic) to ignore the two checks and just withhold their release. In
her affidavit Ms. Castillo said: 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:
'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. 5. Mrs. Cecille Joven turned pale and was not able to answer.'
"14", supra).
There are other factors that constrain this Office to doubt even more the
The evidence shows that it was only on 16 May 1990 that Ms. Joven broke legality of complainant's dismissal based on the first ground stated in the
her silence on the matter despite the fact that on 15 November 1989, at letter of dismissal. The non-release of the dollar checks was reported to top
about 8:00 p.m. the complainant, accompanied by driver Celestino Banito, management sometime on 15 November 1989 when complainant,
went to her residence and confronted her regarding the non-release of the accompanied by Supervisor Dante Castor and Analiza Castillo, reported the
dollar checks. It took Ms. Joven eighteen (18) months before she explained 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 not entitled to full backwages in view of the fact that she did not bother to
memorandum directing her to submit an explanation. And it took the bank appeal that portion of the labor arbiter's judgment awarding back wages
another four (4) months before it dismissed complainant. limited to three years. It must be stressed that private respondent filed a
special civil action for certiorari to review the decision of the NLRC 17 and not
The delayed action taken by respondent against complainant lends credence an ordinary appeal. An ordinary appeal is distinguished from the remedy of
to the assertion of the latter that her dismissal was a mere retaliation to the certiorari under Rule 65 of the Revised Rules of Court in that in ordinary
criminal complaints she filed against the bank's top officials. appeals it is settled that a party who did not appeal cannot seek affirmative
It clearly appears from the foregoing that the complainant herein has no relief other than the ones granted in the decision of the court below. 18 On
knowledge of, much less participation in, the non-release of the dollar the other hand, resort to a judicial review of the decisions of the National
checks under discussion. Ms. Joven is solely responsible for the same. Labor Relations Commission in a petition for certiorari under Rule 65 of
Incidentally, she was not even reprimanded by the bank. 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
FOURTH. Respondent Bank having failed to furnish petitioner necessary that the NLRC gravely abused its discretion in finding that the private
documents imputing loss of confidence, petitioner was not amply afforded respondent's dismissal was valid and so reversed the same. Corollary to the
opportunity to prepare an intelligent answer. The Court finds nothing foregoing, the appellate court awarded backwages in accordance with
confidential in the auditor's report and the affidavit of Transmittal Clerk current jurisprudence.
Joven. Due process dictates that management accord the employees every
kind of assistance to enable him to prepare adequately for his defense, Indeed, jurisprudence is clear on the amount of backwages recoverable in
including legal representation. cases of illegal dismissal. Employees illegally dismissed prior to the
effectivity of Republic Act No. 6715 on March 21, 1989 are entitled to
The issue of conflict of interest not having been covered by the investigation, backwages up to three (3) years without deduction or qualification, while
the Court finds it irrelevant to the charge." 15 those illegally dismissed after are granted full backwages inclusive of
allowances and other benefits or their monetary equivalent from the time
We uphold the findings of the Court of Appeals that the dismissal of private
their actual compensation was withheld from them up to the time of their
respondent on the ground of loss of trust and confidence was without basis.
actual reinstatement. 20 Considering that private respondent was terminated
The charge was predicated on the testimony of Ms. Joven and we defer to
on July 19, 1991, she is entitled to full backwages from the time her actual
the findings of the Labor Arbiter as confirmed and adopted by the Court of
compensation was withheld from her (which, as a rule, is from the time of
Appeals on the credibility of said witness. This Court is not a trier of facts
her illegal dismissal) up to the finality of this judgment (instead of
and will not weigh anew the evidence already passed upon by the Court of
reinstatement) considering that reinstatement is no longer feasible as
Appeals.16
correctly pointed out by the Court of Appeals on account of the strained
On the third issue, the Bank questions the award of full backwages and relations brought about by the litigation in this case. Since reinstatement is
other benefits from July 19, 1991 up to the finality of this judgment; no longer viable, she is also entitled to separation pay equivalent to one (1)
separation pay equivalent to one (1) month salary for every year of service month salary for every year of service. 21 Lastly, since private respondent was
in lieu of reinstatement; and attorney's fees equivalent to ten (10%) percent compelled to file an action for illegal dismissal with the labor arbiter, she is
of the total award. The Bank argues, in the main, that private respondent is likewise entitled to attorney's 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.1âwphi1.nêt

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.

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

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


DACUYCUY, petitioners,
vs.
HON. JUDGE ANTONIO M. MARTINEZ, in his official capacity, and
ABRAHAM TUMALA, JR., respondents.
ESCOLIN, J.: collections of trade accounts, fictitious loaned empties, fictitious product
deals, uncollected loaned empties, advance sales confirmed as fictitious,
This petition for certiorari, prohibition and mandamus raises anew the legal and route shortages which resulted to the damage and prejudice of the
question often brought to this Court: Which tribunal has exclusive bottling company in the amount of P381,851.76." The alleged commission of
jurisdiction over an action filed by an employee against his employer for these fraudulent acts was also advanced by petitioners to justify Tumala's
recovery of unpaid salaries, separation benefits and damages — the court of dismissal.
general jurisdiction or the Labor Arbiter of the National Labor Relations
Commission [NLRC]? The court below, sustaining its jurisdiction over the case, denied the motion
for reconsideration. Hence the present recourse.
The facts that gave rise to this petition are as follows:
We rule that the Labor Arbiter has exclusive jurisdiction over the case.
On September 19, 1980, respondent Abraham Tumala, Jr. filed a complaint
in the Court of First Instance of Davao, docketed as Civil Case No. 13494, Jurisdiction over the subject matter in a judicial proceeding is conferred by
against petitioners Pepsi-Cola Bottling Co., Inc., its president Cosme de the sovereign authority which organizes the court; and it is given only by
Aboitiz and other company officers. Under the first cause of action, the law. 1 Jurisdiction is never presumed; it must be conferred by law in words
complaint averred inter alia that Tumala was a salesman of the company in that do not admit of doubt. 2
Davao City from 1977 up to August 21, 1980; that in the annual "Sumakwel"
contest conducted by the company in 1979, Tumala was declared winner of Since the jurisdiction of courts and judicial tribunals is derived exclusively
from the statutes of the forum, the issue efore Us should be resolved on the
the "Lapu-Lapu Award" for his performance as top salesman of the year, an
award which entitled him to a prize of a house and lot; and that petitioners, basis of the law or statute now in force. We find that law in Presidential
Decree 1691 which took effect on May 1, 1980, Section 3 of which reads as
despite demands, have unjustly refused to deliver said prize Under the
second cause of action, it was alleged that on August 21, 1980, petitioners, follows:
"in a manner oppressive to labor" and "without prior clearance from the SEC. 3. Article 217, 222 and 262 of Book V of the Labor Code are hereby
Ministry of Labor", "arbitrarily and ilegally" terminated his employment. He amended to read as follows:
prayed that petitioners be ordered, jointly and severally, to deliver his prize
of house and lot or its cash equivalent, and to pay his back salaries and Article 217. Jurisdiction of Labor Arbiters and the Commission. — The Labor
separation benefits, plus moral and exemplary damages, attorney's fees and Arbiters shall have the original and exclusive jurisdiction to hear and decide
litigation expenses. He did not ask for reinstatement. the following cases involving all workers, whether agricultural or non-
agricultural:
Petitioners moved to dismiss the complaint on grounds of lack of jurisdiction
and cause of action. Petitioners further alleged that Tumala was not entitled 1. Unfair labor practice cases;
to the "Sumakwel" prize for having misled the company into declaring him
2. Unresolved issues in collective bargaining, including those that involve
top salesman for 1979 through various deceitful and fraudulent
waged hours of work and other terms and conditions of employment;
manipulations and machinations in the performance of his duties as
salesman and depot in-charge of the bottling company in Davao City, which 3. All money claims of workers, including those based on non-payment or
manipulations consisted of "unremitted cash collections, fictitious underpayment of wages, overtime compensation, separation pay and other
benefits provided by law or appropriate agreement, except claims for 1] Unfair labor practice cases;
employees' compensation, social security, medicare and maternity benefits;
2] Unresolved issues in collective bargaining, including those which involve
4. Cases involving household services; and wages, hours of work, and other terms conditions of employment; and

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

Under paragraphs 3 and 5 of the above Presidential Decree, the case is Provided, that the Regional Directors shall not indorse and Labor Arbiters
exclusively cognizable by the Labor Arbiters of the National Labor Relations shall not entertain claims for moral or other forms of damages.
Commission.
It will be noted that paragraphs 3 and 5 of Article 217 were deleted from the
It is to be noted that P.D. 1691 is an exact reproduction of Article 217 of the text of the above decree and a new provision incorporated therein, to wit:
Labor Code (P.D. 442), which took effect on May 1, 1974. In Garcia vs. "Provided that the Regional Directors shall not indorse and Labor Arbiters
Martinez 3, an action filed on August 2, 1976 in the Court of First Instance of shall not en certain claims for moral or other forms of damages." This
Davao by a dismissed employee against his employer for actual, moral and amendatory act thus divested the Labor Arbiters of their competence to
exemplary damages, We held that under Article 217 of the Labor Code, the pass upon claims for damages by employees against their employers.
law then in force, the case was within the exclusive jurisdiction of the Labor
Arbiters and the National Labor Relations Commission [NLRC]. This Court, However, on May 1, 1980, Article 217, as amended by P.D. 1367, was
amended anew by P.D. 1691. This last decree, which is a verbatim
per Justice Aquino, rational this holding thus:
reproduction of the original test of Article 217 of the Labor Code, restored to
The provisions of paragraph 3 and 5 of Article 217 are broad and the Labor Arbiters of the NLRC exclusive jurisdiction over claims, money or
comprehensive enough to cover Velasco's [employee's] claim for damages otherwise, arising from employer-employee relations, except those
allegedly arising from his unjustified dismissal by Garcia [employer]. His expressly excluded therefrom.
claim was a consequence of the termination of their employer-employee
relations [Compare with Ruby Industrial Corporation vs. Court of First In sustaining its jurisdiction over the case at bar, the respondent court relied
on Calderon vs. Court of Appeals 4 , where We ruled that an employee's
Instance of Manila, L- 38893, August 31, 1977, 78 SCRA 499].
action for unpaid salaries, alowances and other reimbursable expenses and
Article 217 of the Labor Code words amended by P.D. 1367, which was damages was beyond the periphery of the jurisdictional competence of the
promulgated on May 1, 1978, the full text of which is quoted as follows: Labor Arbiters. Our ruling in Calderon, however, no longer applaies to this
case because P.D. 1367, upon which said decision was based, had already
SECTION 1. Paragraph [a] of Art, 217 of the Labor Code as amended is been superceded by P.D. 1691. As heretofore stated, P.D. 1691 restored to
hereby further amended to read as follows: the Labor Arbiters their exlcusive jurisdiction over said classes of claims.
[a] The Labor Arbiters shall have exclusive jurisdiction hear and decide the Respondent Tumala maintains that his action for delivery of the house and
following cases involving all workers, whether agricultural or non- lot, his prize as top salesman of the company for 1979, is a civil controversy
agricultural: triable exclusively by the court of the general jurisdiction. We do not share
this view. The claim for said prize unquestionably arose from an employer-
employee relation and, therefore, falls within the coverage of par. 5 of P.D.
1691, which speaks of "all claims arising from employer-employee relations,
unless expressly excluded by this Code." Indeed, Tumala would not have
qualitfied for the content, much less won the prize, if he was not an
employee of the company at the time of the holding of the contest. Besides,
the cause advanced by petitioners to justify their refusal to deliver the prize
—the alleged fraudulent manipulations committed by Tumala in connection
with his duties as salesman of the company—involves an inquiry into his
actuations as an employee.

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

One last point. Petitioners content that Tumala has no cause of action to as
for back salaries and damages because his dimissal was authorized by the
Regional Director of the MInistry of Labor. This question calls for the
presentaiton of evidence and the same may well be entilated before the
labor Arbiter who has jurisdiction over the case. Besides, the issue raised is
not for Us to determine in this certiorari proceeding. The extraordinary
remedy of certiorari proceeding. The extraordinary remedy of certiorari
offers only a limited form of review and its principal function is to keep an G.R. No. 80774 May 31, 1988
inferior tribunal within its jurisdiction. 5
SAN MIGUEL CORPORATION, petitioner,
WHEREFORE, the petition is granted, and respondent judge is hereby vs.
directed to dismiss Civil Case No. 13494, without prejudice to the right of NATIONAL LABOR RELATIONS COMMISSION and RUSTICO
respondent Tumala to refile the same with the Labor Arbiter. No costs. VEGA, respondents.

SO ORDERED. Siguion Reyna, Montecillo & Ongsiako Law Offices for petitioner.

The Solicitor General for public respondent.


FELICIANO, J.: cash award under the Innovation Program. On 22 February 1983., a
Complaint2 (docketed as Case No. RAB-VII-0170-83) was filed against
In line with an Innovation Program sponsored by petitioner San Miguel petitioner Corporation with Regional Arbitration Branch No. VII (Cebu City)
Corporation ("Corporation;" "SMC") and under which management of the then.", Ministry of Labor and Employment. Frivate respondent Vega
undertook to grant cash awards to "all SMC employees ... except [ED-HO alleged there that his proposal "[had] been accepted by the methods analyst
staff, Division Managers and higher-ranked personnel" who submit to the and implemented by the Corporation [in] October 1980," and that the same
Corporation Ideas and suggestions found to be beneficial to the Corporation, "ultimately and finally solved the problem of the Corporation in the
private respondent Rustico Vega submitted on 23 September 1980 an production of Beer Grande." Private respondent thus claimed entitlement to
innovation proposal. Mr. Vega's proposal was entitled "Modified Grande a cash prize of P60,000.00 (the maximum award per proposal offered under
Pasteurization Process," and was supposed to eliminate certain alleged the Innovation Program) and attorney's fees.
defects in the quality and taste of the product "San Miguel Beer Grande:"
In an Answer With Counterclaim and Position Paper, 3 petitioner Corporation
Title of Proposal alleged that private respondent had no cause of action. It denied ever
Modified Grande Pasteurization Process having approved or adopted Mr. Vega's proposal as part of the Corporation's
brewing procedure in the production of San Miguel Beer Grande. Among
Present Condition or Procedure other things, petitioner stated that Mr. Vega's proposal was tumed down by
the company "for lack of originality" and that the same, "even if
At the early stage of beer grande production, several cases of beer grande
implemented [could not] achieve the desired result." Petitioner further
full goods were received by MB as returned beer fulls (RBF). The RBF's were
alleged that the Labor Arbiter had no jurisdiction, Mr. Vega having
found to have sediments and their contents were hazy. These effects are
improperly bypassed the grievance machinery procedure prescribed under a
usually caused by underpasteurization time and the pasteurzation units for
then existing collective bargaining agreement between management and
beer grande were almost similar to those of the steinie.
employees, and available administrative remedies provided under the rules
Proposed lnnovation (Attach necessary information) of the Innovation Program. A counterclaim for moral and exemplary
damages, attorney's fees, and litigation expenses closed out petitioner's
In order to minimize if not elienate underpasteurization of beer grande, pleading.
reduce the speed of the beer grande pasteurizer thereby, increasing the
pasteurization time and the pasteurization acts for grande beer. In this way, In an Order 4 dated 30 April 1986, the Labor Arbiter, noting that the money
the self-life (sic) of beer grande will also be increased. 1 claim of complainant Vega in this case is "not a necessary incident of his
employment" and that said claim is not among those mentioned in Article
Mr. Vega at that time had been in the employ of petitioner Corporation for 217 of the Labor Code, dismissed the complaint for lack of jurisdiction.
thirteen (1 3) years and was then holding the position of "mechanic in the However, in a gesture of "compassion and to show the government's
Bottling Department of the SMC Plant Brewery situated in Tipolo, Mandaue concern for the workingman," the Labor Arbiter also directed petitioner to
City. pay Mr. Vega the sum of P2,000.00 as "financial assistance."

Petitioner Corporation, however, did not find the aforequoted proposal The Labor Arbiter's order was subsequently appealed by both parties,
acceptable and consequently refused Mr. Vega's subsequent demands for a private respondent Vega assailing the dismissal of his complaint for lack of
jurisdiction and petitioner Corporation questioning the propriety of the 5. Cases arising from any violation of Article 265 of this; Code, including
award of "financial assistance" to Mr. Vega. Acting on the appeals, the public questions involving the legality of strikes and lockouts.
respondent National Labor Relations Commission, on 4 September 1987,
(b) The Commission shall have exclusive appellate jurisdiction over all cases
rendered a Decision, 5 the dispositive portion of which reads:
decided by Labor Arbiters. (Emphasis supplied)
WHEREFORE, the appealed Order is hereby set aside and another udgment
While paragraph 3 above refers to "all money claims of workers," it is not
entered, order the respondent to pay the complainant the amount of
P60,000.00 as explained above. necessary to suppose that the entire universe of money claims that might be
asserted by workers against their employers has been absorbed into the
SO ORDERED. original and exclusive jurisdiction of Labor Arbiters. In the first place,
paragraph 3 should be read not in isolation from but rather within the
In the present Petition for certiorari filed on 4 December 1987, petitioner context formed by paragraph 1 related to unfair labor practices), paragraph
Corporation, invoking Article 217 of the Labor Code, seeks to annul the 2 (relating to claims concerning terms and conditions of employment),
Decision of public respondent Commission in Case No. RAB-VII-01 70-83 paragraph 4 (claims relating to household services, a particular species of
upon the ground that the Labor Arbiter and the Commission have no employer-employee relations), and paragraph 5 (relating to certain activities
jurisdiction over the subject matter of the case. prohibited to employees or to employers).<äre||anº•1àw> It is evident that
The jurisdiction of Labor Arbiters and the National Labor Relations there is a unifying element which runs through paragraphs 1 to 5 and that is,
Commission is outlined in Article 217 of the Labor Code, as last amended by that they all refer to cases or disputes arising out of or in connection with an
Batas Pambansa Blg. 227 which took effect on 1 June 1982: employer-employee relationship. This is, in other words, a situation where
the rule of noscitur a sociis may be usefully invoked in clarifying the scope of
ART. 217. Jurisdiction of Labor Arbiters and the commission. (a) The Labor paragraph 3, and any other paragraph of Article 217 of the Labor Code, as
Arbiters shall have theoriginal and exclusive jurisdiction to hear and decide amended. We reach the above conclusion from an examination of the terms
within thirty (30) working days after submission of the case by the parties themselves of Article 217, as last amended by B.P. Blg. 227, and even though
for decision, the following cases involving are workers, whether agricultural earlier versions of Article 217 of the Labor Code expressly brought within
or non-agricultural: the jurisdiction of the Labor Arbiters and the NLRC "cases arising from
employer employee relations," 6 which clause was not expressly carried over,
1. Unfair labor practice cases;
in printer's ink, in Article 217 as it exists today. For it cannot be presumed
2. Those that workers may file involving wages, hours of work and other that money claims of workers which do not arise out of or in connection
terms and conditions of employment; with their employer-employee relationship, and which would therefore fall
within the general jurisdiction of the regular courts of justice, were intended
3. All money claims of workers, including those based on non-payment or by the legislative authority to be taken away from the jurisdiction of the
underpayment of wages, overtime compensation, separation pay and other courts and lodged with Labor Arbiters on an exclusive basis. The Court,
benefits provided by law or appropriate agreement, except claims for therefore, believes and so holds that the money claims of workers" referred
employees' compensation, social security, medicare and maternity benefits; to in paragraph 3 of Article 217 embraces money claims which arise out of
or in connection with the employer-employee relationship, or some aspect
4. Cases involving household services; and
or incident of such relationship. Put a little differently, that money claims of dismissal and requiring respondent Judge to take cognizance of the case
workers which now fall within the original and exclusive jurisdiction of Labor below, this Court, speaking through Mme. Justice Melencio-Herrera, said:
Arbiters are those money claims which have some reasonable causal
Before the enactment of BP Blg. 227 on June 1, 1982, Labor Arbiters, under
connection with the employer-employee relationship.
paragraph 5 of Article 217 of the Labor Code had jurisdiction over" all other
Applying the foregoing reading to the present case, we note that petitioner's cases arising from employer-employee relation, unless, expressly excluded
Innovation Program is an employee incentive scheme offered and open only by this Code." Even then, the principle followed by this Court was that,
to employees of petitioner Corporation, more specifically to employees although a controversy is between an employer and an employee, the Labor
below the rank of manager. Without the existing employer-employee Arbiters have no jurisdiction if the Labor Code is not involved. In Medina vs.
relationship between the parties here, there would have been no occasion Castro-Bartolome, 11 SCRA 597, 604, in negating jurisdiction of the Labor
to consider the petitioner's Innovation Program or the submission by Mr. Arbiter, although the parties were an employer and two employees, Mr.
Vega of his proposal concerning beer grande; without that relationship, Justice Abad Santos stated:
private respondent Vega's suit against petitioner Corporation would never
have arisen. The money claim of private respondent Vega in this case, The pivotal question to Our mind is whether or not the Labor Code has any
relevance to the reliefs sought by the plaintiffs. For if the Labor Code has no
therefore, arose out of or in connection with his employment relationship
with petitioner. relevance, any discussion concerning the statutes amending it and whether
or not they have retroactive effect is unnecessary.
The next issue that must logically be confronted is whether the fact that the
money claim of private respondent Vega arose out of or in connection with It is obvious from the complaint that the plaintiffs have not alleged any
unfair labor practice. Theirs is a simple action for damages for tortious acts
his employment relation" with petitioner Corporation, is enough to bring
such money claim within the original and exclusive jurisdiction of Labor allegedly committed by the defendants. Such being the case, the governing
statute is the Civil Code and not the Labor Code. It results that the orders
Arbiters.
under review are based on a wrong premise.
In Molave Motor Sales, Inc. v. Laron, 7 the petitioner was a corporation
And in Singapore Airlines Limited v. Paño, 122 SCRA 671, 677, the following
engaged in the sale and repair of motor vehicles, while private respondent
was the sales Manager of petitioner. Petitioner had sued private respondent was said:
for non-payment of accounts which had arisen from private respondent's Stated differently, petitioner seeks protection under the civil laws and claims
own purchases of vehicles and parts, repair jobs on cars personally owned no benefits under the Labor Code. The primary relief sought is for liquidated
by him, and cash advances from the corporation. At the pre-trial in the lower damages for breach of a contractual obligation. The other items demanded
court, private respondent raised the question of lack of jurisdiction of the are not labor benefits demanded by workers generally taken cognizance of
court, stating that because petitioner's complaint arose out of the employer- in labor disputes, such as payment of wages, overtime compensation or
employee relationship, it fell outside the jurisdiction of the court and separation pay. The items claimed are the natural consequences flowing
consequently should be dismissed. Respondent Judge did dismiss the case, from breach of an obligation, intrinsically a civil dispute.
holding that the sum of money and damages sued for by the employer arose
from the employer-employee relationship and, hence, fell within the In the case below, PLAINTIFF had sued for monies loaned to DEFENDANT,
jurisdiction of the Labor Arbiter and the NLRC. In reversing the order of the cost of repair jobs made on his personal cars, and for the purchase price
of vehicles and parts sold to him. Those accounts have no relevance to the the Corporation's officials, satisfied the standards and requirements of the
Labor Code. The cause of action was one under the civil laws, and it does not Innovation Program 10 and which, therefore, could be translated into some
breach any provision of the Labor Code or the contract of employment of substantial benefit to the Corporation. Such undertaking, though unilateral
DEFENDANT. Hence the civil courts, not the Labor Arbiters and the NLRC in origin, could nonetheless ripen into an enforceable contractual (facio ut
should have jurisdiction. 8 des) 11 obligation on the part of petitioner Corporation under certain
circumstances. Thus, whether or not an enforceable contract, albeit implied
It seems worth noting that Medina v. Castro-Bartolome, referred to in the arid innominate, had arisen between petitioner Corporation and private
above excerpt, involved a claim for damages by two (2) employees against respondent Vega in the circumstances of this case, and if so, whether or not
the employer company and the General Manager thereof, arising from the it had been breached, are preeminently legal questions, questions not to be
use of slanderous language on the occasion when the General Manager resolved by referring to labor legislation and having nothing to do with
fired the two (2) employees (the Plant General Manager and the Plant wages or other terms and conditions of employment, but rather having
Comptroller). The Court treated the claim for damages as "a simple action recourse to our law on contracts.
for damages for tortious acts" allegedly committed by private respondents,
clearly if impliedly suggesting that the claim for damages did not necessarily WEREFORE, the Petition for certiorari is GRANTED. The decision dated 4
arise out of or in connection with the employer-employee September 1987 of public respondent National Labor Relations Commission
relationship.Singapore Airlines Limited v. Paño, also cited in Molave, is SET ASIDE and the complaint in Case No. RAB-VII-0170-83 is hereby
involved a claim for liquidated damages not by a worker but by the DISMISSED, without prejudice to the right of private respondent Vega to file
employer company, unlike Medina. The important principle that runs a suit before the proper court, if he so desires. No pronouncement as to
through these three (3) cases is that where the claim to the principal relief costs. SO ORDERED.
sought 9 is to be resolved not by reference to the Labor Code or other labor
G.R. No. L-50459 August 25, 1989
relations statute or a collective bargaining agreement but by the general civil
law, the jurisdiction over the dispute belongs to the regular courts of justice LEONARDO D. SUARIO, petitioner,
and not to the Labor Arbiter and the NLRC. In such situations, resolution of vs.
the dispute requires expertise, not in labor management relations nor in BANK OF THE PHILIPPINE ISLANDS, Davao Branch or The Manager/Cashier
wage structures and other terms and conditions of employment, but rather and NATIONAL LABOR RELATIONS COMMISSION, respondents.
in the application of the general civil law. Clearly, such claims fall outside the
area of competence or expertise ordinarily ascribed to Labor Arbiters and Leonardo D. Suario for and in his own behalf.
the NLRC and the rationale for granting jurisdiction over such claims to these
Canete Tolentino, Buyo, Caballero and Fuentes for respondent BPI.
agencies disappears.

Applying the foregoing to the instant case, the Court notes that the SMC
Innovation Program was essentially an invitation from petitioner GUTIERREZ, JR., J.:
Corporation to its employees to submit innovation proposals, and that
petitioner Corporation undertook to grant cash awards to employees who The petitioner, with himself as his own counsel, filed this petition for review
accept such invitation and whose innovation suggestions, in the judgment of of the decision of the National Labor Relations Commission (NLRC) which
denied his claim for damages arising from an alleged illegal dismissal. In 6. That complainant never suspected that his application would be
addition to the separation pay already awarded to him, the petitioner asks disapproved, much less any bad faith on the part of the respondent bank to
for P9,995.00 actual damages, P300,000.00 moral damages, P200,000.00 discriminate union member (sic), since it has been the policy of the
exemplary damages, and attorney's fees to be determined by the Court. respondent bank to grant request of this nature as shown in the case of four
(4) former employees who were all granted leave of absence without pay.
On August 4,1977, petitioner Leonardo D. Suario filed a complaint for Copies of the affidavits of Judge Juan Montejo and Atty. Bienvenido Banez
separation pay, damages and attorney's fees against the Bank of the and xerox copies of the payroll of Jose Ledesma and Antonio Tan are hereto
Philippine Islands, Davao Branch/ or the Manager and Assistant attached as ANNEXES 'A', 'B', 'C', and 'D' and made an integral part hereof;
Manager/Cashier alleging:
7. That on May 10, 1976, the complainant wrote a formal letter to the
xxx xxx xxx President of the respondent bank, Mr. Alberto Villa Abrille, asking for a
2. That complainant has been a loyal employee of the respondent bank since formal reconsideration and caused the same to be received by Mr. Vicente
March, 1969, first assigned as a saving clerk, then rose to become the head Casino but the latter advised instead the complainant to address to him
of the loan section in 1976 with an official designation as Credit Investigator (Casino) a letter of mild tenor since any reconsideration should be coursed
Appraiser-Credit Analyst; through the proper channel; and that Mr. Casino advised the complainant to
just file his 30-day leave of absence without pay as approved and then
3. That during the time of the complainant's employment with the proceed to Manila since the request would ultimately be granted. A Xerox
respondent bank, he pursued his studies of law without criticism or adverse copy of the said letter is hereto attached as ANNEX 'E' to be made an
comments from the respondent bank but instead praises were showered integral part hereof;
and incentives and considerations were bestowed in view of the
complainant's determination for intellectual advancement; 8. That acting on the said advice of Vicente Casino, the complainant, with
utmost good faith, wrote a letter addressed to Mr. Casino aid at the same
4. That sometime in March, 1976, the complainant verbally requested the time, filed a 30-day leave of absence. Copies of the letter and Application for
then Asst. Vice-President and Branch Manager, Mr. Armando N. Guilatco, for Leave of Absence are hereto attached as ANNEXES 'F' and 'G' to be made an
a 6-month leave of absence without pay purposely to take the 1976 pre-bar integral part hereof,
review in Manila and that the said Mr. Guilatco informed the complainant
that there would be no problem as regards the requested leave of absence; 9. That on May 17, 1976, the complainant proceeded to Manila for the pre-
bar review and even went to the extent of going to the respondent's Head
5. That sometime in May, 1976, the complainant received a verbal notice Office to seek an audience with the Personnel Manager with an alternative
from the new Branch Manager, Mr. Vicente Casino, that the respondent's of working with any of the Metro Manila Branches of the respondent bank if
Head Office approved only a 30-day leave of absence without pay but that and when the request would not be granted and that the Personnel
Mr. Guilatco, then assigned in Head Office as Vice President, advised him Manager promised to take up the matter with Mr. Alberto Villa Abrille;
(Casino) to inform the complainant to just avail of the 30-day leave of
absence first and then proceed to Manila for the review since the request 10. That during the first week of August, 1976, the complainant received a
would be ultimately granted; letter from the Asst. Manager/Cashier, Mr. Douglas E. Aurelio, ordering the
complainant to report back for work since the complainant's request was
allegedly disapproved and that failure to report back for work would be a 17. That the dismissal of the complainant was clearly illegal and without just
conclusive proof that the complainant is no longer interested to continue cause, being discriminatory in character he being an active union member
working and therefore considered resigned. ... and in fact the Vice President of the ALU-BPI Chapter until his dismissal in
view of the uneven application of the respondent's policy; ... (Rollo, pp. 15-
11. That upon receipt of the letter, complainant's review was unduly 19)
interrupted since sleepless nights were spent in order to arrive at the proper
decision and that the complainant has decided not to report back because The case was set for conciliation but since the parties could not agree on any
of the considerable expenses already incurred in Manila after he has been settlement, the case was certified to the Labor Arbiter. Thereafter, the
led to believe that the request would ultimately be granted; Executive Labor Arbiter required the parties to submit their position papers.
Based on the position papers submitted, a decision was rendered on
12. That during the last week of August, 1976, the complainant received December 7, 1977. The dispositive portion reads as follows:
another letter from Douglas E. Aurelio, attaching a xerox copy of the
application for a Clearance to terminate on the ground of resignation/ or WHEREFORE, premises considered, respondent is hereby ordered to pay
abandonment. ... complainant's claim for separation pay in the amount of P11,813.36. His
claim for moral, actual, and exemplary damages and attorney's fees are
13. That the complainant failed to file his opposition since as above averred hereby dismissed for lack of merit. (Rollo, p. 46)
to, he was already in Manila taking up the review and was then very busy
since the bar examination was only two months shy; The decision of the Executive Labor Arbiter was affirmed on appeal to the
National Labor Relations Commission on October 9, 1978. A motion for
14. That sometime during the first week of December, 1976, the reconsideration was likewise denied. Hence, this petition.
complainant went to the respondent bank but was verbally informed that he
was already dismissed; The petitioner alleges that the public respondent committed the following:

15. That on December 13, 1976, the complainant formally wrote a letter to I
the respondent bank requesting for a written and formal advise as to his real
status and that on December 14, 1976, the respondent bank replied that the THAT THE NATIONAL LABOR RELATIONS COMMISSION IN ITS DECISION
DATED OCTOBER 9, 1978 (ANNEX F OF THE PETITION) ERRED IN NOT
matter was still referred to the Personnel Department at Head Office leading
again the complainant to believe that his case was not yet hopeless. ... GRANTING THE CLAIM OF DAMAGES PRAYED FOR BY PETITIONER DESPITE
FINDINGS THAT THE DISMISSAL WAS CLEARLY ILLEGAL; and
16. That on December 21, 1976, the complainant wrote another letter
pressing for a categorical answer and on December 23, 1976, the lawyers of II
the respondent bank replied that as far as the bank is concerned the THAT THE NATIONAL LABOR RELATIONS COMMISSION ERRED IN DISMISSING
services of the complainant was considered terminated effective July 19, PETITIONER'S MOTION FOR RECONSIDERATION BASED MAINLY ON PD NOS.
1976 contrary to the respondent bank's manifestation that his case was still 1367 AND 1391 IN ITS DECISION DATED FEBRUARY 9, 1979. (Rollo, p. 139).
pending before the Personnel Department. ...
The main issue in this case is whether or not the NLRC committed grave The contention of private respondent that the NLRC is not clothed with
abuse of discretion in denying the petitioner's claim for actual, moral and authority to entertain claims for moral and other forms of damages is based
exemplary damages plus attorney's fees in addition to his separation pay. on PD 1367 which took effect on May 1, 1979 and which amended Article
217 by specifically providing that "Regional Directors shall not indorse and
On the matter of NLRC jurisdiction over claims for damages, it clearly Labor Arbiters shall not entertain claims for moral or other forms of
appears that the complaint was filed on August 4, 1977 and decided by the damages."
Labor Arbiter on December 7, 1977; hence, the applicable law is Article 217
of the Labor Code which took effect on October 1, 1974, and which This limitation on jurisdiction did not last long. This Court in the case
provides: of Ebon v. De Guzman, (113 SCRA 52 [1982]) explained:

xxx xxx xxx Evidently, the lawmaking authority had second thoughts about depriving the
Labor Arbiters and the NLRC of the jurisdiction to award damages in labor
ART. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) The Labor cases because that set up would mean duplicity of suits, splitting the cause
Arbiters shall have exclusive jurisdiction to hear and decide the following of action and possible conflicting findings and conclusions by two tribunals
cases involving all workers, whether agricultural or non-agricultural: on one and the same claim.
(1) Unfair labor practice cases; So, on May 1, 1980, Presidential Decree No. 1691 (which substantially
(2) Unresolved issues in collective bargaining including those which involve reenacted Article 217 in its original form) nullified Presidential Decree No.
wages, hours of work, and other terms and conditions of employment duly 1367 and restored to the Labor Arbiters and the NLRC their jurisdiction to
indorsed by the Bureau in accordance with the provisions of this Code; award all kinds of damages in cases arising from employer-employee
relations (Pepsi-Cola Bottling Company of the Philippines v. Martinez, G.R.
(3) All money claims of workers involving non-payment or underpayment of No. 58877).
wages, overtime or premium compensation, maternity or service incentive
leave, separation pay and other money claims arising from employer- It is now well settled that money claims of workers provided by law over
employee relation, except claims for employee's compensation, social which the labor arbiter has original and exclusive jurisdiction are
security and medicare benefits and as otherwise provided in Article 128 of comprehensive enough to include claims for moral damages of a dismissed
this Code; employee against his employer. (Vargas v. Akai Phil. Inc., 156 SCRA 531
[1987]).
(4) Cases involving household services; and
On the issue whether or not the petitioner is entitled to his claim for moral
(5) All other cases arising from employer-employee relationship unless damages, we are constrained to decide in the negative. The case of Primero
expressly excluded by this Code. v. Intermediate Appellate Court, (156 SCRA 435 [1987]) expounded on this
matter, to wit:
(b) The Commission shall have exclusive appellate jurisdiction over all cases
decided by Labor Arbiters, compulsory arbitrators, and voluntary arbitrators xxx xxx xxx
in appropriate casino provided in Article 263 of this Code. ...
The legislative intent appears clear to allow recovery in proceedings before It is clear that the question of the legality of the act of dismissal is intimately
Labor Arbiters of moral and other forms of damages, in all cases or matters related to the issue of the legality of the manner by which that act of
arising from employer-employee relations. This would no doubt include, dismissal was performed. But while the Labor Code treats of the nature of,
particularly, instances where an employee has been unlawfully dismissed. In and the remedy available as regards the first the employee's separation
such a case the Labor Arbiter has jurisdiction to award to the dismissed from employment it does not at all deal with the second the manner of that
employee not only the reliefs specifically provided by labor laws, but also separation which is governed exclusively by the Civil Code. In addressing the
moral and the forms of damages governed by the Civil Code. Moral damages first issue, the Labor Arbiter applies the Labor Code; in addressing the
would be recoverable, for example, where the dismissal of the employee second, the Civil Code. And this appears to be the plain and patent
was not only effected without authorized cause and/or due process — for intendment of the law. For apart from the reliefs expressly set out in the
which relief is granted by the Labor Code — but was attended by bad faith Labor Code flowing from illegal dismiss from employment, no other
or fraud, or constituted an act oppressive to labor, or was done in a manner damages may be awarded to an illegally dismiss employee other than those
contrary to morals, good customs or public policy-for which the obtainable specified by the Civil Code. Hence, the fact that the issue of whether or not
relief is determined by 'the Civil Code (not the Labor moral or other damages were suffered by an employee and in the
Code).lâwphî1.ñèt Stated otherwise, if the evidence adduced by the affirmative, the amount that should properly be awarded to him in the
employee before the Labor Arbiter should establish that the employer did circumstances is determined under the provisions of the Civil Code and not
indeed terminate the employee's services without just cause or without the Labor Code. ... (P. 445)
according him due process, the Labor Arbiter's judgment shall be for the
In the case of Guita v. Court of Appeals (139 SCRA 576 [1985]), we stated
employer to reinstate the employee and pay him his back wages, or
exceptionally, for the employee simply to receive separation pay. These are that:
reliefs explicitly prescribed by the Labor Code. But any award of moral Moral damages may be awarded to compensate one for diverse injuries
damages by the Labor Arbiter obviously cannot be based on the Labor Code such as mental anguish, besmirched reputation, wounded feelings and social
but should be grounded on the Civil Code. Such an award cannot be justified humiliation. It is however not enough that such injuries have arisen; it is
solely upon the premise (otherwise sufficient for redress under the Labor essential that they have sprung from a wrongful act or omission of the
Code) that the employer fired his employee without just cause or due defendant which was the proximate cause thereof.
process. Additional facts must be pleaded and proven to warrant the grant
of moral damages under the Civil Code, these being, to repeat, that the act Moral damages include physical suffering, mental anguish, fright, serious
of dismissal was attended by bad faith or fraud, or was oppressive to labor, anxiety, besmirched reputation, wounded feelings, moral shock, social
or done in a manner contrary to morals, good customs, or public policy; and, humiliation, and similar injury. Though incapable of pecuniary computation,
of course, that social humiliation, wounded feelings, grave anxiety, etc., moral damages may be recovered if they are the proximate result of the
resulted therefrom. (pp. 443-444, emphasis supplied) defendant's wrongful act or omission. (Civil Code, Article 2217).

The case of Primero v. IAC states the distinction between the two seemingly In a long line of cases, we have consistently ruled that in the absence of a
disparate causes of action, to wit: wrongful act or omission or of fraud or bad faith, moral damages cannot be
awarded. . . (R & B Surety and Insurance Co., Inc. v. IAC, 129 SCRA 736, 743.)
(p. 580)
We do not find any bad faith or fraud on the part of the bank officials who asked for a reconsideration but notwithstanding its denial, the petitioner
denied the petitioner's request for a six months' leave of absence without proceeded with his review. Whether or not his request for six months' leave
pay. If the petitioner was made to believe that his request would be granted, without pay would be granted, the petitioner was set on continuing with his
we can not fault the branch manager or his subsequent replacement for review.
giving their assurances. They were merely personal assurances which could
Neither can we consider the private respondents' response to the
be reconsidered on the basis of later developments or upon consultation
with higher authorities and which are not binding. Certainly, the bank petitioner's query regarding his status as having given him false hopes. The
referral to the personnel department was merely a part of the formal
officials who gave their verbal assurances had only the petitioner's
paramount welfare in their minds. There is no evidence to show that they procedure undertaken by the bank. Such referral does not show that the
bank acted in a wanton or willful manner.
meant to deceive the petitioner. They themselves thought that such a
request would be granted. Unfortunately, company policy had to be In the light of the foregoing, we sustain the Labor Arbiter's finding that the
followed. The fact that the petitioner's request for six months' leave of petitioner's claim for damages must be dismissed for lack of sufficient basis.
absence was denied does not ipso facto entitle him to damages.
WHEREFORE, the petition is hereby DISMISSED for lack of merit.
As held in the case of Rubio v. Court of Appeals (141 SCRA 488 [1986]):
SO ORDERED.
xxx xxx xxx

In a long line of cases, we have consistently ruled that in the absence of a


wrongful act or omission or of fraud or bad faith, moral damages cannot be G.R. No. 157010 June 21, 2005
awarded and that the adverse result of an action does not per se make the
PHILIPPINE NATIONAL BANK, petitioner,
action wrongful and subject the actor to have payment of damages, for the
vs.
law could not have meant to impose a penalty on the right to litigate. ... (p.
FLORENCE O. CABANSAG, respondent.
516)
DECISION
It is incumbent upon the petitioner to prove that there was malice or bad
faith on the part of the private respondents in terminating him On the PANGANIBAN, J.:
contrary, the records of this petition show that the private respondent acted
in accordance with law before effecting the dismissal. The records also show The Court reiterates the basic policy that all Filipino workers, whether
that there was a prior application with the Ministry of Labor to terminate employed locally or overseas, enjoy the protective mantle of Philippine labor
the petitioner's employment. A copy of said application was furnished to the and social legislations. Our labor statutes may not be rendered ineffective by
petitioner. The petitioner, however, did not oppose such application nor did laws or judgments promulgated, or stipulations agreed upon, in a foreign
he do anything to preserve his right. country.

More pertinent is the fact that the petitioner knew as early as May 6, 1976 The Case
that he was granted only a one month study leave (rollo, p. 98). He may have
Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of employee of the Singapore PNB Branch. Her application was approved for a
Court, seeking to reverse and set aside the July 16, 2002 Decision 2 and the period of two (2) years.
January 29, 2003 Resolution3 of the Court of Appeals (CA) in CA-GR SP No.
"On December 7, 1998, Ruben C. Tobias wrote a letter to Florence O.
68403. The assailed Decision dismissed the CA Petition (filed by herein
petitioner), which had sought to reverse the National Labor Relations Cabansag offering her a temporary appointment, as Credit Officer, at a basic
salary of Singapore Dollars 4,500.00, a month and, upon her successful
Commission (NLRC)’s June 29, 2001 Resolution,4 affirming Labor Arbiter Joel
S. Lustria’s January 18, 2000 Decision.5 completion of her probation to be determined solely, by the Bank, she may
be extended at the discretion of the Bank, a permanent appointment and
The assailed CA Resolution denied herein petitioner’s Motion for that her temporary appointment was subject to the following terms and
Reconsideration. conditions:

The Facts ‘1. You will be on probation for a period of three (3) consecutive months
from the date of your assumption of duty.
The facts are narrated by the Court of Appeals as follows:
‘2. You will observe the Bank’s rules and regulations and those that may be
"In late 1998, [herein Respondent Florence Cabansag] arrived in Singapore adopted from time to time.
as a tourist. She applied for employment, with the Singapore Branch of the
Philippine National Bank, a private banking corporation organized and ‘3. You will keep in strictest confidence all matters related to transactions
existing under the laws of the Philippines, with principal offices at the PNB between the Bank and its clients.
Financial Center, Roxas Boulevard, Manila. At the time, the Singapore PNB
Branch was under the helm of Ruben C. Tobias, a lawyer, as General ‘4. You will devote your full time during business hours in promoting the
business and interest of the Bank.
Manager, with the rank of Vice-President of the Bank. At the time, too, the
Branch Office had two (2) types of employees: (a) expatriates or the regular ‘5. You will not, without prior written consent of the Bank, be employed in
employees, hired in Manila and assigned abroad including Singapore, and anyway for any purpose whatsoever outside business hours by any person,
(b) locally (direct) hired. She applied for employment as Branch Credit firm or company.
Officer, at a total monthly package of $SG4,500.00, effective upon
assumption of duties after approval. Ruben C. Tobias found her eminently ‘6. Termination of your employment with the Bank may be made by either
qualified and wrote on October 26, 1998, a letter to the President of the party after notice of one (1) day in writing during probation, one month
Bank in Manila, recommending the appointment of Florence O. Cabansag, notice upon confirmation or the equivalent of one (1) day’s or month’s
for the position. salary in lieu of notice.’

xxxxxxxxx "Florence O. Cabansag accepted the position and assumed office. In the
meantime, the Philippine Embassy in Singapore processed the employment
"The President of the Bank was impressed with the credentials of Florence contract of Florence O. Cabansag and, on March 8, 1999, she was issued by
O. Cabansag that he approved the recommendation of Ruben C. Tobias. She the Philippine Overseas Employment Administration, an ‘Overseas
then filed an ‘Application,’ with the Ministry of Manpower of the
Government of Singapore, for the issuance of an ‘Employment Pass’ as an
Employment Certificate,’ certifying that she was a bona fide contract worker that she be given sufficient time to look for another job. Ruben C. Tobias
for Singapore. told her that she should be ‘out’ of her employment by May 15, 1999.

xxxxxxxxx "However, on April 19, 1999, Ruben C. Tobias again summoned Florence O.
Cabansag and adamantly ordered her to submit her letter of resignation.
"Barely three (3) months in office, Florence O. Cabansag submitted to Ruben She refused. On April 20, 1999, she received a letter from Ruben C. Tobias
C. Tobias, on March 9, 1999, her initial ‘Performance Report.’ Ruben C. terminating her employment with the Bank.
Tobias was so impressed with the ‘Report’ that he made a notation and, on
said ‘Report’: ‘GOOD WORK.’ However, in the evening of April 14, 1999, xxxxxxxxx
while Florence O. Cabansag was in the flat, which she and Cecilia Aquino,
the Assistant Vice-President and Deputy General Manager of the Branch and "On January 18, 2000, the Labor Arbiter rendered judgment in favor of the
Complainant and against the Respondents, the decretal portion of which
Rosanna Sarmiento, the Chief Dealer of the said Branch, rented, she was
told by the two (2) that Ruben C. Tobias has asked them to tell Florence O. reads as follows:
Cabansag to resign from her job. Florence O. Cabansag was perplexed at the ‘WHEREFORE, considering the foregoing premises, judgment is hereby
sudden turn of events and the runabout way Ruben C. Tobias procured her rendered finding respondents guilty of Illegal dismissal and devoid of due
resignation from the Bank. The next day, Florence O. Cabansag talked to process, and are hereby ordered:
Ruben C. Tobias and inquired if what Cecilia Aquino and Rosanna Sarmiento
had told her was true. Ruben C. Tobias confirmed the veracity of the 1. To reinstate complainant to her former or substantially equivalent
information, with the explanation that her resignation was imperative as a position without loss of seniority rights, benefits and privileges;
‘cost-cutting measure’ of the Bank. Ruben C. Tobias, likewise, told Florence
2. Solidarily liable to pay complainant as follows:
O. Cabansag that the PNB Singapore Branch will be sold or transformed into
a remittance office and that, in either way, Florence O. Cabansag had to a) To pay complainant her backwages from 16 April 1999 up to her actual
resign from her employment. The more Florence O. Cabansag was reinstatement. Her backwages as of the date of the promulgation of this
perplexed. She then asked Ruben C. Tobias that she be furnished with a decision amounted to SGD 40,500.00 or its equivalent in Philippine Currency
‘Formal Advice’ from the PNB Head Office in Manila. However, Ruben C. at the time of payment;
Tobias flatly refused. Florence O. Cabansag did not submit any letter of
resignation. b) Mid-year bonus in the amount of SGD 2,250.00 or its equivalent in
Philippine Currency at the time of payment;
"On April 16, 1999, Ruben C. Tobias again summoned Florence O. Cabansag
to his office and demanded that she submit her letter of resignation, with c) Allowance for Sunday banking in the amount of SGD 120.00 or its
the pretext that he needed a Chinese-speaking Credit Officer to penetrate equivalent in Philippine Currency at the time of payment;
the local market, with the information that a Chinese-speaking Credit Officer
d) Monetary equivalent of leave credits earned on Sunday banking in the
had already been hired and will be reporting for work soon. She was warned
amount of SGD 1,557.67 or its equivalent in Philippine Currency at the time
that, unless she submitted her letter of resignation, her employment record
of payment;
will be blemished with the notation ‘DISMISSED’ spread thereon. Without
giving any definitive answer, Florence O. Cabansag asked Ruben C. Tobias
e) Monetary equivalent of unused sick leave benefits in the amount of SGD herself solely to the Ministry of Manpower of Singapore’s jurisdiction over
1,150.60 or its equivalent in Philippine Currency at the time of payment. disputes arising from her employment. The appellate court further noted
that a cursory reading of the Ministry’s letter will readily show that no such
f) Monetary equivalent of unused vacation leave benefits in the amount of waiver or submission is stated or implied.
SGD 319.85 or its equivalent in Philippine Currency at the time of payment.
Finally, the CA held that petitioner had failed to establish a just cause for the
g) 13th month pay in the amount of SGD 4,500.00 or its equivalent in dismissal of respondent. The bank had also failed to give her sufficient
Philippine Currency at the time of payment; notice and an opportunity to be heard and to defend herself. The CA ruled
3. Solidarily to pay complainant actual damages in the amount of SGD that she was consequently entitled to reinstatement and back wages,
1,978.00 or its equivalent in Philippine Currency at the time of payment, and computed from the time of her dismissal up to the time of her
moral damages in the amount of PhP 200,000.00, exemplary damages in the reinstatement.
amount of PhP 100,000.00; Hence, this Petition.7
4. To pay complainant the amount of SGD 5,039.81 or its equivalent in Issues
Philippine Currency at the time of payment, representing attorney’s fees.
Petitioner submits the following issues for our consideration:
SO ORDERED." 6 [Emphasis in the original.]
"1. Whether or not the arbitration branch of the NLRC in the National
PNB appealed the labor arbiter’s Decision to the NLRC. In a Resolution dated Capital Region has jurisdiction over the instant controversy;
June 29, 2001, the Commission affirmed that Decision, but reduced the
moral damages to P100,000 and the exemplary damages to P50,000. In a "2. Whether or not the arbitration of the NLRC in the National Capital
subsequent Resolution, the NLRC denied PNB’s Motion for Reconsideration. Region is the most convenient venue or forum to hear and decide the
instant controversy; and
Ruling of the Court of Appeals
"3. Whether or not the respondent was illegally dismissed, and therefore,
In disposing of the Petition for Certiorari, the CA noted that petitioner bank entitled to recover moral and exemplary damages and attorney’s fees." 8
had failed to adduce in evidence the Singaporean law supposedly governing
the latter’s employment Contract with respondent. The appellate court In addition, respondent assails, in her Comment, 9 the propriety of Rule 45 as
found that the Contract had actually been processed by the Philippine the procedural mode for seeking a review of the CA Decision affirming the
Embassy in Singapore and approved by the Philippine Overseas Employment NLRC Resolution. Such issue deserves scant consideration. Respondent
Administration (POEA), which then used that Contract as a basis for issuing miscomprehends the Court’s discourse in St. Martin Funeral Home v.
an Overseas Employment Certificate in favor of respondent. NLRC,10 which has indeed affirmed that the proper mode of review of NLRC
decisions, resolutions or orders is by a special civil action for certiorari under
According to the CA, even though respondent secured an employment pass Rule 65 of the Rules of Court. The Supreme Court and the Court of Appeals
from the Singapore Ministry of Employment, she did not thereby waive have concurrent original jurisdiction over such petitions for certiorari. Thus,
Philippine labor laws, or the jurisdiction of the labor arbiter or the NLRC
over her Complaint for illegal dismissal. In so doing, neither did she submit
in observance of the doctrine on the hierarchy of courts, these petitions 2. Termination disputes;
should be initially filed with the CA.11
3. If accompanied with a claim for reinstatement, those cases that workers
Rightly, the bank elevated the NLRC Resolution to the CA by way of a may file involving wage, rates of pay, hours of work and other terms and
Petition for Certiorari. In seeking a review by this Court of the CA Decision -- conditions of employment
on questions of jurisdiction, venue and validity of employment termination
4. Claims for actual, moral, exemplary and other forms of damages arising
-- petitioner is likewise correct in invoking Rule 45. 12
from the employer-employee relations;
It is true, however, that in a petition for review on certiorari, the scope of
5. Cases arising from any violation of Article 264 of this Code, including
the Supreme Court’s judicial review of decisions of the Court of Appeals is
generally confined only to errors of law. It does not extend to questions of questions involving the legality of strikes and lockouts; and
fact. This doctrine applies with greater force in labor cases. Factual 6. Except claims for Employees Compensation, Social Security, Medicare and
questions are for the labor tribunals to resolve. 13In the present case, the maternity benefits, all other claims, arising from employer-employee
labor arbiter and the NLRC have already determined the factual issues. Their relations, including those of persons in domestic or household service,
findings, which are supported by substantial evidence, were affirmed by the involving an amount of exceeding five thousand pesos (P5,000.00)
CA. Thus, they are entitled to great respect and are rendered conclusive regardless of whether accompanied with a claim for reinstatement.
upon this Court, absent a clear showing of palpable error or arbitrary
disregard of evidence.14 (b) The commission shall have exclusive appellate jurisdiction over all cases
decided by Labor Arbiters.
The Court’s Ruling
x x x x x x x x x."
The Petition has no merit.
More specifically, Section 10 of RA 8042 reads in part:
First Issue:
"SECTION 10. Money Claims. — Notwithstanding any provision of law to the
Jurisdiction contrary, the Labor Arbiters of the National Labor Relations Commission
The jurisdiction of labor arbiters and the NLRC is specified in Article 217 of (NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after the filing of the complaint, the claims
the Labor Code as follows:
arising out of an employer-employee relationship or by virtue of any law or
"ART. 217. Jurisdiction of Labor Arbiters and the Commission. – (a) Except as contract involving Filipino workers for overseas deployment including claims
otherwise provided under this Code the Labor Arbiters shall have original for actual, moral, exemplary and other forms of damages.
and exclusive jurisdiction to hear and decide, within thirty (30) calendar days
x x x x x x x x x"
after the submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the following cases Based on the foregoing provisions, labor arbiters clearly have original and
involving all workers, whether agricultural or non-agricultural: exclusive jurisdiction over claims arising from employer-employee relations,
1. Unfair labor practice cases;
including termination disputes involving all workers, among whom are that respondent was "locally hired"; and totally "governed by and subject to
overseas Filipino workers (OFW).15 the laws, common practices and customs" of Singapore, not of the
Philippines. Instead, with more reason does this fact reinforce the
We are not unmindful of the fact that respondent was directly hired, while presumption that respondent falls under the legal definition of migrant
on a tourist status in Singapore, by the PNB branch in that city state. Prior to worker, in this case one deployed in Singapore. Hence, petitioner cannot
employing respondent, petitioner had to obtain an employment pass for her escape the application of Philippine laws or the jurisdiction of the NLRC and
from the Singapore Ministry of Manpower. Securing the pass was a the labor arbiter.
regulatory requirement pursuant to the immigration regulations of that
country.16 In any event, we recall the following policy pronouncement of the Court
in Royal Crown Internationale v. NLRC:20
Similarly, the Philippine government requires non-Filipinos working in the
country to first obtain a local work permit in order to be legally employed "x x x. Whether employed locally or overseas, all Filipino workers enjoy the
here. That permit, however, does not automatically mean that the non- protective mantle of Philippine labor and social legislation, contract
citizen is thereby bound by local laws only, as averred by petitioner. It does stipulations to the contrary notwithstanding. This pronouncement is in
not at all imply a waiver of one’s national laws on labor. Absent any clear keeping with the basic public policy of the State to afford protection to labor,
and convincing evidence to the contrary, such permit simply means that its promote full employment, ensure equal work opportunities regardless of
holder has a legal status as a worker in the issuing country.1avvphil.zw+ sex, race or creed, and regulate the relations between workers and
employers.1awphi1.net For the State assures the basic rights of all workers
Noteworthy is the fact that respondent likewise applied for and secured an to self-organization, collective bargaining, security of tenure, and just and
Overseas Employment Certificate from the POEA through the Philippine humane conditions of work [Article 3 of the Labor Code of the
Embassy in Singapore. The Certificate, issued on March 8, 1999, declared Philippines; See also Section 18, Article II and Section 3, Article XIII, 1987
her a bona fide contract worker for Singapore. Under Philippine law, this Constitution]. This ruling is likewise rendered imperative by Article 17 of the
document authorized her working status in a foreign country and entitled Civil Code which states that laws ‘which have for their object public order,
her to all benefits and processes under our statutes. Thus, even public policy and good customs shall not be rendered ineffective by laws or
assuming arguendothat she was considered at the start of her employment judgments promulgated, or by determination or conventions agreed upon in
as a "direct hire" governed by and subject to the laws, common practices a foreign country.’"
and customs prevailing in Singapore 17 she subsequently became a contract
worker or an OFW who was covered by Philippine labor laws and policies Second Issue:
upon certification by the POEA. At the time her employment was illegally
terminated, she already possessed the POEA employment Certificate. Proper Venue

Section 1(a) of Rule IV of the NLRC Rules of Procedure reads:


Moreover, petitioner admits that it is a Philippine corporation doing
business through a branch office in Singapore. 18 Significantly, respondent’s "Section 1. Venue – (a) All cases which Labor Arbiters have authority to hear
employment by the Singapore branch office had to be approved by and decide may be filed in the Regional Arbitration Branch having
Benjamin P. Palma Gil,19 the president of the bank whose principal offices jurisdiction over the workplace of the complainant/petitioner; Provided,
were in Manila. This circumstance militates against petitioner’s contention however that cases of Overseas Filipino Worker (OFW) shall be filed before
the Regional Arbitration Branch where the complainant resides or where the accordance with Article 281 of the Labor Code: "An employee who is
principal office of the respondent/employer is situated, at the option of the allowed to work after a probationary period shall be considered a regular
complainant. employee." Indeed, petitioner recognized respondent as such at the time it
dismissed her, by giving her one month’s salary in lieu of a one-month
"For purposes of venue, workplace shall be understood as the place or notice, consistent with provision No. 6 of her employment Contract.
locality where the employee is regularly assigned when the cause of action
arose. It shall include the place where the employee is supposed to report Notice and Hearing Not Complied With
back after a temporary detail, assignment or travel. In the case of field
As a regular employee, respondent was entitled to all rights, benefits and
employees, as well as ambulant or itinerant workers, their workplace is
where they are regularly assigned, or where they are supposed to regularly privileges provided under our labor laws. One of her fundamental rights is
that she may not be dismissed without due process of law. The twin
receive their salaries/wages or work instructions from, and report the
results of their assignment to their employers." requirements of notice and hearing constitute the essential elements of
procedural due process, and neither of these elements can be eliminated
Under the "Migrant Workers and Overseas Filipinos Act of 1995" (RA 8042), without running afoul of the constitutional guarantee. 22
a migrant worker "refers to a person who is to be engaged, is engaged or has
In dismissing employees, the employer must furnish them two written
been engaged in a remunerated activity in a state of which he or she is not a
legal resident; to be used interchangeably with overseas Filipino notices: 1) one to apprise them of the particular acts or omissions for which
their dismissal is sought; and 2) the other to inform them of the decision to
worker."21 Undeniably, respondent was employed by petitioner in its branch
office in Singapore. Admittedly, she is a Filipino and not a legal resident of dismiss them. As to the requirement of a hearing, its essence lies simply in
the opportunity to be heard.23
that state. She thus falls within the category of "migrant worker" or
"overseas Filipino worker." The evidence in this case is crystal-clear. Respondent was not notified of the
specific act or omission for which her dismissal was being sought. Neither
As such, it is her option to choose the venue of her Complaint against
petitioner for illegal dismissal. The law gives her two choices: (1) at the was she given any chance to be heard, as required by law. At any rate, even
if she were given the opportunity to be heard, she could not have defended
Regional Arbitration Branch (RAB) where she resides or (2) at the RAB where
the principal office of her employer is situated. Since her dismissal by herself effectively, for she knew no cause to answer to.
petitioner, respondent has returned to the Philippines -- specifically to her All that petitioner tendered to respondent was a notice of her employment
residence at Filinvest II, Quezon City. Thus, in filing her Complaint before the termination effective the very same day, together with the equivalent of a
RAB office in Quezon City, she has made a valid choice of proper venue. one-month pay. This Court has already held that nothing in the law gives an
Third Issue: employer the option to substitute the required prior notice and opportunity
to be heard with the mere payment of 30 days’ salary. 24
Illegal Dismissal
Well-settled is the rule that the employer shall be sanctioned for
The appellate court was correct in holding that respondent was already a noncompliance with the requirements of, or for failure to observe, due
regular employee at the time of her dismissal, because her three-month process that must be observed in dismissing an employee. 25
probationary period of employment had already ended. This ruling is in
No Valid Cause for Dismissal Finally, moral damages are recoverable when the dismissal of an employee
is attended by bad faith or constitutes an act oppressive to labor or is done
Moreover, Articles 282,26 28327 and 28428 of the Labor Code provide the valid in a manner contrary to morals, good customs or public policy. 34 Awards for
grounds or causes for an employee’s dismissal. The employer has the burden moral and exemplary damages would be proper if the employee was
of proving that it was done for any of those just or authorized causes. The harassed and arbitrarily dismissed by the employer. 35
failure to discharge this burden means that the dismissal was not justified,
and that the employee is entitled to reinstatement and back wages. 29 In affirming the awards of moral and exemplary damages, we quote with
approval the following ratiocination of the labor arbiter:
Notably, petitioner has not asserted any of the grounds provided by law as a
valid reason for terminating the employment of respondent. It merely insists "The records also show that [respondent’s] dismissal was effected by
that her dismissal was validly effected pursuant to the provisions of her [petitioners’] capricious and high-handed manner, anti-social and
employment Contract, which she had voluntarily agreed to be bound to. oppressive, fraudulent and in bad faith, and contrary to morals, good
customs and public policy. Bad faith and fraud are shown in the acts
Truly, the contracting parties may establish such stipulations, clauses, terms committed by [petitioners] before, during and after [respondent’s] dismissal
and conditions as they want, and their agreement would have the force of in addition to the manner by which she was dismissed. First, [respondent]
law between them. However, petitioner overlooks the qualification that was pressured to resign for two different and contradictory reasons, namely,
those terms and conditions agreed upon must not be contrary to law, cost-cutting and the need for a Chinese[-]speaking credit officer, for which
morals, customs, public policy or public order. 30 As explained earlier, the no written advice was given despite complainant’s request. Such wavering
employment Contract between petitioner and respondent is governed by stance or vacillating position indicates bad faith and a dishonest purpose.
Philippine labor laws. Hence, the stipulations, clauses, and terms and Second, she was employed on account of her qualifications, experience and
conditions of the Contract must not contravene our labor law provisions. readiness for the position of credit officer and pressured to resign a month
Moreover, a contract of employment is imbued with public interest. The after she was commended for her good work. Third, the demand for
Court has time and time again reminded parties that they "are not at liberty [respondent’s] instant resignation on 19 April 1999 to give way to her
to insulate themselves and their relationships from the impact of labor laws replacement who was allegedly reporting soonest, is whimsical, fraudulent
and regulations by simply contracting with each other." 31 Also, while a and in bad faith, because on 16 April 1999 she was given a period of [sic]
contract is the law between the parties, the provisions of positive law that until 15 May 1999 within which to leave. Fourth, the pressures made on her
regulate such contracts are deemed included and shall limit and govern the to resign were highly oppressive, anti-social and caused her absolute
relations between the parties.32 torture, as [petitioners] disregarded her situation as an overseas worker
away from home and family, with no prospect for another job. She was not
Basic in our jurisprudence is the principle that when there is no showing of even provided with a return trip fare. Fifth, the notice of termination is an
any clear, valid, and legal cause for the termination of employment, the law utter manifestation of bad faith and whim as it totally disregards
considers the matter a case of illegal dismissal. 33 [respondent’s] right to security of tenure and due process. Such notice
together with the demands for [respondent’s] resignation contravenes the
Awards for Damages Justified
fundamental guarantee and public policy of the Philippine government on
security of tenure.
"[Respondent] likewise established that as a proximate result of her
dismissal and prior demands for resignation, she suffered and continues to
suffer mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock and social humiliation. Her standing in the
social and business community as well as prospects for employment with
other entities have been adversely affected by her dismissal. [Petitioners]
are thus liable for moral damages under Article 2217 of the Civil Code.

xxxxxxxxx

"[Petitioners] likewise acted in a wanton, oppressive or malevolent manner


in terminating [respondent’s] employment and are therefore liable for
exemplary damages. This should served [sic] as protection to other
employees of [petitioner] company, and by way of example or correction for
the public good so that persons similarly minded as [petitioners] would be
deterred from committing the same acts."36

The Court also affirms the award of attorney’s fees. It is settled that when an
action is instituted for the recovery of wages, or when employees are forced
to litigate and consequently incur expenses to protect their rights and G.R. Nos. L-53364-65 March 16, 1987
interests, the grant of attorney’s fees is legally justifiable. 37
DOMICIANO SOCO, petitioner,
WHEREFORE, the Petition is DENIED and the assailed Decision and vs.
Resolution AFFIRMED. Costs against petitioner. MERCANTILE CORPORATION OF DAVAO AND THE HONORABLE AMADO G.
INCIONG, DEPUTY MINISTER, MINISTRY OF LABOR, respondents.
SO ORDERED.
Antonio Ladlao for petitioner.

Rodolfo A. Ta-asan for private respondent.

ALAMPAY, J.:

Petition for certiorari to annul the order dated October 25, 1979 of the
former Deputy Minister of Labor in Case No. ROXI-C-209-79 and Case No.
LR-30-79, which affirmed the order dated May 31, 1979 of the Regional
Director, granting the application of private respondent Mercantile
Corporation of Davao (MERCO), for clearance to terminate petitioner Gempesaw Store at Gempesaw Street, Davao City. After making these
Domiciano Soco and dismissing the latter's complaint for unfair labor deliveries, petitioner then proceeded to the Office of SPFL Union at the
practice. Puericulture Center building located on Alvarez Street. John Ferrazzini,
Manager of MERCO saw the company vehicle parked along the street, After
Private respondent is engaged in the sale and distribution of ice cream in verifying that petitioner was the driver of the MERCO Ford Fiera van, he
Davao City. Petitioner who was employed as driver of MERCO's delivery van, then called for Rogelio Galagar, Secretary of the MELU and another
was the President of the MERCO Employees Labor Union (MELU), an affiliate employee and in their presence, the MERCO manager took out the rotor of
of the Federation of Free Workers (FFW). In the last week of January, 1979, the van. Later that morning, when petitioner came out of the building he
the personnel officer of private respondent conducted an investigation due was unable to start the engine of the vehicle and he called for company
to reports that petitioner was carrying on his union MELU activities during assistance. An officer of MERCO advised petitioner to report to his office
his working hours for the purpose of transferring his Union's affiliation from because of the said incident in order to explain his unauthorized deviation
the FFW to the Southern Philippines Federation of Labor (SPFL) and for this but petitioner did not do so. On February 14, 1979, respondent MERCO
purpose he was even utilizing the company vehicle of MERCO, in violation of wrote the FFW to which MELU was affiliated and the petitioner herein was
the Company's Rule No. 19(a) which prescribes a penalty of suspension of the President, for a grievance conference on February 15, 1979, but this was
15 days for the first offense and dismissal for succeeding offenses. reset to February 21, 1979 to afford FFW sufficient time to notify petitioner
It appears that on January 25, 1979, petitioner was ordered to deliver ice Domiciano Soco. On February 20, 1979, FFW informed MERCO that the
cream to the Imperial Hotel and Maguindanao Hotel at CM Recto Avenue requested grievance conference would not be held because petitioner
and to Your Goody Mart at Anda Street, all in Davao City, but he deviated Domiciano Soco finds it unnecessary to do so.
from the usual route and went to Kiosk No. 4 on San Pedro Street to talk to On his part, petitioner filed on February 14, 1979 a complaint for unfair
Bartolome Calago, a co-employee, but who was then off-duty. The personnel labor practice against MERCO, docketed by the Regional Office of the
officer of MERCO advised petitioner to report to his office to explain his Ministry of Labor, Davao City, as LRD Case No. LR-30-79. Petitioner alleged
unauthorized deviation in connection with said incident but petitioner did therein that the five (5) days suspension imposed on him by respondent
not comply. On January 30, 1979, MERCO wrote the FFW to which MELU Company, was on account of his union activities.
was affiliated and wherein petitioner Domiciano Soco was the President
asking for a grievance conference to be scheduled not later than February On February 21, 1979, petitioner was placed on preventive suspension
13, 1979. When petitioner manifested his unwillingness to attend the pending the approval of MERCO's application for clearance to terminate the
grievance conference in his belief that such is not necessary, FFW relayed services of the former. This application was filed with the Ministry of Labor
this information to MERCO. Due to the refusal of petitioner to submit on February 22, 1979 and docketed therein as LRD Case No. ROXI-C-209-79.
himself to a formal conference, MERCO, in a memorandum dated February MERCO's application for clearance to terminate was opposed by petitioner
13, 1979 suspended petitioner for five (5) days, effective February 15, 1979, even as MERCO filed its Answer to the complaint against it for unfair labor
for violation of Company Rule No. 19(a). Then a report of this action taken practice, on March 7, 1979.
was filed with the Ministry of Labor.
The two cases were consolidated and tried jointly as agreed to by the
On February 13, 1979, at 10:30 A.M., petitioner was instructed to deliver ice contending parties. In an order dated May 21, 1979, the Regional Director
cream to the New City Commercial Corporation at R. Magsaysay Avenue and granted private respondent's application to terminate the employment of
petitioner. He upheld the preventive suspension imposed by MERCO on accepting the judgment, only if favorable, and attacking it for lack of
herein petitioner and dismissed the latter's complaint for unfair labor jurisdiction when adverse."
practice. Said order was then appealed by herein petitioner but the Deputy
In Ching vs. Ramolete, 51 SCRA 14, this view was reiterated, and We quote:
Minister of Labor, on October 25, 1979, affirmed the appealed order. The
dismissal of petitioner's appeal led to the filing of the instant petition for xxx xxx xxx
certiorari.
Having invoked the jurisdiction of the trial court to secure an affirmative
Petitioner assails the action taken by the respondent Deputy Minister of relief against his opponents, petitioner may not now be allowed to
Labor as done with grave abuse of discretion amounting to lack of or in repudiate or question the same jurisdiction after failing to obtain such relief.
excess of jurisdiction. Petitioner contends that Policy Instruction No. 6 of the While jurisdiction of a tribunal may be challenged at any time, sound public
Ministry of Labor and Employment (MOLE) indicates that the Regional policy bars petitioner from doing so after having procured that jurisdiction
Director has no jurisdiction to hear and decide unfair labor practice cases himself, speculating on the fortunes of litigation.
because the exclusive original jurisdiction over such labor cases belongs to
the Conciliation Section of the Regional Office of the MOLE. Petitioner avers, Petitioner avers that respondent Minister of Labor erred in affirming the
that such cases, therefore, should be first resolved by the Labor Arbiter and findings of the Regional Director that he violated Company Rules No. 19(a)
not the Regional Director. twice and his dismissal was, therefore, unwarranted. This issue raised by
petitioner relates to questions of fact. It has been held, however, in
This contention is undeserving of the Court's favor. numerous cases, that as a general rule, the findings of fact of the trial court
The fact appears that at the initial hearing conducted on March 7, 1979 by or quasi-judicial bodies are binding on this Court. This principle should be
applied in the instant cases, considering that the findings of respondent
the Regional Director, it was agreed upon by the parties to consolidate the
two cases being litigated considering that both cases concern the same Deputy Minister of Labor are supported by the evidence he appreciated. As
a matter of fact, the petitioner was caught for the second time by no less
parties and the issues involved are interrelated (Decision of the Regional
Director, p. 20, Rollo). Petitioner obviously accepted the jurisdiction of the than the Manager of respondent's company, in actual violation of the rule
prohibiting the use of the company vehicle for private purposes.
Regional Director by presenting his evidence. By having asked for affirmative
relief, without challenging the Regional Director's power to hear and try his Lastly, petitioner asserts that in affirming his dismissal, the Deputy Minister
complaint for unfair labor practice, he cannot rightfully now challenge the of Labor violated the constitutional provision of the security of tenure of
resolution made in said cases by the same Director, based on the latter's employees and that assuming that he indeed violated the company rule, the
alleged lack of jurisdiction. fact remains that the damage caused by him, if any, to the company, is only
In the case of Tijam vs. Sibonghanoy, 23 SCRA 29, it has been stated that very minimal which should not warrant the imposition of a penalty of
dismissal. Petitioner submits that he has been employed in the company for
"after voluntarily submitting a cause and encountering an adverse decision
on the merits, it is too late for the loser to question the jurisdiction or power eighteen (18) years. Petitioner avers that the damage inflicted on MERCO by
his activities due to his misuse of the company vehicle during working hours
of the court." Therein, We stated that the Court "frowns upon the
undesirable practice of a party submitting his case for decision and then did not hamper the smooth business operations of MERCO.
However, what should not be overlooked is the prerogative of an employer separation pay, equivalent to one month salary for every year of his service
company to prescribe reasonable rules and regulations necessary or proper to said Company.
for the conduct of its business and to provide certain disciplinary measures
WHEREFORE, the petition is hereby DISMISSED but respondent Mercantile
in order to implement said rules and to assure that the same would be
complied with. A rule prohibiting employees from using company vehicles Corporation of Davao (MERCO) is, nevertheless, ordered to grant the
petitioner herein separation pay, equivalent to one (1) month salary for
for private purpose without authority from management is, from our
viewpoint, a reasonable one. This regulation cannot be faulted by petitioner every year of his service.
because this is proper and necessary even if only for an orderly conduct of No pronouncement as to costs.
MERCO's business. From the evidence presented, petitioner twice used the
company vehicle in pursuing his own personal interests, on company time SO ORDERED.
and deviating from his authorized route, all without permission. To cap off
his infractions, petitioners stubbornly declined even to satisfy MERCO's
request for an explanation or to attend a grievance conference to discuss
violations. Certainly, to condone petitioner's own conduct will erode the
discipline that an employer should uniformly apply so that it can expect
compliance to the same rules and regulations by its other employees.
Otherwise, the rules necessary and proper for the operation of its business,
would be gradually rendered ineffectual, ignored, and eventually become
meaningless.
G.R. No. 104269 November 11, 1993
The Court agrees fully with the comment made by the respondent Deputy
Minister of Labor, represented by the office of the Solicitor General, that- DEPARTMENT OF AGRICULTURE, petitioner,
vs.
xxx xxx xxx THE NATIONAL LABOR RELATIONS COMMISSION, et al., respondents.

The filing by petitioner of the complaint for Unfair Labor Practice case on Roy Lago Salcedo for private respondents.
February 14, 1979 was brought about by the fact that he was caught for the
second time on February 13, 1979 violating Company Rule 19(a). It was
more of an anticipatory move on the part of petitioner. (Rollo, pp. 82-83).
VITUG, J.:
The Court is not unmindful of the fact that petitioner has, as he says, been
For consideration are the incidents that flow from the familiar doctrine of
employed with petitioner Company for eighteen (18) years. On this singular
non-suability of the state.
consideration, the Court deems it proper to afford some equitable relief to
petitioner due to the past services rendered by him to MERCO. Thus, it is but In this petition for certiorari, the Department of Agriculture seeks to nullify
appropriate that petitioner should be given by respondent MERCO, the Resolution, 1 dated 27 November 1991, of the National Labor Relations
Commission (NLRC), Fifth Division, Cagayan de Oro City, denying the petition
for injunction, prohibition and mandamus that prays to enjoin permanently A petition for injunction, prohibition and mandamus, with prayer for
the NLRC's Regional Arbitration Branch X and Cagayan de Oro City Sheriff preliminary writ of injunction was filed by the petitioner with the National
from enforcing the decision 2 of 31 May 1991 of the Executive Labor Arbiter Labor Relations Commission (NLRC), Cagayan de Oro, alleging, inter alia, that
and from attaching and executing on petitioner's property. the writ issued was effected without the Labor Arbiter having duly acquired
jurisdiction over the petitioner, and that, therefore, the decision of the Labor
The Department of Agriculture (herein petitioner) and Sultan Security Arbiter was null and void and all actions pursuant thereto should be deemed
Agency entered into a contract 3 on 01 April 1989 for security services to be equally invalid and of no legal, effect. The petitioner also pointed out that
provided by the latter to the said governmental entity. Save for the increase the attachment or seizure of its property would hamper and jeopardize
in the monthly rate of the guards, the same terms and conditions were also petitioner's governmental functions to the prejudice of the public good.
made to apply to another contract, dated 01 May 1990, between the same
parties. Pursuant to their arrangements, guards were deployed by Sultan On 27 November 1991, the NLRC promulgated its assailed resolution; viz:
Agency in the various premises of the petitioner.
WHEREFORE, premises considered, the following orders are issued:
On 13 September 1990, several guards of the Sultan Security Agency filed a
complaint for underpayment of wages, non-payment of 13th month pay, 1. The enforcement and execution of the judgments against petitioner in
NLRC RABX Cases Nos. 10-10-00455-90; 10-10-0481-90 and 10-10-00519-90
uniform allowances, night shift differential pay, holiday pay and overtime
pay, as well as for damages, 4 before the Regional Arbitration Branch X of are temporarily suspended for a period of two (2) months, more or less, but
not extending beyond the last quarter of calendar year 1991 to enable
Cagayan de Oro City, docketed as NLRC Case No. 10-09-00455-90 (or 10-10-
00519-90, its original docket number), against the Department of petitioner to source and raise funds to satisfy the judgment awards against
it;
Agriculture and Sultan Security Agency.

The Executive Labor Arbiter rendered a decision on 31 May finding herein 2. Meantime, petitioner is ordered and directed to source for funds within
the period above-stated and to deposit the sums of money equivalent to the
petitioner and jointly and severallyliable with Sultan Security Agency for the
payment of money claims, aggregating P266,483.91, of the complainant aggregate amount. it has been adjudged to pay jointly and severally with
respondent Sultan Security Agency with the Regional Arbitration Branch X,
security guards. The petitioner and Sultan Security Agency did not appeal
the decision of the Labor Arbiter. Thus, the decision became final and Cagayan de Oro City within the same period for proper dispositions;
executory. 3. In order to ensure compliance with this order, petitioner is likewise
On 18 July 1991, the Labor Arbiter issued a writ of execution. 5 commanding directed to put up and post sufficient surety and supersedeas
bond equivalent to at least to fifty (50%) percent of the total monetary
the City Sheriff to enforce and execute the judgment against the property of
the two respondents. Forthwith, or on 19 July 1991, the City Sheriff levied award issued by a reputable bonding company duly accredited by the
Supreme Court or by the Regional Trial Court of Misamis Oriental to answer
on execution the motor vehicles of the petitioner, i.e. one (1) unit Toyota Hi-
Ace, one (1) unit Toyota Mini Cruiser, and one (1) unit Toyota Crown. 6 These for the satisfaction of the money claims in case of failure or default on the
part of petitioner to satisfy the money claims;
units were put under the custody of Zacharias Roa, the property custodian
of the petitioner, pending their sale at public auction or the final settlement 4. The City Sheriff is ordered to immediately release the properties of
of the case, whichever would come first. petitioner levied on execution within ten (10) days from notice of the
posting of sufficient surety or supersedeas bond as specified above. In the The private respondents, on the other hand, argue that the petitioner has
meanwhile, petitioner is assessed to pay the costs and/or expenses incurred impliedly waived its immunity from suit by concluding a service contract
by the City Sheriff, if any, in connection with the execution of the judgments with Sultan Security Agency.
in the above-stated cases upon presentation of the appropriate claims or
vouchers and receipts by the city Sheriff, subject to the conditions specified The basic postulate enshrined in the constitution that "(t)he State may not
be sued without its consent," 7 reflects nothing less than a recognition of the
in the NLRC Sheriff, subject to the conditions specified in the NLRC Manual
of Instructions for Sheriffs; sovereign character of the State and an express affirmation of the unwritten
rule effectively insulating it from the jurisdiction of courts. 8 It is based on
5. The right of any of the judgment debtors to claim reimbursement against the very essence of sovereignty. As has been aptly observed, by Justice
each other for any payments made in connection with the satisfaction of the Holmes, a sovereign is exempt from suit, not because of any formal
judgments herein is hereby recognized pursuant to the ruling in the Eagle conception or obsolete theory, but on the logical and practical ground that
Security case, (supra). In case of dispute between the judgment debtors, the there can be no legal right as against the authority that makes the law on
Executive Labor Arbiter of the Branch of origin may upon proper petition by which the right depends. 9 True, the doctrine, not too infrequently, is
any of the parties conduct arbitration proceedings for the purpose and derisively called "the royal prerogative of dishonesty" because it grants the
thereby render his decision after due notice and hearings; state the prerogative to defeat any legitimate claim against it by simply
invoking its non-suability. 10 We have had occasion, to explain in its defense,
7. Finally, the petition for injunction is Dismissed for lack of basis. The writ of however, that a continued adherence to the doctrine of non-suability cannot
preliminary injunction previously issued is Lifted and Set Aside and in lieu be deplored, for the loss of governmental efficiency and the obstacle to the
thereof, a Temporary Stay of Execution is issued for a period of two (2) performance of its multifarious functions would be far greater in severity
months but not extending beyond the last quarter of calendar year 1991, than the inconvenience that may be caused private parties, if such
conditioned upon the posting of a surety or supersedeas bond by petitioner fundamental principle is to be abandoned and the availability of judicial
within ten (10) days from notice pursuant to paragraph 3 of this disposition. remedy is not to be accordingly restricted. 11
The motion to admit the complaint in intervention isDenied for lack of merit
while the motion to dismiss the petition filed by Duty Sheriff is Noted The rule, in any case, is not really absolute for it does not say that the state
may not be sued under any circumstances. On the contrary, as correctly
SO ORDERED. phrased, the doctrine only conveys, "the state may not be sued without its
In this petition for certiorari, the petitioner charges the NLRC with grave consent;" its clear import then is that the State may at times be sued. 12 The
abuse of discretion for refusing to quash the writ of execution. The States' consent may be given expressly or impliedly. Express consent may be
petitioner faults the NLRC for assuming jurisdiction over a money claim made through a general law 13 or a special law. 14 In this jurisdiction, the
against the Department, which, it claims, falls under the exclusive general law waiving the immunity of the state from suit is found in Act No.
jurisdiction of the Commission on Audit. More importantly, the petitioner 3083, where the Philippine government "consents and submits to be sued
asserts, the NLRC has disregarded the cardinal rule on the non-suability of upon any money claims involving liability arising from contract, express or
the State. implied, which could serve as a basis of civil action between private
parties." 15 Implied consent, on the other hand, is conceded when the State
itself commences litigation, thus opening itself to a counterclaim 16 or when
it enters into a contract. 17 In this situation, the government is deemed to highest order; they are not utilized for not dedicated to commercial or
have descended to the level of the other contracting party and to have business purposes.
divested itself of its sovereign immunity. This rule, relied upon by the NLRC
In the instant case, the Department of Agriculture has not pretended to
and the private respondents, is not, however, without qualification. Not all
contracts entered into by the government operate as a waiver of its non- have assumed a capacity apart from its being a governmental entity when it
entered into the questioned contract; nor that it could have, in fact,
suability; distinction must still be made between one which is executed in
the exercise of its sovereign function and another which is done in its performed any act proprietary in character.
proprietary capacity. 18 But, be that as it may, the claims of private respondents, i.e. for
In the Unites States of America vs. Ruiz, 19 where the questioned transaction underpayment of wages, holiday pay, overtime pay and similar other items,
arising from the Contract for Service, clearly constitute money claims. Act
dealt with improvements on the wharves in the naval installation at Subic
Bay, we held: No. 3083, aforecited, gives the consent of the State to be "sued upon any
moneyed claim involving liability arising from contract, express or implied, . .
The traditional rule of immunity exempts a State from being sued in the . Pursuant, however, to Commonwealth Act ("C.A.") No. 327, as amended by
courts of another State without its consent or waiver. This rule is a necessary Presidential Decree ("P.D.") No. 1145, the money claim first be brought to
consequence of the principles of independence and equality of States. the Commission on Audit. Thus, inCarabao, Inc., vs. Agricultural Productivity
However, the rules of International Law are not petrified; they are constantly Commission, 20 we ruled:
developing and evolving. And because the activities of states have
multiplied, it has been necessary to distinguish them — between sovereign (C)laimants have to prosecute their money claims against the Government
under Commonwealth Act 327, stating that Act 3083 stands now merely as
and governmental acts ( jure imperii) and private, commercial and
proprietary act ( jure gestionisis). The result is that State immunity now the general law waiving the State's immunity from suit, subject to the
general limitation expressed in Section 7 thereof that "no execution shall
extends only to acts jure imperii. The restrictive application of State
immunity is now the rule in the United States, the United Kingdom and issue upon any judgment rendered by any Court against the Government of
the (Philippines), and that the conditions provided in Commonwealth Act
other states in Western Europe.
327 for filing money claims against the Government must be strictly
xxx xxx xxx observed."

The restrictive application of State immunity is proper only when the We fail to see any substantial conflict or inconsistency between the
proceedings arise out of commercial transactions of the foreign sovereign, provisions of C.A. No. 327 and the Labor Code with respect to money claims
its commercial activities or economic affairs. Stated differently, a state may against the State. The Labor code, in relation to Act No. 3083, provides the
be said to have descended to the level of an individual and can this be legal basis for the State liability but the prosecution, enforcement or
deemed to have actually given its consent to be sued only when it enters satisfaction thereof must still be pursued in accordance with the rules and
into business contracts. It does not apply where the contracts relates to the procedures laid down in C.A. No. 327, as amended by P.D. 1445.
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 When the state gives its consent to be sued, it does thereby necessarily
consent to unrestrained execution against it. tersely put, when the State
States and the Philippines, indisputably a function of the government of the
waives its immunity, all it does, in effect, is to give the other party an
opportunity to prove, if it can, that the State has a liability. 21 In Republic vs.
Villasor 22 this Court, in nullifying the issuance of an alias writ of execution
directed against the funds of the Armed Forces of the Philippines to satisfy a
final and executory judgment, has explained, thus —

The universal rule that where the State gives its consent to be sued by
private parties either by general or special law, it may limit the claimant's
action "only up to the completion of proceedings anterior to the stage of
execution" and that the power of the Courts ends when the judgment is
rendered, since government funds and properties may not be seized under
writs or execution or garnishment to satisfy such judgments, is based on
obvious considerations of public policy. Disbursements of public funds must
be covered by the correspondent appropriation as required by law. The
functions and public services rendered by the State cannot be allowed to be
paralyzed or disrupted by the diversion of public funds from their legitimate
and specific objects, as appropriated by law. 23
G.R. No. 116347 October 3, 1996
WHEREFORE, the petition is GRANTED. The resolution, dated 27 November
1991, is hereby REVERSED and SET ASIDE. The writ of execution directed NATIVIDAD PONDOC, petitioner,
against the property of the Department of Agriculture is nullified, and the vs.
public respondents are hereby enjoined permanently from doing, issuing NATIONAL LABOR RELATIONS COMMISSION (Fifth Division, Cagayan de Oro
and implementing any and all writs of execution issued pursuant to the City) and EMILIO PONDOC,respondents.
decision rendered by the Labor Arbiter against said petitioner.

SO ORDERED.
DAVIDE, JR., J.:p

The novel issue that confronts us in this case is whether the Fifth Division of
the National Labor Relations Commission (NLRC) can validly defeat a final
judgment of the Labor Arbiter in favor of the complainant in a labor case by:
(a) entertaining a petition for injunction and damages, and an appeal from
the Labor Arbiter's denial of a claim for set-off based on an alleged
indebtedness of the laborer and order of execution of the final judgment;
and, (b) thereafter, by receiving evidence and adjudging recovery on such
indebtedness and authorizing it to offset the Labor Arbiter's final award.
The petitioner takes the negative view. In its Manifestation and Motion in On June 17, 1993, Labor Arbiter Esteban Abecia rendered a Decision finding
Lieu of Comment, 1 the Office of the Solicitor General joins her in her plea, the existence of [an] employer-employee relationship between the parties.
hence we required the NLRC to file its own comment. The dispositive portion of the Decision reads:

We resolved to give due course to the petition after the filing by the NLRC WHEREFORE, judgment is hereby rendered: (a) ordering respondent Eulalio
and the private respondent of their separate comments. Pondoc to pay complainant the following claims:

Petitioner Natividad Pondoc was the legitimate wife of Andres Pondoc. Atter (1) Salary differential for
her death on 5 December 1994, she was substituted by Hipolito Pondoc, her reason of underpayment P35,776.00;
only legitimate son. 2 —————

The Office of the Solicitor General summarized the factual antecedents of (2) Regular holiday and
this case in its Manifestation and Motion in Lieu of Comment: premium pay for holiday services 902.00;
————
Private respondent Eulalio Pondoc is the owner-proprietor of Melleonor
General Merchandise and Hardware Supply located at Poblacion, Sindangan, (3) Premium pay for rest day
Zamboanga del Norte. Respondent is engaged, among others, in the services 3,840.00;
business of buying and selling copra, rice, corn, "binangkol," junk iron and ————
empty bottles. He has in his employ more than twenty (20) regular workers
(4) 13th month pay 3,600.00
(Records, pp. 9-11)
————
Records disclose that Andres Pondoc was employed by Eulalio Pondoc as a
or the total amount of FORTY-FOUR [sic] THOUSAND AND ONE HUNDRED
laborer from October 1990 up to December 1991, receiving a wage rate of
P20.00 per day. He was required to work twelve (12) hours a day from 7:00 EIGHTEEN PESOS (P44,118.00).
AM to 8:00 PM, Monday to Sunday. Despite working on his rest days and Other claims are denied for lack of merit.
holidays, he was not paid his premium pay as required by law (Ibid).
SO ORDERED (Records, pp. 323-324).
Consequently, on May 14, 1992, Natividad Pondoc, on behalf of her
husband, filed a complaint for salary differential, overtime pay, 13th month On his last day to perfect an appeal, private respondent filed a Manifestation
pay, holiday pay and other money claims before the Sub-Regional before the Labor Arbiter praying that his liabilities be set-off against
Arbitration Branch No. 9 of the NLRC, docketed as Sub-RAB Case No. 09-05- petitioner's alleged indebtedness to him (Records, pp. 325-327). The Labor
10102-92 (Records, p.1). Arbiter denied, however, the compensation, and, instead, issued a writ of
execution as prayed for by petitioner (Records, p. 328).
In his position paper, private respondent questioned, among others, the
existence of [an] employer-employee relationship between them. He further Before the execution order could be implemented, however, private
averred that Melleonor General Merchandise and Hardware Supply is a respondent was able to obtain a restraining order from the NLRC, where he
fictitious establishment (Records, pp. 64-68).
filed a Petition for "Injunction and Damages," docketed as NLRC Case No. deemed waived. Moreover the indebtedness "did not evolve out [sic]
ICM-000065. employer-employee relationship, hence, purely civil in aspect."

On February 28, 1994, public respondent NLRC allowed compensation The Office of the Solicitor General agreed with the petitioner and stressed
between petitioner's monetary award and her alleged indebtedness to further that the asserted indebtedness was never proven to have arisen out
private respondent. It disposed: of or in connection with the employer-employee relationship between the
private respondent and the late Andres Pondoc, or to have any causal
WHEREFORE, the appealed order is hereby vacated and set aside. A new one connection thereto. Accordingly, both the Labor Arbiter and the NLRC did
is entered declaring the setting-off of complainant's indebtedness which not have jurisdiction over the private respondent's claim.
allegedly amounted to P41,051.35 against the complainant's monetary
award in the amount of P44,118.00. The additional amount of P5,000.00 As expected, the private respondent and the NLRC prayed for the dismissal
which complainant allegedly got from respondent on 10 July 1993 could not of this case.
be credited in view of appellant's failure to submit evidence to prove that
We rule for the petitioner.
complainant was really paid P5,000.00.

Accordingly, respondent Eulalio Pondoc is hereby directed to pay The proceedings before the NLRC were fatally flawed.
complainant Natividad Pondoc the amount of P3,066.65. In the first place, the NLRC should not have entertained the private
The Temporary restraining order issued herein is hereby made permanent. respondent's separate or independent petition for "Injunction and
Damages" (NLRC IC No. M-000065). It was obvious that the petition was a
SO ORDERED (Annex "D" of Petition). 3 scheme to defeat or obstruct the enforcement of the judgment in NLRC Case
No. SRAB-09-05-10102-92 where, in fact, a writ of execution had been
Her motion for reconsideration of the judgment having been denied by the issued. Article 218(e) of the Labor Code does not provide blanket authority
NLRC, the petitioner instituted this special civil action for certiorari under to the NLRC or any of its divisions to issue writs of injunction, while Rule XI
Rule 65 of the Rules of Court wherein she prays this Court annul the of the New Rules of Procedure of the NLRC makes injunction only an
challenged decision of the NLRC, Fifth Division (Cagayan de Oro City), in ancillary remedy in ordinary labor disputes such as the one brought by the
NLRC Case No. IC No. M-000065, and direct the enforcement of the writ of petitioner in NLRC Case No. SRAB-09-05-10102-92. This is clear from Section
execution in NLRC Case No. SRAB-09-05-10102-92, on the ground that the 1 of the said Rule which pertinently provides as follows:
NLRC, Fifth Division, acted without or in excess of jurisdiction or with grave
abuse of discretion when it proceeded to determine the alleged Sec. 1. Injunction in Ordinary Labor Disputed. — A preliminary injunction or
indebtedness of the petitioner and set-off the same against the liabilities of a restraining order may be granted by the Commission through its divisions
the private respondent. The petitioner asserts that the decision of the Labor pursuant to the provisions of paragraph (e) of Article 218 of the Labor Code,
Arbiter in NLRC Case No. SRAB-09-05-10102-92 was already final and as amended, when it is established on the bases of the sworn allegations in
executory when the private respondent tried to defeat the judgment by the petition that the acts complained of, involving or arising from any labor
asserting an alleged indebtedness of Andres Pondoc as a set-off, a claim not dispute before the Commission, which, if not restrained or performed
pleaded before the Labor Arbiter at any time before judgment, hence forthwith, may cause grave or irreparable damage to any party or render
ineffectual any decision in favor of such party.
xxx xxx xxx damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
The foregoing ancillary power may be exercised by the Labor Arbiters only including questions involving the legality of strikes and
as an incident to the cases pending before them in order to preserve the lockouts; and
rights of the parties during the pendency of the case, but excluding labor 6. Except claims for Employees Compensation, Social
disputes involving strike or lockout. (emphasis supplied). Security, Medicare and maternity benefits, all other claims,
Hence, a petition or motion for preliminary injunction should have been arising from employer-employee relations, including those
filed in the appeal interposed by the private respondent, i.e., in NLRC Case of persons in domestic or household service, involving an
No. SRAB-09-05-10102-92. This matter, however, became academic when amount exceeding five thousand pesos (P5,000.00)
the NLRC consolidated the two cases as shown by the captions in its regardless of whether accompanies with a claim for
challenged decision of 28 February 1994 and resolution of 6 May 1994. reinstatement.

Secondly, the appeal of the private respondent in NLRC Case No. SRAB-09- On the other hand, under paragraph (b) thereof, the NLRC has exclusive
05-10102-92 was not from the decision therein, but from the order of the appellate jurisdiction over all cases decided by the Labor Arbiters. This
Labor Arbiter denying the set-off insisted upon by the private respondent simply means that the NLRC does not have original jurisdiction over the
and directing the execution of the judgment. Therefore, the private cases enumerated in paragraph (a) and that if a claim does not fall within
respondent admitted the final and executory character of the judgment. the exclusive original jurisdiction of the Labor Arbiter, the NLRC cannot have
appellate jurisdiction thereon.
The Labor Arbiter, in denying the set-off, reasoned "[i]t could have been
considered if it was presented before the decision of this case." 4 While this The conclusion then is inevitable that the NLRC was without jurisdiction,
is correct, there are stronger reasons why the set-off should, indeed, be either original or appellate, to receive evidence on the alleged indebtedness,
denied. As correctly contended by the Office of the Solicitor General, there render judgment thereon, and direct that its award be set-off against the
is a complete want of evidence that the indebtedness asserted by the final judgment of the Labor Arbiter.
private respondent against Andres Pondoc arose out of or was incurred in Finally, even assuming arguendo that the claim for the alleged indebtedness
connection with the employer-employee relationship between them. The fell within the exclusive original jurisdiction of the Labor Arbiter, it was
Labor Arbiter did not then have jurisdiction over the claim as under deemed waived for not having been pleaded as an affirmative defense or
paragraph (a) of Article 217 of the Labor Code, Labor Arbiters have exclusive barred for not having been set up as a counterclaim before the Labor Arbiter
and original jurisdiction only in the following cases: at any appropriate time prior to the rendition of the decision in NLRC Case
1. Unfair labor practice cases; No. SRAB-09-05-10102-92. Under the Rules of Court, which is applicable in a
2. Termination disputes; suppletory character in labor cases before the Labor Arbiters or the NLRC
3. If accompanied with a claim for reinstatement, those cases pursuant to Section 3, Rule I of the New Rules of Procedure of the NLRC,
that workers may file involving wages, rates of pay, hours of defenses which are not raised either in a motion to dismiss or in the answer
work and other terms and conditions of employment; are deemed waived 5 and counterclaims not set up in the answer are
4. Claim for actual, moral, exemplary and other forms of barred. 6 Set-off or compensation is one of the modes of extinguishing
obligations 7 and extinguishment is an affirmative defense and a ground for a
motion to dismiss. 8

We do not then hesitate to rule that the NLRC acted without jurisdiction or
with grave abuse of discretion in entertaining an independent action for
injunction and damages (NLRC IC No. M-000065), in receiving evidence and
rendering judgment on the alleged indebtedness of Andres Pondoc, and in
ordering such judgment to offset the final award of the Labor Arbiter in
NLRC Case No. SRAB-09-05-10102-92.

WHEREFORE, the instant petition is GRANTED and the challenged decision of


28 February 1994 and resolution of 6 May 1994 of the National Labor
Relations Commission in NLRC Case No. IC No. M-000065 and NLRC Case No.
SRAB-09-05-10102-92 are ANNULLED and SET ASIDE. The judgment of the
Labor Arbiter in NLRC Case No. SRAB-09-05-10102-92 should forthwith be
enforced without any further delay, the award therein bearing interest at
the rate of twelve per centum (12%) per annum from the finality of such
judgment until it shall have been fully paid. G.R. No. 120567 March 20, 1998

Costs against the private respondent. PHILIPPINE AIRLINES, INC., petitioner,


vs.
SO ORDERED.
NATIONAL LABOR RELATIONS COMMISSION, FERDINAND PINEDA and
GOGFREDO CABLING, respondents.

MARTINEZ, J.:

Can the National Labor Relations Commission (NLRC), even without a


complaint for illegal dismissal tiled before the labor arbiter, entertain an
action for injunction and issue such writ enjoining petitioner Philippine
Airlines, inc. from enforcing its Orders of dismissal against private
respondents, and ordering petitioner to reinstate the private respondents to
their previous positions?

This is the pivotal issue presented before us in this petition


for certiorari under Rule 65 of the Revised Rules of Court which seeks the
nullification of the injunctive writ dated April 3, 1995 issued by the NLRC and Hongkong "was intercepted by the Hongkong Airport Police at Gate 05 . . .
the Order denying petitioner's motion for reconsideration on the ground the ramp area of the Kai Tak International Airport while . . . about to exit said
that the said Orders were issued in excess of jurisdiction. gate carrying a . . . bag said to contain some 2.5 million pesos in Philippine
Currencies. That at the Police Station. Mr. Abaca claimed that he just found
Private respondents are flight stewards of the petitioner. Both were said plastic bag at the Skybed Section of the arrival flight PR300/03 April 93,"
dismissed from the service for their alleged involvement in the April 3, 1993 where petitioners served as flight stewards of said flight PR300; . . the
currency smuggling in Hong Kong. petitioners sought "a more detailed account of what this HKG incident is all
Aggrieved by said dismissal, private respondents filed with the NLRC a about"; but instead, the petitioners were administratively charged, "a
petition 1 for injunction praying that: hearing" on which "did
not push through" until almost two (2) years after, i.e, "on January 20, 1995 .
I. Upon filing of this Petition, a temporary restraining order be issued, . . where a confrontation between Mr. Abaca and petitioners herein was
prohibiting respondents (petitioner herein) from effecting or enforcing the compulsorily arranged by the respondent's disciplinary board" at which
Decision dated Feb. 22, 1995, or to reinstate petitioners temporarily while a hearing, Abaca was made to identify petitioners as co-conspirators; that
hearing on the propriety of the issuance of a writ of preliminary injunction is despite the fact that the procedure of identification adopted by
being undertaken; respondent's Disciplinary Board was anomalous "as there was no one else in
the line-up (which could not be called one) but petitioners . . . Joseph Abaca
II. After hearing, a writ of preliminary mandatory injunction be issued
still had difficulty in identifying petitioner Pineda as his co-conspirator, and
ordering respondent to reinstate petitioners to their former positions
as to petitioner Cabling, he was implicated and pointed by Abaca only after
pending the hearing of this case, or, prohibiting respondent from enforcing
respondent's Atty. Cabatuando pressed the former to identify petitioner
its Decision dated February 22, 1995 while this case is pending adjudication;
Cabling as co-conspirator"; that with the hearing reset to January 25, 1995,
III. After hearing, that the writ of preliminary injunction as to the reliefs "Mr. Joseph Abaca finally gave exculpating statements to the board in that
sought for be made permanent, that petitioners be awarded full backwages, he cleared petitioners from any participation or from being the owners of
moral damages of PHP 500,000.00 each and exemplary damages of PHP the currencies, and at which hearing Mr. Joseph Abaca volunteered the
500,000.00 each, attorney's fees equivalent to ten percent of whatever information that the real owner of said money was one who frequented his
amount is awarded, and the costs of suit. headquarters in Hongkong to which information, the Disciplinary Board
Chairman, Mr. Ismael Khan," opined "for the need for another hearing to go
On April 3, 1995, the NLRC issued a temporary mandatory to the bottom of the incident"; that from said statement, it appeared "that
injunction 2 enjoining petitioner to cease and desist from enforcing its Mr. Joseph Abaca was the courier, and had another mechanic in Manila who
February 22, 1995 Memorandum of dismissal. In granting the writ, the NLRC hid the currency at the plane's skybed for Abaca to retrieve in Hongkong,
considered the following facts, to wit: which findings of how the money was found was previously confirmed by
Mr. Joseph Abaca himself when he was first investigated by the Hongkong
. . . that almost two (2) years ago, i.e. on April 15, 1993, the petitioners were
authorities"; that just as petitioners "thought that they were already fully
instructed to attend an investigation by respondent's "Security and Fraud
cleared of the charges, as they no longer received any summons/notices on
Prevention Sub-Department" regarding an April 3, 1993 incident in
the intended "additional hearings" mandated by the Disciplinary Board,"
Hongkong at which Joseph Abaca, respondent's Avionics Mechanic in
they were surprised to receive "on February 23, 1995. . . a Memorandum
dated February 22, 1995" terminating their services for alleged violation of 3. . . . in ordering the reinstatement of private respondents on the basis of
respondent's Code of Discipline "effective immediately"; that sometime . . . their mere allegations, in violation of PAL's right to due process:
first week of March, 1995, petitioner Pineda received another Memorandum
4. . . . in arrogating unto itself management prerogative to discipline its
from respondent Mr. Juan Paraiso, advising him of his termination effective
February 3, 1995, likewise for violation of respondent's Code of Discipline; . . employees and divesting the labor arbiter of its original and exclusive
jurisdiction over illegal dismissal cases;
.

In support of the issuance of the writ of temporary injunction, the NLRC 5. . . . in suspending the effects of termination when such action is
exclusively within the jurisdiction of the Secretary of Labor;
adapted the view that: (1) private respondents cannot be validly dismissed
on the strength of petitioner's Code of Discipline which was declared illegal 6. . . . in issuing the temporary injunction in the absence of any irreparable
by this Court in the ease at PAL, Inc. vs. NLRC, (G.R. No. 85985), promulgated or substantial injury to both private respondents.
August 13, 1993, for the reason that it was formulated by the petitioner
without the participation of its employees as required in R.A. 6715, On May 31, 1995, the NLRC denied petitioner's motion for reconsideration,
amending Article 211 of the Labor Code; (2) the whimsical, baseless and ruling:
premature dismissals of private respondents which "caused them grave and
"The respondent (now petitioner), for one, cannot validly claim that we
irreparable injury" is enjoinable as private respondents are left "with no
cannot exercise our injunctive power under Article 218 (e) of the Labor Code
speedy and adequate remedy at law" except the issuance of a temporary
on the pretext that what we have here is not a labor dispute as long as it
mandatory injunction; (3) the NLRC is empowered under Article 218 (e) of
concedes that as defined by law, a" (l) "Labor Dispute" includes any
the Labor Code not only to restrain any actual or threatened commission of
controversy or matter concerning terms or conditions of employment." If
any or all prohibited or unlawful acts but also to require the performance of
security of tenure, which has been breached by respondent and which,
a particular act in any labor dispute, which, if not restrained or performed
precisely, is sought to be protected by our temporary mandatory injunction
forthwith, may cause grave or irreparable damage to any party; and (4) the
(the core of controversy in this case) is not a "term or condition of
temporary power of the NLRC was recognized by this Court in the case
employment", what then is?
of Chemo-Technische Mfg., Inc.Employees Union, DFA, et. al. vs. Chemo-
Technische Mfg., Inc. [G.R. No. 107031, January 25, 1993]. xxx xxx xxx
On May 4, 1995, petitioner moved for reconsideration 3 arguing that the Anent respondent's second argument . . . . Article 218 (e) of the Labor Code .
NLRC erred: . . empowered the Commission not only to issue a prohibitory injunction,
but a mandatory ("to require the performance") one as well. Besides, as
1. . . . in granting a temporary injunction order when it has no jurisdiction to
earlier discussed, we already exercised (on August 23, 1991) this temporary
issue an injunction or restraining order since this may be issued only under
mandatory injunctive power in the case of "Chemo-Technische Mfg., Inc.
Article 218 of the Labor Code if the case involves or arises from labor
Employees Union-DFA et. al. vs. Chemo-Technische Mfg., Inc., et. al." (supra)
disputes;
and effectively enjoined one (1) month old dismissals by Chemo-Technische
2. . . . in granting a temporary injunction order when the termination of and that our aforesaid mandatory exercise of injunctive power, when
private respondents have long been carried out;
questioned through a petition for certiorari, was sustained by the Third But just the same, we have to stress that Article 279 does not speak alone of
Division of the Supreme court per its Resolution dated January 25, 1993. backwages as an obtainable relief for illegal dismissal; that reinstatement as
well is the concern of said law, enforceable when necessary, through Article
xxx xxx xxx 218 (e) of the Labor Code (without need of an illegal dismissal suit under
Respondent's fourth argument that petitioner's remedy for their dismissals Article 217 (a) of the Code) if such whimsical and capricious act of illegal
is "to file an illegal dismissal case against PAL which cases are within the dismissal will "cause grave or irreparable injury to a party". . . . . 4
original and exclusive jurisdiction of the Labor Arbiter' is ignorant. In Hence, the present recourse.
requiring as a condition for the issuance of a "temporary or permanent
injunction" — "(4) That complainant has no adequate remedy at law;" Generally, injunction is a preservative remedy for the protection of one's
Article 218 (e) of the Labor Code clearly envisioned adequacy, and not substantive rights or interest. It is not a cause of action in itself but merely a
plain availability of a remedy at law as an alternative bar to the issuance of provisional remedy, an adjunct to a main suit. It is resorted to only when
an injunction. An illegal dismissal suit (which takes, on its expeditious side, there is a pressing necessity to avoid injurious consequences which cannot
three (3) years before it can be disposed of) while available as a remedy be remedied under any standard of compensation. The application of the
under Article 217 (a) of the Labor Code, is certainly not an "adequate; injunctive writ rests upon the existence of an emergency or of a special
remedy at law, Ergo, it cannot as an alternative remedy, bar our exercise of reason before the main case be regularly heard. The essential conditions for
that injunctive power given us by Article 218 (e) of the Code. granting such temporary injunctive relief are that the complaint alleges facts
which appear to be sufficient to constitute a proper basis for injunction and
xxx xxx xxx that on the entire showing from the contending parties, the injunction is
Thus, Article 218 (e), as earlier discussed [which empowers this Commission reasonably necessary to protect the legal rights of the plaintiff pending the
"to require the performance of a particular act" (such as our requiring litigation. 5 Injunction is also a special equitable relief granted only in cases
respondent "to cease and desist from enforcing" its whimsical memoranda where there is no plain, adequate and complete remedy at law. 6
of dismissals and "instead to reinstate petitioners to their respective In labor cases, Article 218 of the Labor Code empowers the NLRC —
position held prior to their subject dismissals") in "any labor dispute which,
if not . . . performed forthwith, may cause grave and irreparable damage to (e) To enjoin or restrain any actual or threatened commission of any or all
any party"] stands as the sole "adequate remedy at law" for petitioners prohibited or unlawful acts or to require the performance of a particular
here. act in any labor dispute which, if not restrained or performed forthwith, may
cause grave or irreparable damage to any party or render ineffectual any
Finally, the respondent, in its sixth argument claims that even if its acts of decision in favor of such party; . . ." (Emphasis Ours)
dismissing petitioners "may be great, still the same is capable of
compensation", and that consequently, "injunction need not be issued Complementing the above-quoted provision, Sec. 1, Rule XI of the New
where adequate compensation at law could be obtained". Actually, Rules of Procedure of the NLRC, pertinently provides as follows:
what respondent PAL argues here is that we need not interfere in its
Sec. 1. Injunction in Ordinary Labor Dispute. — A preliminary injunction or a
whimsical dismissals of petitioners as, after all, it can pay the latter its
backwages. . . . restraining order may be granted by the Commission through its divisions
pursuant to the provisions of paragraph (e) of Article 218 of the Labor Code,
as amended, when it is established on the bases of the sworn allegations in between the petitioner and private respondents as there has yet been no
the petition that the acts complained of, involving or arising from any labor complaint for illegal dismissal filed with the labor arbiter by the private
dispute before the Commission, which, if not restrained or performed respondents against the petitioner.
forthwith, may cause grave or irreparable damage to any party or render
ineffectual any decision in favor of such party. The petition for injunction directly filed before the NLRC is in reality an
action for illegal dismissal. This is clear from the allegations in the petition
xxx xxx xxx which prays for; reinstatement of private respondents; award of full
backwages, moral and exemplary damages; and attorney's fees. As such, the
The foregoing ancillary power may be exercised by the Labor Arbiters only petition should have been filed with the labor arbiter who has the original
as an incident to the cases pending before them in order to preserve the and exclusive jurisdiction to hear and decide the following cases involving all
rights of the parties during the pendency of the case, but excluding labor workers, whether agricultural or non-agricultural:
disputes involving strikes or lockout. 7 (Emphasis Ours)
(1) Unfair labor practice;
From the foregoing provisions of law, the power of the NLRC to issue an
injunctive writ originates from "any labor dispute" upon application by a (2) Termination disputes;
party thereof, which application if not granted "may cause grave or
(3) If accompanied with a claim for reinstatement, those cases that workers
irreparable damage to any party or render ineffectual any decision in favor
of such party." may file involving wages, rates of pay, hours of work and other terms and
conditions of employment;
The term "labor dispute" is defined as "any controversy or matter
concerning terms and conditions of employment or the association or (4) Claims for actual, moral, exemplary and other forms of damages arising
from the employer-employee relations;
representation of persons in negotiating, fixing. maintaining, changing, or
arranging the terms and conditions of employment regardless of whether or (5) Cases arising from any violation of Article 264 of this Code, including
not the disputants stand in the proximate relation of employers and questions involving the legality of strikes and lockouts; and
employees." 8
(6) Except claims for employees compensation, social security, medicare and
The term "controversy" is likewise defined as "a litigated maternity benefits, all other claims arising from employer- employee
question; adversary proceeding in a court of law; a civil action or suit, either relations, including those of persons in domestic or household service,
at law or in equity; a justiciable dispute." 9 involving an amount exceeding five thousand pesos (P5,000.00), whether or
A "justiciable controversy" is "one involving an active antagonistic assertion not accompanied with a claim for reinstatement. 11
of a legal right on one side and a denial thereof on the other concerning a The jurisdiction conferred by the foregoing legal provision to the labor
real, and not a mere theoretical question or issue." 10 arbiter is both original and exclusive, meaning, no other officer or tribunal
can take cognizance of, hear and decide any of the cases therein
Taking into account the foregoing definitions, it is an essential requirement
that there must first be a labor dispute between the contending parties enumerated. The only exceptions are where the Secretary of Labor and
Employment or the NLRC exercises the power of compulsory arbitration, or
before the labor arbiter. In the present case, there is no labor dispute
the parties agree to submit the matter to voluntary arbitration pursuant to the matter in controversy, and which is appropriate to the particular
Article 263 (g) of the Labor Code, the pertinent portions of which reads: circumstances of the case." 13 It is a remedy which is equally, beneficial,
speedy and sufficient which will promptly relieve the petitioner from the
(g) When, in his opinion, there exists a labor dispute causing or likely to injurious effects of the acts complained of. 14
cause a strike or lockout in an industry indispensable to the national
interest, the Secretary of Labor and Employment may assume jurisdiction Under the Labor Code, the ordinary and proper recourse of an illegally
over the dispute and decide it or certify the same to the Commission for dismissed employee is to file a complaint for illegal dismissal with the labor
compulsory arbitration. Such assumption or certification shall have the arbiter. 15 In the case at bar, private respondents disregarded this rule and
effect of automatically enjoining the intended or impending strike or lockout directly went to the NLRC through a petition for injunction praying that
as specified in the assumption or certification order. If one has already taken petitioner be enjoined from enforcing its dismissal orders. In Lamb
place at the time of assumption or certification, all striking or locked out vs. Phipps, 16 we ruled that if the remedy is specifically provided by law, it is
employees shall immediately resume operations and readmit all workers presumed to be adequate. Moreover, the preliminary mandatory injunction
under the same terms and conditions prevailing before the strike or lockout. prayed for by the private respondents in their petition before the NLRC can
The Secretary of Labor and Employment or the Commission may seek the also be entertained by the labor arbiter who, as shown earlier, has the
assistance of law enforcement agencies to ensure compliance with this ancillary power to issue preliminary injunctions or restraining orders as an
provision as well as with such orders as he may issue to enforce the same. incident in the cases pending before him in order to preserve the rights of
the parties during the pendency of the case. 17
On the other hand, the NLRC shall have exclusive appellate jurisdiction over
all cases decided by labor arbiters as provided in Article 217(b) of the Labor Furthermore, an examination of private respondents' petition for injunction
Code. In short, the jurisdiction of the NLRC in illegal dismissal cases is reveals that it has no basis since there is no showing of any urgency or
appellate in nature and, therefore, it cannot entertain the private irreparable injury which the private respondents might suffer. An injury is
respondents' petition for injunction which challenges the dismissal orders of considered irreparable if it is of such constant and frequent recurrence that
petitioner. Article 218(e) of the Labor Code does not provide blanket no fair and reasonable redress can be had therefor in a court of law, 18 or
authority to the NLRC or any of its divisions to issue writs of injunction, where there is no standard by which their amount can be measured with
considering that Section 1 of Rule XI of the New Rules of Procedure of the reasonable accuracy, that is, it is not susceptible of mathematical
NLRC makes injunction only an ancillary remedy in ordinary labor computation. It is considered irreparable injury when it cannot be
disputes." 12 adequately compensated in damages due to the nature of the injury itself or
the nature of the right or property injured or when there exists no certain
Thus, the NLRC exceeded its jurisdiction when it issued the assailed Order pecuniary standard for the measurement of damages. 19
granting private respondents' petition for injunction and ordering the
petitioner to reinstate private respondents. In the case at bar, the alleged injury which private respondents stand to
suffer by reason of their alleged illegal dismissal can be adequately
The argument of the NLRC in its assailed Order that to file an illegal dismissal compensated and therefore, there exists no "irreparable injury," as defined
suit with the labor arbiter is not an "adequate" remedy since it takes three above which would necessitate the issuance of the injunction sought for.
(3) years before it can be disposed of, is patently erroneous. An "adequate" Article 279 of the Labor Code provides that an employee who is unjustly
remedy at law has been defined as one "that affords relief with reference to dismissed from employment shall be entitled to reinstatement, without loss
of seniority rights and other privileges, and to the payment of full Commission (First Division), in NLRC NCR IC No. 000563-95, are hereby
backwages, inclusive of allowances, and to other benefits or their monetary REVERSED and SET ASIDE.
equivalent computed from the time his compensation was withheld from
SO ORDERED.
him up to the time of his actual reinstatement.

The ruling of the NLRC that the Supreme Court upheld its power to issue
temporary mandatory injunction orders in the case of Chemo-Technische
Mfg., Inc. Employees Union-DFA, et. al. vs. Chemo-Technische Mfg.,
Inc. et. al., docketed as G.R. No. 107031, is misleading. As correctly argued
by the petitioner, no such pronouncement was made by this Court in said
case. On January 25, 1993, we issued a Minute Resolution in the subject
case stating as follows:

Considering the allegations contained, the issues raised and the arguments G.R. No. L-46496 February 27, 1940
adduced in the petition for certiorari, as well as the comments of both
public and private respondents thereon, and the reply of the petitioners to ANG TIBAY, represented by TORIBIO TEODORO, manager and propietor,
private respondent's motion to dismiss the petition, the Court Resolved to and
DENY the same for being premature. NATIONAL WORKERS BROTHERHOOD, petitioners,
vs.
It is clear from the above resolution that we did not in anyway sustain the THE COURT OF INDUSTRIAL RELATIONS and NATIONAL LABOR UNION,
action of the NLRC in issuing such temporary mandatory injunction but INC., respondents.
rather we dismissed the petition as the NLRC had yet to rule upon the
motion for reconsideration filed by petitioner. Thus, the minute resolution Office of the Solicitor-General Ozaeta and Assistant Attorney Barcelona for
denying the petition for being prematurely filed. the Court of Industrial Relations.
Antonio D. Paguia for National Labor Unon.
Finally, an injunction, as an extraordinary remedy, is not favored in labor law Claro M. Recto for petitioner "Ang Tibay".
considering that it generally has not proved to be an effective means of Jose M. Casal for National Workers' Brotherhood.
settling labor disputes. 20 It has been the policy of the State to encourage the
parties to use the non-judicial process of negotiation and compromise, LAUREL, J.:
mediation and arbitration. 21 Thus, injunctions may be issued only in cases of
The Solicitor-General in behalf of the respondent Court of Industrial
extreme necessity based on legal grounds clearly established, after due
Relations in the above-entitled case has filed a motion for reconsideration
consultations or hearing and when all efforts at conciliation are exhausted
and moves that, for the reasons stated in his motion, we reconsider the
which factors, however, are clearly absent in the present case.
following legal conclusions of the majority opinion of this Court:
WHEREFORE, the petition is hereby GRANTED. The assailed Orders dated
1. Que un contrato de trabajo, asi individual como colectivo, sin termino fijo
April 3, 1995 and May 31, 1995, issued by the National Labor Relations
de duracion o que no sea para una determinada, termina o bien por
voluntad de cualquiera de las partes o cada vez que ilega el plazo fijado para to systematically prevent the forfeiture of this bond despite the breach of
el pago de los salarios segun costumbre en la localidad o cunado se termine his CONTRACT with the Philippine Army.
la obra;
4. That the National Worker's Brotherhood of ANG TIBAY is a company or
2. Que los obreros de una empresa fabril, que han celebrado contrato, ya employer union dominated by Toribio Teodoro, the existence and functions
individual ya colectivamente, con ell, sin tiempo fijo, y que se han visto of which are illegal. (281 U.S., 548, petitioner's printed memorandum, p. 25.)
obligados a cesar en sus tarbajos por haberse declarando paro forzoso en la
fabrica en la cual tarbajan, dejan de ser empleados u obreros de la misma; 5. That in the exercise by the laborers of their rights to collective bargaining,
majority rule and elective representation are highly essential and
3. Que un patrono o sociedad que ha celebrado un contrato colectivo de indispensable. (Sections 2 and 5, Commonwealth Act No. 213.)
trabajo con sus osbreros sin tiempo fijo de duracion y sin ser para una obra
6. That the century provisions of the Civil Code which had been (the)
determiminada y que se niega a readmitir a dichos obreros que cesaron
como consecuencia de un paro forzoso, no es culpable de practica injusta in principal source of dissensions and continuous civil war in Spain cannot and
should not be made applicable in interpreting and applying the salutary
incurre en la sancion penal del articulo 5 de la Ley No. 213 del
Commonwealth, aunque su negativa a readmitir se deba a que dichos provisions of a modern labor legislation of American origin where the
industrial peace has always been the rule.
obreros pertenecen a un determinado organismo obrero, puesto que tales
ya han dejado deser empleados suyos por terminacion del contrato en 7. That the employer Toribio Teodoro was guilty of unfair labor practice for
virtud del paro. discriminating against the National Labor Union, Inc., and unjustly favoring
The respondent National Labor Union, Inc., on the other hand, prays for the the National Workers' Brotherhood.
vacation of the judgement rendered by the majority of this Court and the 8. That the exhibits hereto attached are so inaccessible to the respondents
remanding of the case to the Court of Industrial Relations for a new trial, that even with the exercise of due diligence they could not be expected to
and avers: have obtained them and offered as evidence in the Court of Industrial
1. That Toribio Teodoro's claim that on September 26, 1938, there was Relations.
shortage of leather soles in ANG TIBAY making it necessary for him to 9. That the attached documents and exhibits are of such far-reaching
temporarily lay off the members of the National Labor Union Inc., is entirely importance and effect that their admission would necessarily mean the
false and unsupported by the records of the Bureau of Customs and the modification and reversal of the judgment rendered herein.
Books of Accounts of native dealers in leather.
The petitioner, Ang Tibay, has filed an opposition both to the motion for
2. That the supposed lack of leather materials claimed by Toribio Teodoro reconsideration of the respondent National Labor Union, Inc.
was but a scheme to systematically prevent the forfeiture of this bond
despite the breach of his CONTRACT with the Philippine Army. In view of the conclusion reached by us and to be herein after stead with
reference to the motion for a new trial of the respondent National Labor
3. That Toribio Teodoro's letter to the Philippine Army dated September 29, Union, Inc., we are of the opinion that it is not necessary to pass upon the
1938, (re supposed delay of leather soles from the States) was but a scheme motion for reconsideration of the Solicitor-General. We shall proceed to
dispose of the motion for new trial of the respondent labor union. Before labor or conditions of tenancy or employment, between landlords and
doing this, however, we deem it necessary, in the interest of orderly tenants or farm-laborers, provided that the number of employees, laborers
procedure in cases of this nature, in interest of orderly procedure in cases of or tenants of farm-laborers involved exceeds thirty, and such industrial or
this nature, to make several observations regarding the nature of the powers agricultural dispute is submitted to the Court by the Secretary of Labor or by
of the Court of Industrial Relations and emphasize certain guiding principles any or both of the parties to the controversy and certified by the Secretary
which should be observed in the trial of cases brought before it. We have re- of labor as existing and proper to be by the Secretary of Labor as existing
examined the entire record of the proceedings had before the Court of and proper to be dealth with by the Court for the sake of public interest.
Industrial Relations in this case, and we have found no substantial evidence (Section 4, ibid.) It shall, before hearing the dispute and in the course of such
that the exclusion of the 89 laborers here was due to their union affiliation hearing, endeavor to reconcile the parties and induce them to settle the
or activity. The whole transcript taken contains what transpired during the dispute by amicable agreement. (Paragraph 2, section 4, ibid.) When
hearing and is more of a record of contradictory and conflicting statements directed by the President of the Philippines, it shall investigate and study all
of opposing counsel, with sporadic conclusion drawn to suit their own views. industries established in a designated locality, with a view to determinating
It is evident that these statements and expressions of views of counsel have the necessity and fairness of fixing and adopting for such industry or locality
no evidentiary value. a minimum wage or share of laborers or tenants, or a maximum "canon" or
rental to be paid by the "inquilinos" or tenants or less to landowners.
The Court of Industrial Relations is a special court whose functions are (Section 5, ibid.) In fine, it may appeal to voluntary arbitration in the
specifically stated in the law of its creation (Commonwealth Act No. 103). It settlement of industrial disputes; may employ mediation or conciliation for
is more an administrative than a part of the integrated judicial system of the that purpose, or recur to the more effective system of official investigation
nation. It is not intended to be a mere receptive organ of the Government. and compulsory arbitration in order to determine specific controversies
Unlike a court of justice which is essentially passive, acting only when its between labor and capital industry and in agriculture. There is in reality here
jurisdiction is invoked and deciding only cases that are presented to it by the a mingling of executive and judicial functions, which is a departure from the
parties litigant, the function of the Court of Industrial Relations, as will rigid doctrine of the separation of governmental powers.
appear from perusal of its organic law, is more active, affirmative and
dynamic. It not only exercises judicial or quasi-judicial functions in the In the case of Goseco vs. Court of Industrial Relations et al., G.R. No. 46673,
determination of disputes between employers and employees but its promulgated September 13, 1939, we had occasion to joint out that the
functions in the determination of disputes between employers and Court of Industrial Relations et al., G. R. No. 46673, promulgated September
employees but its functions are far more comprehensive and expensive. It 13, 1939, we had occasion to point out that the Court of Industrial Relations
has jurisdiction over the entire Philippines, to consider, investigate, decide, is not narrowly constrained by technical rules of procedure, and the Act
and settle any question, matter controversy or dispute arising between, requires it to "act according to justice and equity and substantial merits of
and/or affecting employers and employees or laborers, and regulate the the case, without regard to technicalities or legal forms and shall not be
relations between them, subject to, and in accordance with, the provisions bound by any technicalities or legal forms and shall not be bound by any
of Commonwealth Act No. 103 (section 1). It shall take cognizance or technical rules of legal evidence but may inform its mind in such manner as
purposes of prevention, arbitration, decision and settlement, of any it may deem just and equitable." (Section 20, Commonwealth Act No. 103.)
industrial or agricultural dispute causing or likely to cause a strike or lockout, It shall not be restricted to the specific relief claimed or demands made by
arising from differences as regards wages, shares or compensation, hours of the parties to the industrial or agricultural dispute, but may include in the
award, order or decision any matter or determination which may be deemed (4) Not only must there be some evidence to support a finding or conclusion
necessary or expedient for the purpose of settling the dispute or of (City of Manila vs. Agustin, G.R. No. 45844, promulgated November 29,
preventing further industrial or agricultural disputes. (section 13, ibid.) And 1937, XXXVI O. G. 1335), but the evidence must be "substantial."
in the light of this legislative policy, appeals to this Court have been (Washington, Virginia and Maryland Coach Co. v. national labor Relations
especially regulated by the rules recently promulgated by the rules recently Board, 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81 Law. ed. 965.) It means such
promulgated by this Court to carry into the effect the avowed legislative relevant evidence as a reasonable mind accept as adequate to support a
purpose. The fact, however, that the Court of Industrial Relations may be conclusion." (Appalachian Electric Power v. National Labor Relations Board,
said to be free from the rigidity of certain procedural requirements does not 4 Cir., 93 F. 2d 985, 989; National Labor Relations Board v. Thompson
mean that it can, in justifiable cases before it, entirely ignore or disregard Products, 6 Cir., 97 F. 2d 13, 15; Ballston-Stillwater Knitting Co. v. National
the fundamental and essential requirements of due process in trials and Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . . The statute provides that
investigations of an administrative character. There are primary rights which "the rules of evidence prevailing in courts of law and equity shall not be
must be respected even in proceedings of this character: controlling.' The obvious purpose of this and similar provisions is to free
administrative boards from the compulsion of technical rules so that the
(1) The first of these rights is the right to a hearing, which includes the right mere admission of matter which would be deemed incompetent inn judicial
of the party interested or affected to present his own case and submit proceedings would not invalidate the administrative order. (Interstate
evidence in support thereof. In the language of Chief Hughes, in Morgan v. Commerce Commission v. Baird, 194 U.S. 25, 44, 24 S. Ct. 563, 568, 48 Law.
U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed. 1129, "the liberty and ed. 860; Interstate Commerce Commission v. Louisville and Nashville R. Co.,
property of the citizen shall be protected by the rudimentary requirements 227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431; United States v. Abilene
of fair play. and Southern Ry. Co. S. Ct. 220, 225, 74 Law. ed. 624.) But this assurance of
(2) Not only must the party be given an opportunity to present his case and a desirable flexibility in administrative procedure does not go far as to justify
to adduce evidence tending to establish the rights which he asserts but the orders without a basis in evidence having rational probative force. Mere
tribunal must consider the evidence presented. (Chief Justice Hughes in uncorroborated hearsay or rumor does not constitute substantial evidence.
Morgan v. U.S. 298 U.S. 468, 56 S. Ct. 906, 80 law. ed. 1288.) In the language (Consolidated Edison Co. v. National Labor Relations Board, 59 S. Ct. 206, 83
of this court inEdwards vs. McCoy, 22 Phil., 598, "the right to adduce Law. ed. No. 4, Adv. Op., p. 131.)"
evidence, without the corresponding duty on the part of the board to (5) The decision must be rendered on the evidence presented at the
consider it, is vain. Such right is conspicuously futile if the person or persons hearing, or at least contained in the record and disclosed to the parties
to whom the evidence is presented can thrust it aside without notice or affected. (Interstate Commence Commission vs. L. & N. R. Co., 227 U.S. 88,
consideration." 33 S. Ct. 185, 57 Law. ed. 431.) Only by confining the administrative tribunal
(3) "While the duty to deliberate does not impose the obligation to decide to the evidence disclosed to the parties, can the latter be protected in their
right, it does imply a necessity which cannot be disregarded, namely, that of right to know and meet the case against them. It should not, however,
having something to support it is a nullity, a place when directly attached." detract from their duty actively to see that the law is enforced, and for that
(Edwards vs. McCoy, supra.) This principle emanates from the more purpose, to use the authorized legal methods of securing evidence and
fundamental is contrary to the vesting of unlimited power anywhere. Law is informing itself of facts material and relevant to the controversy. Boards of
both a grant and a limitation upon power. inquiry may be appointed for the purpose of investigating and determining
the facts in any given case, but their report and decision are only advisory. Union Inc., from work" and this avernment is desired to be proved by the
(Section 9, Commonwealth Act No. 103.) The Court of Industrial Relations petitioner with the "records of the Bureau of Customs and the Books of
may refer any industrial or agricultural dispute or any matter under its Accounts of native dealers in leather"; that "the National Workers
consideration or advisement to a local board of inquiry, a provincial fiscal. a Brotherhood Union of Ang Tibay is a company or employer union dominated
justice of the peace or any public official in any part of the Philippines for by Toribio Teodoro, the existence and functions of which are illegal."
investigation, report and recommendation, and may delegate to such board Petitioner further alleges under oath that the exhibits attached to the
or public official such powers and functions as the said Court of Industrial petition to prove his substantial avernments" are so inaccessible to the
Relations may deem necessary, but such delegation shall not affect the respondents that even within the exercise of due diligence they could not be
exercise of the Court itself of any of its powers. (Section 10, ibid.) expected to have obtained them and offered as evidence in the Court of
Industrial Relations", and that the documents attached to the petition "are
(6) The Court of Industrial Relations or any of its judges, therefore, must act of such far reaching importance and effect that their admission would
on its or his own independent consideration of the law and facts of the necessarily mean the modification and reversal of the judgment rendered
controversy, and not simply accept the views of a subordinate in arriving at a herein." We have considered the reply of Ang Tibay and its arguments
decision. It may be that the volume of work is such that it is literally against the petition. By and large, after considerable discussions, we have
Relations personally to decide all controversies coming before them. In the come to the conclusion that the interest of justice would be better served if
United States the difficulty is solved with the enactment of statutory the movant is given opportunity to present at the hearing the documents
authority authorizing examiners or other subordinates to render final referred to in his motion and such other evidence as may be relevant to the
decision, with the right to appeal to board or commission, but in our case main issue involved. The legislation which created the Court of Industrial
there is no such statutory authority. Relations and under which it acts is new. The failure to grasp the
(7) The Court of Industrial Relations should, in all controversial questions, fundamental issue involved is not entirely attributable to the parties
render its decision in such a manner that the parties to the proceeding can adversely affected by the result. Accordingly, the motion for a new trial
know the various issues involved, and the reasons for the decision rendered. should be and the same is hereby granted, and the entire record of this case
The performance of this duty is inseparable from the authority conferred shall be remanded to the Court of Industrial Relations, with instruction that
upon it. it reopen the case, receive all such evidence as may be relevant and
otherwise proceed in accordance with the requirements set forth
In the right of the foregoing fundamental principles, it is sufficient to hereinabove. So ordered.
observe here that, except as to the alleged agreement between the Ang
Tibay and the National Worker's Brotherhood (appendix A), the record is
barren and does not satisfy the thirst for a factual basis upon which to
predicate, in a national way, a conclusion of law.

This result, however, does not now preclude the concession of a new trial
prayed for the by respondent National Labor Union, Inc., it is alleged that
"the supposed lack of material claimed by Toribio Teodoro was but a scheme
adopted to systematically discharged all the members of the National Labor
G.R. No. 157634 May 16, 2005

MAYON HOTEL & RESTAURANT, PACITA O. PO and/or JOSEFA PO


LAM, petitioners,
vs.
ROLANDO ADANA, CHONA BUMALAY, ROGER BURCE, EDUARDO
ALAMARES, AMADO ALAMARES, EDGARDO TORREFRANCA, LOURDES
CAMIGLA, TEODORO LAURENARIA, WENEFREDO LOVERES, LUIS GUADES,
AMADO MACANDOG, PATERNO LLARENA, GREGORIO NICERIO, JOSE
ATRACTIVO, MIGUEL TORREFRANCA, and SANTOS BROÑOLA, respondents.

DECISION

PUNO, J.:

This is a petition for certiorari to reverse and set aside the Decision issued by
the Court of Appeals (CA)1 in CA-G.R. SP No. 68642, entitled "Rolando
Adana, Wenefredo Loveres, et. al. vs. National Labor Relations Commission
(NLRC), Mayon Hotel & Restaurant/Pacita O. Po, et al.," and the
Resolution2 denying petitioners' motion for reconsideration. The assailed CA
decision reversed the NLRC Decision which had dismissed all of respondents'
complaints,3 and reinstated the Joint Decision of the Labor Arbiter 4 which
ruled that respondents were illegally dismissed and entitled to their money
claims.

The facts, culled from the records, are as follows: 5


Petitioner Mayon Hotel & Restaurant is a single proprietor business Due to the expiration and non-renewal of the lease contract for the rented
registered in the name of petitioner Pacita O. Po, 6 whose mother, petitioner space occupied by the said hotel and restaurant at Rizal Street, the hotel
Josefa Po Lam, manages the establishment. 7 The hotel and restaurant operations of the business were suspended on March 31, 1997. 9 The
employed about sixteen (16) employees. operation of the restaurant was continued in its new location at Elizondo
Street, Legazpi City, while waiting for the construction of a new Mayon Hotel
Records show that on various dates starting in 1981, petitioner hotel and & Restaurant at Peñaranda Street, Legazpi City. 10 Only nine (9) of the sixteen
restaurant hired the following people, all respondents in this case, with the (16) employees continued working in the Mayon Restaurant at its new site. 11
following jobs:8
On various dates of April and May 1997, the 16 employees filed complaints
1. Wenefredo Loveres Accountant and Officer-in-charge for underpayment of wages and other money claims against petitioners, as
2. Paterno Llarena Front Desk Clerk follows:12

3. Gregorio Nicerio Supervisory Waiter Wenefredo Loveres, Luis Guades, Amado Macandog and Jose Atractivo for
illegal dismissal, underpayment of wages, nonpayment of holiday and rest
4. Amado Macandog Roomboy day pay; service incentive leave pay (SILP) and claims for separation pay plus
damages;
5. Luis Guades Utility/Maintenance Worker
Paterno Llarena and Gregorio Nicerio for illegal dismissal with claims for
6. Santos Broñola Roomboy
underpayment of wages; nonpayment of cost of living allowance (COLA) and
7. Teodoro Laurenaria Waiter overtime pay; premium pay for holiday and rest day; SILP; nightshift
differential pay and separation pay plus damages;
8. Eduardo Alamares Roomboy/Waiter
Miguel Torrefranca, Chona Bumalay and Lourdes Camigla for underpayment
9. Lourdes Camigla Cashier of wages; nonpayment of holiday and rest day pay and SILP;
10. Chona Bumalay Cashier Rolando Adana, Roger Burce and Amado Alamares for underpayment of
11. Jose Atractivo Technician wages; nonpayment of COLA, overtime, holiday, rest day, SILP and nightshift
differential pay;
12. Amado Alamares Dishwasher and Kitchen Helper
Eduardo Alamares for underpayment of wages, nonpayment of holiday, rest
13. Roger Burce Cook day and SILP and night shift differential pay;

14. Rolando Adana Waiter Santos Broñola for illegal dismissal, underpayment of wages, overtime pay,
rest day pay, holiday pay, SILP, and damages; 13 and
15. Miguel Torrefranca Cook
Teodoro Laurenaria for underpayment of wages; nonpayment of COLA and
16. Edgardo Torrefranca Cook
overtime pay; premium pay for holiday and rest day, and SILP.
On July 14, 2000, Executive Labor Arbiter Gelacio L. Rivera, Jr. rendered a IV. The Honorable Court of Appeals erred in holding that Pacita Ong Po is the
Joint Decision in favor of the employees. The Labor Arbiter awarded owner of the business establishment, petitioner Mayon Hotel and
substantially all of respondents' money claims, and held that respondents Restaurant, thus disregarding the certificate of registration of the business
Loveres, Macandog and Llarena were entitled to separation pay, while establishment ISSUED by the local government, which is a public document,
respondents Guades, Nicerio and Alamares were entitled to their retirement and the unqualified admissions of complainants-private respondents. 14
pay. The Labor Arbiter also held that based on the evidence presented,
Josefa Po Lam is the owner/proprietor of Mayon Hotel & Restaurant and the In essence, the petition calls for a review of the following issues:
proper respondent in these cases. 1. Was it correct for petitioner Josefa Po Lam to be held liable as the owner
On appeal to the NLRC, the decision of the Labor Arbiter was reversed, and of petitioner Mayon Hotel & Restaurant, and the proper respondent in this
case?
all the complaints were dismissed.

Respondents filed a motion for reconsideration with the NLRC and when this 2. Were respondents Loveres, Guades, Macandog, Atractivo, Llarena and
Nicerio illegally dismissed?
was denied, they filed a petition forcertiorari with the CA which rendered
the now assailed decision. 3. Are respondents entitled to their money claims due to underpayment of
wages, and nonpayment of holiday pay, rest day premium, SILP, COLA,
After their motion for reconsideration was denied, petitioners now come to
this Court, seeking the reversal of the CA decision on the following grounds: overtime pay, and night shift differential pay?

It is petitioners' contention that the above issues have already been


I. The Honorable Court of Appeals erred in reversing the decision of the
National Labor Relations Commission (Second Division) by holding that the threshed out sufficiently and definitively by the NLRC. They therefore assail
the CA's reversal of the NLRC decision, claiming that based on the ruling
findings of fact of the NLRC were not supported by substantial evidence
despite ample and sufficient evidence showing that the NLRC decision is in Castillo v. NLRC,15 it is non sequitur that the CA should re-examine the
factual findings of both the NLRC and the Labor Arbiter, especially as in this
indeed supported by substantial evidence;
case the NLRC's findings are allegedly supported by substantial evidence.
II. The Honorable Court of Appeals erred in upholding the joint decision of
We do not agree.
the labor arbiter which ruled that private respondents were illegally
dismissed from their employment, despite the fact that the reason why There is no denying that it is within the NLRC's competence, as an appellate
private respondents were out of work was not due to the fault of petitioners agency reviewing decisions of Labor Arbiters, to disagree with and set aside
but to causes beyond the control of petitioners. the latter's findings.16 But it stands to reason that the NLRC should state an
acceptable cause therefore, otherwise it would be a whimsical, capricious,
III. The Honorable Court of Appeals erred in upholding the award of
monetary benefits by the labor arbiter in his joint decision in favor of the oppressive, illogical, unreasonable exercise of quasi-judicial prerogative,
subject to invalidation by the extraordinary writ of certiorari.17 And when the
private respondentS, including the award of damages to six (6) of the private
respondents, despite the fact that the private respondents have not proven factual findings of the Labor Arbiter and the NLRC are diametrically opposed
and this disparity of findings is called into question, there is, necessarily, a
by substantial evidence their entitlement thereto and especially the fact that
they were not illegally dismissed by the petitioners.
re-examination of the factual findings to ascertain which opinion should be 1. Ownership by Josefa Po Lam
sustained.18 As ruled in Asuncion v. NLRC,19
The Labor Arbiter ruled that as regards the claims of the employees,
Although, it is a legal tenet that factual findings of administrative bodies are petitioner Josefa Po Lam is, in fact, the owner of Mayon Hotel & Restaurant.
entitled to great weight and respect, we are constrained to take a second Although the NLRC reversed this decision, the CA, on review, agreed with
look at the facts before us because of the diversity in the opinions of the the Labor Arbiter that notwithstanding the certificate of registration in the
Labor Arbiter and the NLRC. A disharmony between the factual findings of name of Pacita Po, it is Josefa Po Lam who is the owner/proprietor of Mayon
the Labor Arbiter and those of the NLRC opens the door to a review thereof Hotel & Restaurant, and the proper respondent in the complaints filed by
by this Court.20 the employees. The CA decision states in part:

The CA, therefore, did not err in reviewing the records to determine which [Despite] the existence of the Certificate of Registration in the name of
opinion was supported by substantial evidence. Pacita Po, we cannot fault the labor arbiter in ruling that Josefa Po Lam is
the owner of the subject hotel and restaurant. There were conflicting
Moreover, it is explicit in Castillo v. NLRC21 that factual findings of documents submitted by Josefa herself. She was ordered to submit
administrative bodies like the NLRC are affirmed only if they are supported additional documents to clearly establish ownership of the hotel and
by substantial evidence that is manifest in the decision and on the records. restaurant, considering the testimonies given by the [respondents] and the
As stated in Castillo: non-appearance and failure to submit her own position paper by Pacita Po.
[A]buse of discretion does not necessarily follow from a reversal by the NLRC But Josefa did not comply with the directive of the Labor Arbiter. The ruling
of a decision of a Labor Arbiter. Mere variance in evidentiary assessment of the Supreme Court in Metropolitan Bank and Trust Company v. Court of
between the NLRC and the Labor Arbiter does not automatically call for a Appeals applies to Josefa Po Lam which is stated in this wise:
full review of the facts by this Court. The NLRC's decision, so long as it is not When the evidence tends to prove a material fact which imposes a liability
bereft of substantial support from the records, deserves respect from this on a party, and he has it in his power to produce evidence which from its
Court. As a rule, the original and exclusive jurisdiction to review a decision very nature must overthrow the case made against him if it is not founded
or resolution of respondent NLRC in a petition for certiorari under Rule 65 of on fact, and he refuses to produce such evidence, the presumption arises
the Rules of Court does not include a correction of its evaluation of the that the evidence[,] if produced, would operate to his prejudice, and
evidence but is confined to issues of jurisdiction or grave abuse of support the case of his adversary.
discretion. Thus, the NLRC's factual findings, if supported by substantial
evidence, are entitled to great respect and even finality, unless petitioner is Furthermore, in ruling that Josefa Po Lam is the real owner of the hotel and
able to show that it simply and arbitrarily disregarded the evidence before it restaurant, the labor arbiter relied also on the testimonies of the witnesses,
or had misappreciated the evidence to such an extent as to compel a during the hearing of the instant case. When the conclusions of the labor
contrary conclusion if such evidence had been properly appreciated. arbiter are sufficiently corroborated by evidence on record, the same should
(citations omitted)22 be respected by appellate tribunals, since he is in a better position to assess
and evaluate the credibility of the contending parties. 23 (citations omitted)
After careful review, we find that the reversal of the NLRC's decision was in
order precisely because it was not supported by substantial evidence.
Petitioners insist that it was error for the Labor Arbiter and the CA to have Mayon Hotel and Restaurant is a [business name] of an enterprise. While
ruled that petitioner Josefa Po Lam is the owner of Mayon Hotel & [petitioner] Josefa Po Lam claims that it is her daughter, Pacita Po, who owns
Restaurant. They allege that the documents they submitted to the Labor the hotel and restaurant when the latter purchased the same from one
Arbiter sufficiently and clearly establish the fact of ownership by petitioner Palanos in 1981, Josefa failed to submit the document of sale from said
Pacita Po, and not her mother, petitioner Josefa Po Lam. They contend that Palanos to Pacita as allegedly the sale was only verbal although the license
petitioner Josefa Po Lam's participation was limited to merely (a) being the to operate said hotel and restaurant is in the name of Pacita which, despite
overseer; (b) receiving the month-to-month and/or year-to-year financial our Order to Josefa to present the same, she failed to comply (p. 38, tsn.
reports prepared and submitted by respondent Loveres; and (c) visitation of August 13, 1998). While several documentary evidences were submitted by
the premises.24 They also put emphasis on the admission of the respondents Josefa wherein Pacita was named therein as owner of the hotel and
in their position paper submitted to the Labor Arbiter, identifying petitioner restaurant (pp. 64, 65, 67 to 69; vol. I, rollo)[,] there were documentary
Josefa Po Lam as the manager, and Pacita Po as the owner. 25 This, they claim, evidences also that were submitted by Josefa showing her ownership of said
is a judicial admission and is binding on respondents. They protest the enterprise (pp. 468 to 469; vol. II, rollo). While Josefa explained her
reliance the Labor Arbiter and the CA placed on their failure to submit participation and interest in the business as merely to help and assist her
additional documents to clearly establish ownership of the hotel and daughter as the hotel and restaurant was near the former's store, the
restaurant, claiming that there was no need for petitioner Josefa Po Lam to testimonies of [respondents] and Josefa as well as her demeanor during the
submit additional documents considering that the Certificate of Registration trial in these cases proves (sic) that Josefa Po Lam owns Mayon Hotel and
is the best and primary evidence of ownership. Restaurant. [Respondents] testified that it was Josefa who exercises all the
acts and manifestation of ownership of the hotel and restaurant like
We disagree with petitioners. We have scrutinized the records and find the transferring employees from the Greatwall Palace Restaurant which she and
claim that petitioner Josefa Po Lam is merely the overseer is not borne out her husband Roy Po Lam previously owned; it is Josefa to whom the
by the evidence. employees submits (sic) reports, draws money for payment of payables and
First. It is significant that only Josefa Po Lam appeared in the proceedings for marketing, attending (sic) to Labor Inspectors during ocular inspections.
with the Labor Arbiter. Despite receipt of the Labor Arbiter's notice and Except for documents whereby Pacita Po appears as the owner of Mayon
summons, other notices and Orders, petitioner Pacita Po failed to appear in Hotel and Restaurant, nothing in the record shows any circumstance or
any of the proceedings with the Labor Arbiter in these cases, nor file her manifestation that Pacita Po is the owner of Mayon Hotel and Restaurant.
position paper.26 It was only on appeal with the NLRC that Pacita Po signed The least that can be said is that it is absurd for a person to purchase a hotel
the pleadings.27 The apathy shown by petitioner Pacita Po is contrary to and restaurant in the very heart of the City of Legazpi verbally. Assuming this
human experience as one would think that the owner of an establishment to be true, when [petitioners], particularly Josefa, was directed to submit
would naturally be concerned when all her employees file complaints evidence as to the ownership of Pacita of the hotel and restaurant,
against her. considering the testimonies of [respondents], the former should [have]
submitted the lease contract between the owner of the building where
Second. The records of the case belie petitioner Josefa Po Lam's claim that Mayon Hotel and Restaurant was located at Rizal St., Legazpi City and Pacita
she is merely an overseer. The findings of the Labor Arbiter on this question Po to clearly establish ownership by the latter of said enterprise. Josefa
were based on credible, competent and substantial evidence. We again failed. We are not surprised why some employers employ schemes to
quote the Joint Decision on this matter: mislead Us in order to evade liabilities. We therefore consider and hold
Josefa Po Lam as the owner/proprietor of Mayon Hotel and Restaurant and that petitioners had absolute lack of opportunity to be heard. 35 Obviously,
the proper respondent in these cases.28 the choice not to present evidence was made by petitioners themselves. 36

Petitioners' reliance on the rules of evidence, i.e., the certificate of But more significantly, we sustain the Labor Arbiter and the CA because
registration being the best proof of ownership, is misplaced. even when the case was on appeal with the NLRC, nothing was submitted to
Notwithstanding the certificate of registration, doubts were cast as to the negate the Labor Arbiter's finding that Pacita Po is not the real owner of the
true nature of petitioner Josefa Po Lam's involvement in the enterprise, and subject hotel and restaurant. Indeed, no such evidence was submitted in the
the Labor Arbiter had the authority to resolve this issue. It was therefore proceedings with the CA nor with this Court. Considering that petitioners
within his jurisdiction to require the additional documents to ascertain who vehemently deny ownership by petitioner Josefa Po Lam, it is most telling
was the real owner of petitioner Mayon Hotel & Restaurant. that they continue to withhold evidence which would shed more light on
this issue. We therefore agree with the CA that the failure to submit could
Article 221 of the Labor Code is clear: technical rules are not binding, and only mean that if produced, it would have been adverse to petitioners'
the application of technical rules of procedure may be relaxed in labor cases case.37
to serve the demand of substantial justice. 29 The rule of evidence prevailing
in court of law or equity shall not be controlling in labor cases and it is the Thus, we find that there is substantial evidence to rule that petitioner Josefa
spirit and intention of the Labor Code that the Labor Arbiter shall use every Po Lam is the owner of petitioner Mayon Hotel & Restaurant.
and all reasonable means to ascertain the facts in each case speedily and
2. Illegal Dismissal: claim for separation pay
objectively and without regard to technicalities of law or procedure, all in
the interest of due process.30 Labor laws mandate the speedy administration Of the sixteen employees, only the following filed a case for illegal dismissal:
of justice, with least attention to technicalities but without sacrificing the respondents Loveres, Llarena, Nicerio, Macandog, Guades, Atractivo and
fundamental requisites of due process.31 Broñola.38
Similarly, the fact that the respondents' complaints contained no allegation The Labor Arbiter found that there was illegal dismissal, and granted
that petitioner Josefa Po Lam is the owner is of no moment. To apply the separation pay to respondents Loveres, Macandog and Llarena. As
concept of judicial admissions to respondents — who are but lowly respondents Guades, Nicerio and Alamares were already 79, 66 and 65 years
employees - would be to exact compliance with technicalities of law that is old respectively at the time of the dismissal, the Labor Arbiter granted
contrary to the demands of substantial justice. Moreover, the issue of retirement benefits pursuant to Article 287 of the Labor Code as
ownership was an issue that arose only during the course of the proceedings amended.39 The Labor Arbiter ruled that respondent Atractivo was not
with the Labor Arbiter, as an incident of determining respondents' claims, entitled to separation pay because he had been transferred to work in the
and was well within his jurisdiction.32 restaurant operations in Elizondo Street, but awarded him damages.
Respondents Loveres, Llarena, Nicerio, Macandog and Guades were also
Petitioners were also not denied due process, as they were given sufficient
opportunity to be heard on the issue of ownership. 33 The essence of due awarded damages.40
process in administrative proceedings is simply an opportunity to explain The NLRC reversed the Labor Arbiter, finding that "no clear act of
one's side or an opportunity to seek reconsideration of the action or ruling termination is attendant in the case at bar" and that respondents "did not
complained of.34 And there is nothing in the records which would suggest submit any evidence to that effect, but the finding and conclusion of the
Labor Arbiter [are] merely based on his own surmises and conjectures." 41 In Parenthetically, the Labor Arbiter did not grant separation pay to the other
turn, the NLRC was reversed by the CA. respondents as they had not filed an amended complaint to question the
cessation of their employment after the closure of Mayon Hotel &
It is petitioners contention that the CA should have sustained the NLRC Restaurant on March 31, 1997.45
finding that none of the above-named respondents were illegally dismissed,
or entitled to separation or retirement pay. According to petitioners, even The above factual finding of the Labor Arbiter was never refuted by
the Labor Arbiter and the CA admit that when the illegal dismissal case was petitioners in their appeal with the NLRC. It confounds us, therefore, how
filed by respondents on April 1997, they had as yet no cause of action. the NLRC could have so cavalierly treated this uncontroverted factual finding
Petitioners therefore conclude that the filing by respondents of the illegal by ruling that respondents have not introduced any evidence to show that
dismissal case was premature and should have been dismissed outright by they were illegally dismissed, and that the Labor Arbiter's finding was based
the Labor Arbiter.42 Petitioners also claim that since the validity of on conjecture.46 It was a serious error that the NLRC did not inquire as to
respondents' dismissal is a factual question, it is not for the reviewing court thelegality of the cessation of employment. Article 286 of the Labor Code is
to weigh the conflicting evidence.43 clear — there is termination of employment when an otherwise bona
fide suspension of work exceeds six (6) months. 47 The cessation of
We do not agree. Whether respondents are still working for petitioners is a employment for more than six months was patent and the employer has the
factual question. And the records are unequivocal that since April 1997, burden of proving that the termination was for a just or authorized cause. 48
when petitioner Mayon Hotel & Restaurant suspended its hotel operations
and transferred its restaurant operations in Elizondo Street, respondents Moreover, we are not impressed by any of petitioners' attempts to exculpate
Loveres, Macandog, Llarena, Guades and Nicerio have not been permitted themselves from the charges. First, in the proceedings with the Labor
to work for petitioners. Respondent Alamares, on the other hand, was also Arbiter, they claimed that it could not be illegal dismissal because the lay-off
laid-off when the Elizondo Street operations closed, as were all the other was merely temporary (and due to the expiration of the lease contract over
respondents. Since then, respondents have not been permitted to work nor the old premises of the hotel). Theyspecifically invoked Article 286 of the
recalled, even after the construction of the new premises at Peñaranda Labor Code to argue that the claim for separation pay was premature and
Street and the reopening of the hotel operations with the restaurant in this without legal and factual basis. 49 Then, because the Labor Arbiter had ruled
new site. As stated by the Joint Decision of the Labor Arbiter on July 2000, or that there was already illegal dismissal when the lay-off had exceeded the
more than three (3) years after the complaint was filed: 44 six-month period provided for in Article 286, petitioners raise this novel
argument, to wit:
[F]rom the records, more than six months had lapsed without [petitioner]
having resumed operation of the hotel. After more than one year from the It is the firm but respectful submission of petitioners that reliance on Article
temporary closure of Mayon Hotel and the temporary transfer to another 286 of the Labor Code is misplaced, considering that the reason why private
site of Mayon Restaurant, the building which [petitioner] Josefa allege[d] respondents were out of work was not due to the fault of petitioners. The
w[h]ere the hotel and restaurant will be transferred has been finally failure of petitioners to reinstate the private respondents to their former
constructed and the same is operated as a hotel with bar and restaurant positions should not likewise be attributable to said petitioners as the
nevertheless, none of [respondents] herein who were employed at Mayon private respondents did not submit any evidence to prove their alleged
Hotel and Restaurant which was also closed on April 30, 1998 was/were illegal dismissal. The petitioners cannot discern why they should be made
recalled by [petitioner] to continue their services... liable to the private respondents for their failure to be reinstated
considering that the fact that they were out of work was not due to the fault the permanent severance or complete separation of the worker from the
of petitioners but due to circumstances beyond the control of petitioners, service on the initiative of the employer regardless of the reasons therefor. 51
which are the termination and non-renewal of the lease contract over the
On this point, we note that the Labor Arbiter and the CA are in accord that
subject premises. Private respondents, however, argue in their Comment
that petitioners themselves sought the application of Article 286 of the at the time of the filing of the complaint, respondents had no cause of
action to file the case for illegal dismissal. According to the CA and the Labor
Labor Code in their case in their Position Paper filed before the Labor
Arbiter. In refutation, petitioners humbly submit that even if they invoke Arbiter, the lay-off of the respondents was merely temporary, pending
construction of the new building at Peñaranda Street. 52
Article 286 of the Labor Code, still the fact remains, and this bears stress and
emphasis, that the temporary suspension of the operations of the While the closure of the hotel operations in April of 1997 may have been
establishment arising from the non-renewal of the lease contract did not temporary, we hold that the evidence on record belie any claim of
result in the termination of employment of private respondents and, petitioners that the lay-of of respondents on that same date was merely
therefore, the petitioners cannot be faulted if said private respondents were temporary. On the contrary, we find substantial evidence that petitioners
out of work, and consequently, they are not entitled to their money claims intended the termination to be permanent. First, respondents Loveres,
against the petitioners.50 Macandog, Llarena, Guades, Nicerio and Alamares filed the complaint for
It is confounding how petitioners have fashioned their arguments. After illegal dismissalimmediately after the closure of the hotel operations in Rizal
Street, notwithstanding the alleged temporary nature of the closure of the
having admitted, in effect, that respondents have been laid-off since April
1997, they would have this Court excuse their refusal to reinstate hotel operations, and petitioners' allegations that the employees assigned to
the hotel operations knew about this beforehand. Second, in their position
respondents or grant them separation pay because these same respondents
purportedly have not proven the illegality of their dismissal. paper submitted to the Labor Arbiter, petitioners invoked Article 286 of the
Labor Code to assert that the employer-employee relationship was merely
Petitioners' arguments reflect their lack of candor and the blatant attempt to suspended, and therefore the claim for separation pay was premature and
use technicalities to muddle the issues and defeat the lawful claims of their without legal or factual basis. 53 But they made no mention of any intent to
employees. First, petitioners admit that since April 1997, when hotel recall these respondents to work upon completion of the new premises.
operations were suspended due to the termination of the lease of the old Third,the various pleadings on record show that petitioners held
premises, respondents Loveres, Macandog, Llarena, Nicerio and respondents, particularly Loveres, as responsible for mismanagement of the
Guades have not been permitted to work. Second, even after six monthsof establishment and for abuse of trust and confidence. Petitioner Josefa Po
what should have been just a temporary lay-off, the same respondents Lam's affidavit on July 21, 1998, for example, squarely blamed respondents,
were still not recalled to work. As a matter of fact, the Labor Arbiter even specifically Loveres, Bumalay and Camigla, for abusing her leniency and
found that as of the time when he rendered his Joint Decision on July 2000 causing petitioner Mayon Hotel & Restaurant to sustain "continuous losses
— or more than three (3) years after the supposed "temporary lay-off," the until it is closed." She then asserts that respondents "are not entitled to
employment of all of the respondents with petitioners had ceased, separation pay for they were not terminated and if ever the business ceased
notwithstanding that the new premises had been completed and the same to operate it was because of losses." 54 Again, petitioners make the same
operated as a hotel with bar and restaurant. This is clearly dismissal — or allegation in their memorandum on appeal with the NLRC, where they
alleged that three (3) years prior to the expiration of the lease in 1997, the
operation of the Hotel had been sustaining consistent losses, and these Moreover, even assuming arguendo that the cessation of employment on
were solely attributed to respondents, but most especially due to Loveres's April 1997 was merely temporary, itbecame dismissal by operation of law
mismanagement and abuse of petitioners' trust and confidence. 55 Even the when petitioners failed to reinstate respondents after the lapse of six (6)
petition filed in this court made reference to the separation of the months, pursuant to Article 286 of the Labor Code.
respondents due to "severe financial losses and reverses," again imputing it
We are not impressed by petitioners' claim that severe business losses
to respondents' mismanagement.56 The vehemence of petitioners'
accusation of mismanagement against respondents, especially against justified their failure to reinstate respondents. The evidence to prove this
fact is inconclusive. But more important, serious business losses do not
Loveres, is inconsistent with the desire to recall them to work. Fourth,
petitioners' memorandum on appeal also averred that the case was filed excuse the employer from complying with the clearance or report required
under Article 283 of the Labor Code and its implementing rules before
"not because of the business being operated by them or that they were
supposedly not receiving benefits from the Labor Code which is true, but terminating the employment of its workers. 63 In the absence of justifying
circumstances, the failure of petitioners to observe the procedural
because of the fact that the source of their livelihood, whether legal or
immoral, was stopped on March 31, 1997, when the owner of the building requirements set out under Article 284, taints their actuations with bad
faith, especially since they claimed that they have been experiencing losses
terminated the Lease Contract." 57Fifth, petitioners had inconsistencies in
their pleadings (with the NLRC, CA and with this Court) in referring to the in the three years before 1997. To say the least, if it were true that the lay-
off was temporary but then serious business losses prevented the
closure,58 i.e., in the petition filed with this court, they assert that there is no
illegal dismissal because there was "only a temporary cessation or reinstatement of respondents, then petitioners should have complied with
the requirements of written notice. The requirement of law mandating the
suspension of operations of the hotel and restaurant due to circumstances
beyond the control of petitioners, and that is, the non-renewal of the lease giving of notices was intended not only to enable the employees to look for
another employment and therefore ease the impact of the loss of their jobs
contract..."59 And yet, in the same petition, they also assert that: (a) the
separation of respondents was due to severe financial losses and reverses and the corresponding income, but more importantly, to give the
Department of Labor and Employment (DOLE) the opportunity to ascertain
leading to the closure of the business; and (b) petitioner Pacita Po had to
close shop and was bankrupt and has no liquidity to put up her own building the verity of the alleged authorized cause of termination. 64
to house Mayon Hotel & Restaurant. 60 Sixth, and finally, the uncontroverted And even assuming that the closure was due to a reason beyond the control
finding of the Labor Arbiter that petitioners terminated all the other of the employer, it still has to accord its employees some relief in the form of
respondents, by not employing them when the Hotel and Restaurant severance pay.65
transferred to its new site on Peñaranda Street. 61 Indeed, in this same
memorandum, petitioners referred to all respondents as "former employees While we recognize the right of the employer to terminate the services of an
of Mayon Hotel & Restaurant."62 employee for a just or authorized cause, the dismissal of employees must be
made within the parameters of law and pursuant to the tenets of fair
These factors may be inconclusive individually, but when taken together, play.66 And in termination disputes, the burden of proof is always on the
they lead us to conclude that petitioners really intended to dismiss all employer to prove that the dismissal was for a just or authorized
respondents and merely used the termination of the lease (on Rizal Street cause.67 Where there is no showing of a clear, valid and legal cause for
premises) as a means by which they could terminate their employees. termination of employment, the law considers the case a matter of illegal
dismissal.68
Under these circumstances, the award of damages was proper. As a rule, 3. Money claims
moral damages are recoverable where the dismissal of the employee was
attended by bad faith or fraud or constituted an act oppressive to labor, or The CA held that contrary to the NLRC's ruling, petitioners had not
discharged the burden of proving that the monetary claims of the
was done in a manner contrary to morals, good customs or public
policy.69 We believe that the dismissal of the respondents was attended with respondents have been paid.74 The CA thus reinstated the Labor Arbiter's
grant of respondents' monetary claims, including damages.
bad faith and meant to evade the lawful obligations imposed upon an
employer. Petitioners assail this ruling by repeating their long and convoluted
argument that as there was no illegal dismissal, then respondents are not
To rule otherwise would lead to the anomaly of respondents being
terminated from employment in 1997 as a matter of fact, but without legal entitled to their monetary claims or separation pay and damages.
Petitioners' arguments are not only tiring, repetitive and unconvincing, but
redress. This runs counter to notions of fair play, substantial justice and the
constitutional mandate that labor rights should be respected. If doubts exist confusing and confused — entitlement to labor standard benefits is a
separate and distinct concept from payment of separation pay arising from
between the evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter — the employer must illegal dismissal, and are governed by different provisions of the Labor Code.
affirmatively show rationally adequate evidence that the dismissal was for a We agree with the CA and the Labor Arbiter. Respondents have set out with
justifiable cause.70 It is a time-honored rule that in controversies between a particularity in their complaint, position paper, affidavits and other
laborer and his master, doubts reasonably arising from the evidence, or in documents the labor standard benefits they are entitled to, and which they
the interpretation of agreements and writing should be resolved in the alleged that petitioners have failed to pay them. It was therefore petitioners'
former's favor.71 The policy is to extend the doctrine to a greater number of burden to prove that they have paid these money claims. One who pleads
employees who can avail of the benefits under the law, which is in payment has the burden of proving it, and even where the employees must
consonance with the avowed policy of the State to give maximum aid and allege nonpayment, the general rule is that the burden rests on the
protection of labor.72 defendant to prove nonpayment, rather than on the plaintiff to prove non
payment.75 This petitioners failed to do.
We therefore reinstate the Labor Arbiter's decision with the following
modifications: We also agree with the Labor Arbiter and the CA that the documents
petitioners submitted, i.e., affidavits executed by some of respondents
(a) Separation pay for the illegal dismissal of respondents Loveres,
Macandog and Llarena; (Santos Broñola cannot be granted separation pay as during an ocular inspection conducted by an inspector of the DOLE; notices
of inspection result and Facility Evaluation Orders issued by DOLE, are not
he made no such claim);
sufficient to prove payment.76 Despite repeated orders from the Labor
(b) Retirement pay for respondents Guades, Nicerio, and Alamares, who at Arbiter,77 petitioners failed to submit the pertinent employee files, payrolls,
the time of dismissal were entitled to their retirement benefits pursuant to records, remittances and other similar documents which would show that
Article 287 of the Labor Code as amended;73 and respondents rendered work entitling them to payment for overtime work,
night shift differential, premium pay for work on holidays and rest day, and
(c) Damages for respondents Loveres, Macandog, Llarena, Guades, Nicerio, payment of these as well as the COLA and the SILP – documents which are
Atractivo, and Broñola. not in respondents' possession but in the custody and absolute control of
petitioners.78 By choosing not to fully and completely disclose information by [petitioners] to [respondents] were specified for purposes of considering
and present the necessary documents to prove payment of labor standard the same as part of their wages, We cannot consider the cost of meals in the
benefits due to respondents, petitioners failed to discharge the burden of Orders as applicable to [respondents]. [Respondents] were not interviewed
proof.79 Indeed, petitioners' failure to submit the necessary documents by the DOLE as to the quality and quantity of food appearing in the
which as employers are in their possession, inspite of orders to do so, gives applications of [petitioners] for facility evaluation prior to its approval to
rise to the presumption that their presentation is prejudicial to its determine whether or not [respondents] were indeed given such kind and
cause.80 As aptly quoted by the CA: quantity of food. Also, there was no evidence that the quality and quantity
of food in the Orders were voluntarily accepted by [respondents]. On the
[W]hen the evidence tends to prove a material fact which imposes a liability contrary; while some [of the respondents] admitted that they were given
on a party, and he has it in his power to produce evidence which from its meals and merienda, the quality of food serve[d] to them were not what
very nature must overthrow the case made against him if it is not founded were provided for in the Orders and that it was only when they filed these
on fact, and he refuses to produce such evidence, the presumption arises cases that they came to know about said Facility Evaluation Orders (pp. 100;
that the evidence, if produced, would operate to his prejudice, and support 379[,] vol. II, rollo; p. 40, tsn[,] June 19, 1998). [Petitioner] Josefa herself,
the case of his adversary. 81 who applied for evaluation of the facility (food) given to [respondents],
Petitioners next claim that the cost of the food and snacks provided to testified that she did not inform [respondents] concerning said Facility
respondents as facilities should have been included in reckoning the Evaluation Orders (p. 34, tsn[,] August 13, 1998).
payment of respondents' wages. They state that although on the surface Even granting that meals and snacks were provided and indeed constituted
respondents appeared to receive minimal wages, petitioners had granted facilities, such facilities could not be deducted without compliance with
respondents other benefits which are considered part and parcel of their certain legal requirements. As stated in Mabeza v. NLRC,87 the employer
wages and are allowed under existing laws. 82 They claim that these benefits simply cannot deduct the value from the employee's wages without
make up for whatever inadequacies there may be in satisfying the following: (a) proof that such facilities are customarily
compensation.83 Specifically, they invoked Sections 5 and 6, Rule VII-A, which furnished by the trade; (b) the provision of deductible facilities is voluntarily
allow the deduction of facilities provided by the employer through an accepted in writing by the employee; and (c) the facilities are charged at fair
appropriate Facility Evaluation Order issued by the Regional Director of the and reasonable value. The records are clear that petitioners failed to comply
DOLE.84 Petitioners also aver that they give five (5) percent of the gross with these requirements. There was no proof of respondents' written
income each month as incentives. As proof of compliance of payment of authorization. Indeed, the Labor Arbiter found that while the respondents
minimum wages, petitioners submitted the Notice of Inspection Results admitted that they were given meals and merienda, the quality of food
issued in 1995 and 1997 by the DOLE Regional Office. 85 served to them was not what was provided for in the Facility Evaluation
The cost of meals and snacks purportedly provided to respondents cannot Orders and it was only when they filed the cases that they came to know of
be deducted as part of respondents' minimum wage. As stated in the Labor this supposed Facility Evaluation Orders. 88 Petitioner Josefa Po Lam
Arbiter's decision:86 herself admitted that she did not inform the respondents of the facilities she
had applied for.89
While [petitioners] submitted Facility Evaluation Orders (pp. 468, 469; vol.
II, rollo) issued by the DOLE Regional Office whereby the cost of meals given
Considering the failure to comply with the above-mentioned legal same [are] based on the gross receipt of the hotel[?] No profit can as yet be
requirements, the Labor Arbiter therefore erred when he ruled that the cost determined out of the gross receipt of an enterprise. Profits are realized
of the meals actually provided to respondents should be deducted as part of after expenses are deducted from the gross income.
their salaries, on the ground that respondents have availed themselves of
the food given by petitioners. 90 The law is clear that mere availment is not On the issue of the proper minimum wage applicable to respondents, we
sustain the Labor Arbiter. We note that petitioners themselves have
sufficient to allow deductions from employees' wages.
admitted that the establishment employs "more or less sixteen (16)
More important, we note the uncontroverted testimony of respondents on employees,"93therefore they are estopped from claiming that the applicable
record that they were required to eat in the hotel and restaurant so that minimum wage should be for service establishments employing 15
they will not go home and there is no interruption in the services of Mayon employees or less.
Hotel & Restaurant. As ruled in Mabeza, food or snacks or other
convenience provided by the employers are deemed as supplements if they As for petitioners repeated invocation of serious business losses, suffice to
say that this is not a defense to payment of labor standard benefits. The
are granted for the convenience of the employer. The criterion in making a
distinction between a supplement and a facility does not so much lie in the employer cannot exempt himself from liability to pay minimum wages
because of poor financial condition of the company. The payment of
kind (food, lodging) but the purpose. 91 Considering, therefore, that hotel
workers are required to work different shifts and are expected to be minimum wages is not dependent on the employer's ability to pay. 94
available at various odd hours, their ready availability is a necessary matter Thus, we reinstate the award of monetary claims granted by the Labor
in the operations of a small hotel, such as petitioners' business. 92 The Arbiter.
deduction of the cost of meals from respondents' wages, therefore, should
be removed. 4. Conclusion

We also do not agree with petitioners that the five (5) percent of the gross There is no denying that the actuations of petitioners in this case have been
income of the establishment can be considered as part of the respondents' reprehensible. They have terminated the respondents' employment in an
wages. We quote with approval the Labor Arbiter on this matter, to wit: underhanded manner, and have used and abused the quasi-judicial and
judicial processes to resist payment of their employees' rightful claims,
While complainants, who were employed in the hotel, receive[d] various thereby protracting this case and causing the unnecessary clogging of
amounts as profit share, the same cannot be considered as part of their dockets of the Court. They have also forced respondents to unnecessary
wages in determining their claims for violation of labor standard benefits. hardship and financial expense. Indeed, the circumstances of this case
Although called profit share[,] such is in the nature of share from service would have called for exemplary damages, as the dismissal was effected in a
charges charged by the hotel. This is more explained by [respondents] when wanton, oppressive or malevolent manner, 95 and public policy requires that
they testified that what they received are not fixed amounts and the same these acts must be suppressed and discouraged. 96
are paid not on a monthly basis (pp. 55, 93, 94, 103, 104; vol. II, rollo). Also,
[petitioners] failed to submit evidence that the amounts received by Nevertheless, we cannot agree with the Labor Arbiter in granting exemplary
[respondents] as profit share are to be considered part of their wages and damages of P10,000.00 each to all respondents. While it is true that other
had been agreed by them prior to their employment. Further, how can the forms of damages under the Civil Code may be awarded to illegally
amounts receive[d] by [respondents] be considered as profit share when the dismissed employees,97 any award of moral damages by the Labor Arbiter
cannot be based on the Labor Code but should be grounded on the Civil The case is REMANDED to the Labor Arbiter for the RECOMPUTATION of the
Code.98 And the law is clear that exemplary damages can only be awarded if total monetary benefits awarded and due to the employees concerned in
plaintiff shows proof that he is entitled to moral, temperate or accordance with the decision. The Labor Arbiter is ORDERED to submit his
compensatory damages.99 compliance thereon within thirty (30) days from notice of this decision, with
copies furnished to the parties.
As only respondents Loveres, Guades, Macandog, Llarena, Nicerio, Atractivo
and Broñola specifically claimed damages from petitioners, then only they SO ORDERED.
are entitled to exemplary damages.sjgs1

Finally, we rule that attorney's fees in the amount to P10,000.00 should be


granted to each respondent. It is settled that in actions for recovery of
wages or where an employee was forced to litigate and incur expenses to
protect his rights and interest, he is entitled to an award of attorney's
fees.100 This case undoubtedly falls within this rule.

IN VIEW WHEREOF, the petition is hereby DENIED. The Decision of January


17, 2003 of the Court of Appeals in CA-G.R. SP No. 68642 upholding the
Joint Decision of July 14, 2000 of the Labor Arbiter in RAB V Case Nos. 04-
00079-97 and 04-00080-97 is AFFIRMED, with the following
MODIFICATIONS:

(1) Granting separation pay of one-half (1/2) month for every year of service
to respondents Loveres, Macandog and Llarena;

(2) Granting retirement pay for respondents Guades, Nicerio, and Alamares;

(3) Removing the deductions for food facility from the amounts due to all
respondents;

(4) Awarding moral damages of P20,000.00 each for respondents Loveres,


Macandog, Llarena, Guades, Nicerio, Atractivo, and Broñola;

(5) Deleting the award of exemplary damages of P10,000.00 from all


respondents except Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo,
and Broñola; and

(6) Granting attorney's fees of P10,000.00 each to all respondents.


G.R. No. 76988 January 31, 1989

GENERAL RUBBER AND FOOTWEAR CORPORATION, petitioner,


vs.
THE HON. FRANKLIN DRILON IN HIS CAPACITY AS THE MINISTER OF LABOR
& EMPLOYMENT and THE GENERAL RUBBER WORKERS' UNION-
NATU, respondents.

Paez & Pascual Law Office for petitioners.

The Solicitor General for public respondent.

Marcelino Lontok, Jr. for private respondent.

RESOLUTION

FELICIANO, J.:

The present petition involves the question of whether or not union


members who did not ratify a waiver of accrued wage differentials are
bound by the ratification made by a majority of the union members.

On 26 December 1984, Wage Order No. 6 was issued, increasing the


statutory minimum wage rate (by P2.00) and the mandatory cost of living
allowance (by P3.00 for non-agricultural workers) in the private sector, to
take effect on 1 November 1984, Petitioner General Rubber and Footwear
Corporation applied to the National Wages Council ("Council") for
exemption from the provisions of Wage Order No. 6. The Council, in an
Order dated 4 March 1985, denied petitioner's application, stating in part
that:

[Y]ou are hereby ordered to pay your covered employees the daily increase
in statutory minimum wage rate of P 2.00 and living allowance of P3.00
effective November 1, 1984. ...

This decision is final. 1 (Emphasis supplied)


Petitioner filed a Motion for Reconsideration of this Order on 27 May 1985. withdrawal of petitioner's Motion for Reconsideration and who would not
sign the instrument ratifying the Agreement. On 10 July 1985, these
On 25 May 1985, some members of respondent General Rubber Workers' minority union members with respondent union acting on their behalf,
Union-NATU, led by one Leopoldo Sto. Domingo, declared a strike against applied for a writ of execution of the Council's Order. 6
petitioner. 2 Three (3) days later, on 28 May 1985, petitioner and Sto.
Domingo, the latter purporting to represent the striking workers, entered Petitioner opposed the Motion for a writ of execution, contending that the
into a Return-to-Work Agreement ("Agreement"), Article 4 of which Council's approval of its deferred compliance with the implementation of
provided: the Wage Order, 7 together with the majority ratification of the Agreement
by the individual workers, 8 bound the non-ratifying union members
4. The COMPANY agrees to implement in full Wage Order No. 6 effective represented by respondent union.
May 30, 1985, and agrees to withdraw the Motion for Reconsideration
which it filed with the National Wages Council in connection with the Respondent union countered that the Agreement — despite the majority
Application for Exemption. In consideration, the UNION, its officers and ratification — was not binding on the union members who had not
members, agrees not to demand or ask from the COMPANY the consented thereto, upon the ground that ratification or non-ratification of
corresponding differential pay from November 1, 1984 to May 29 the Agreement, involving as it did money claims, was a personal right under
1985 arising out of the non-compliance of said wage order during the said the doctrine of "Kaisahan ng Manggagawa sa La Campana v. Honorable
period. 3 (Emphasis supplied) Judge Ulpiano Sarmiento and La Campana." 9

This agreement was subsequently ratified on 30 July 1985 in a document Finding for the Union members represented by respondent union, the then
entitled "Sama-samang Kapasyahan sa Pagpapatibay ng Return-to-Work Ministry (now Department) of Labor and Employment, in an order dated 20
Agreement" 4 by some two hundred and sixty-eight (268) members of September 1985 issued by National Capital Region Director Severo M.
respondent union, each member signing individually the instrument of Pucan, directed the issuance of a writ of execution and required petitioner
ratification. to pay the minority members of respondent union their claims for
differential pay under Wage Order No. 6, which totalled P90,090.00. 10
Before the ratification of the Agreement, petitioner filed, on 5 June 1985, a
Motion with the Council withdrawing its pending Motion for Petitioner then moved to quash the writ of execution upon the ground that
Reconsideration of the Council's Order of 4 March 1985. By a letter dated 13 the Council's order could not be the subject of a writ of execution, having
June 1985, the Council allowed the withdrawal of petitioner's Motion for been superseded by the Agreement. 11 In another Order dated 15 January
Reconsideration, which letter in part stated: 1986. Director Pucan, reversed his previous order and sustained petitioner's
contention that the minority union members represented by respondent
In view of your compliance with Wage Order No. 6 effective May 30, union were bound by the majority ratification, holding that the Council's 20
1985 pursuant to the Return to Work Agreement ... , this Council interposes September 1985 Order sought to be enforced by writ of execution should
no objection to your Motion to Withdraw ... 5 (Emphasis supplied) not have been issued. 12
Meanwhile, there were some one hundred (100) members of the union who Respondent union filed a Motion for Reconsideration, which was treated as
were unhappy over the Agreement, who took the view that the Council's an appeal to the Minister of Labor. In a decision dated 19 December 1986,
Order of 4 March 1985 bad become final and executory upon the
the Minister of Labor set aside the appealed Order of Director Pucan. The because it was a contractual document and not the final and executory
Minister's decision held that: award of a public official or agency. Petitioner's contention is more clever
than substantial. The core issue is whether or not Article 4 of the Return-to-
It is undisputed that the 100 numbers did not sign and ratify the Return-to- Work Agreement quoted above, could be deemed as binding upon all
Work Agreement and therefore they cannot be bound by the waiver of members of the union, without regard to whether such members had or had
benefits therein. This, in essence, is the ruling of the High Tribunal in the La not in fact individually signed and ratified such Agreement. Article 4 of that
Campana case. Accordingly, the benefits under Wage Order No. 6 due them Agreement provided for, apparently, a quid pro quo arrangement: petitioner
by virtue of the final and executory Order of the National Wages Council agreed to implement in full Wage Order No. 6 starting 30 May 1985 (and
dated March 4, 1985 subsists in their favor and can be subject for execution. not 1 November 1984, as provided by the terms of Wage Order No. 6) and
xxx xxx xxx to withdraw its previously filed Motion for Reconsideration with the
National Wages Council; in turn, the union and its members would refrain
The writ of execution dated September 20, 1985 ... was clearly based on the from requiring the company to pay the differential pay (increase in pay) due
final Order of the National Wages Council sought to be enforced in a Motion under Wage Order No. 6 corresponding to the preceding seven-month
for Execution filed by the union. While the Return-to-Work Agreement was period from 1 November 1984 to 29 May 1985.
mentioned in the writ, the respondent allegedly failing 'to comply with the
above-stated Agreement which had become final and executory,' we find Thus, Kaisahan ng Mangagawa sa La Campana v. Sarmiento, (supra) is
the Agreement indeed not the basis for the issuance of the writ. practically on all fours with the instant case. In La Campana, what was at
stake was the validity of a compromise agreement entered into between the
WHEREFORE, the Order of the Director dated January 15, 1986 is hereby set union and the company. In that compromise agreement, the union
aside. Let a writ of execution be issued immediately to enforce the payment undertook to dismiss and withdraw the case it had filed with the then Court
of the differential pay under Wage Order No. 6 from November 1, 1984 to of Industrial Relations, and waived its right to execute any final judgment
May 29, 1985 of the 100 workers who did not sign any waiver, in compliance rendered in that case. The CIR had in that case, rendered a judgment
with the final Order of the National Wages Council. The entire record is directing reinstatement of dismissed workers and payment of ten (10) years
hereby remanded to the Regional Director, National Capital Region for this backwages. The Secretary of Labor held that that compromise agreement
purpose. was void for lack of ratification by the individual members of the union. The
Supreme Court upheld the decision of the Secretary of Labor, stating among
SO ORDERED . 13 (Emphasis supplied)
other things that:
Not pleased with the adverse decision of the Minister, petitioner filed the
Generally, a judgment on a compromise agreement puts an end to a
instant Petition for Certiorari.
litigation and is immediately executory. However, the Rules [of Court] require
Petitioner argues once again that the National Wages Council's Order of 4 a special authority before an attorney can compromise the litigation of [his]
March 1985 did not become final and executory because it had been clients. The authority to compromise cannot lightly be presumed and should
superseded by the Return-to-Work Agreement signed by petitioner be duly established by evidence. (Esso Philippine, Inc. v. MME, 75 SCRA 91).
corporation and the union. At the same time, petitioner also argues that the
As aptly held by the Secretary of Labor, the records are bereft of showing
Return-to-Work Agreement could not be enforced by a writ of execution,
that the individual members consented to the said agreement. Now were
the members informed of the filing of the civil case before the Court of First the union had any authority to waive the accrued rights pertaining to the
Instance. If the parties to said agreement acted in good faith, why did they dissenting minority members, even under a collective bargaining agreement
not furnish the Office of the president with a copy of the agreement when which provided for a "union shop." The same considerations of public policy
they knew all the while that the labor case was then pending appeal which impelled the Court to reach the conclusion it did in La Campana, are
therein? Undoubtedly, the compromise agreement was executed to the equally compelling in the present case. The members of the union need the
prejudice of the complainants who never consented thereto, hence, it is null protective shield of this doctrine not only vis-a-vis their employer but also,
and void. The judgment based on such agreement does not bind the at times, vis-a-vis the management of their own union, and at other times
individual members or complainants who are not parties thereto nor even against their own imprudence or impecuniousness.
signatories therein.
It should perhaps be made clear that the Court is not here saying that
Money claims due to laborers cannot be the object of settlement or accrued money claims can never be effectively waived by workers and
compromise effected by a union or counsel without the specific individual employees. What the Court is saying is that, in the present case, the private
consent of each laborer concerned. The beneficiaries are the individual respondents never purported to waive their claims to accrued differential
complainants themselves. The union to which they belong can only assist pay. Assuming that private respondents had actually and individually
them but cannot decide for them.Awards in favor of laborers after long years purported to waive such claims, a second question would then have arisen:
of litigation must be attended to with mutual openness and in the best of whether such waiver could be given legal effect or whether, on the contrary,
faith. (Danao Development Corp. v. NLRC, 81 SCRA 487-505). Only thus can it was violative of public policy. 15 Fortunately, we do not have to address this
we really give meaning to the constitutional mandate of giving laborers second question here.
maximum protection and security. It is about time that the judgment in Case
No. 584-V(7) be fully implemented considering the unreasonable delay in Since Article 4 of the Return-to-Work Agreement was not enforceable
against the non-consenting union members, the Order of the National
the satisfaction thereof. This unfortunate incident may only weaken the
workingmen's faith in the judiciary's capacity to give them justice when Wages Council dated 4 March 1985 requiring petitioner to comply with
Wage Order No. 6 from 1 November 1984 onward must be regarded as
due. 14
having become final and executory insofar as the non-consenting union
xxx xxx xxx members were concerned. Enforcement by writ of execution of that Order
was, therefore, proper. It follows further that the decision of 19 December
(Emphasis supplied) 1986 of the respondent Minister of Labor, far from constituting a grave
In the instant case, there is no dispute that private respondents had not abuse of discretion or an act without or in excess of jurisdiction, was fully in
ratified the Return-to-Work Agreement. It follows, and we so hold, that accordance with law as laid down in La Campana and here reiterated.
private respondents cannot be held bound by the Return-to-Work WHEREFORE, the Court Resolved to DISMISS the Petition for certiorari for
Agreement. The waiver of money claims, which in this case were accrued lack of merit. Costs against petitioner.
money claims, by workers and employees must be regarded as a personal
right, that is, a right that must be personally exercised. For a waiver thereof
to be legally effective, the individual consent or ratification of the workers or
employees involved must be shown. Neither the officers nor the majority of
RUBBERWORLD [PHILS.], INC., and JULIE YAO ONG, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, AQUINO MAGSALIN, PEDRO
MAÑIBO, RICARDO BORJA, ALICIA M. SAN PEDRO AND FELOMENA B.
TOLIN, respondents.

DECISION

PARDO, J.:

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

The facts are as follows:

Petitioner Rubberworld (Phils.), Inc. [hereinafter Rubberworld], a


corporation established in 1965, was engaged in manufacturing footwear,
bags and garments.

Aquilino Magsalin, Pedro Manibo, Ricardo Borja, Benjamin Camitan, Alicia


M. San Pedro, and Felomena Tolin were employed as dispatcher,
warehouseman, issue monitor, foreman, jacks cementer and outer sole
attacher, respectively.

On August 26, 1994, Rubberworld filed with the Department of Labor and
Employment a notice of temporary shutdown of operations to take effect on
September 26, 1994. Before the effectivity date, however, Rubberworld was
forced to prematurely shutdown its operations.

On November 11, 1994, private respondents filed with the National Labor
Relations Commission a complaint 2against petitioner for illegal dismissal and
non-payment of separation pay.

On November 22, 1994, Rubberworld filed with the Securities and Exchange
Commission (SEC) a petition for declaration of suspension of payments with
G.R. No. 128003 July 26, 2000 a proposed rehabilitation plan.3
On December 28, 1994, SEC issued the following order: On February 5, 1996, petitioners appealed to the National Labor Relations
Commission (NLRC) alleging abuse of discretion and serious errors in the
"Accordingly, with the creation of the Management Committee, all actions findings of facts of the labor arbiter.
for claims against Rubberworld Philippines, Inc. pending before any court,
tribunal, office, board, body, Commission or sheriff are hereby deemed On August 30, 1996, NLRC issued a resolution, the dispositive portion of
SUSPENDED. which reads:

"Consequently, all pending incidents for preliminary injunctions, writ or "PREMISES CONSIDERED, the decision appealed from is hereby, AFFIRMED
attachments, foreclosures and the like are hereby rendered moot and with MODIFICATION in that the award of moral and exemplary damages is
academic. hereby, DELETED.

"SO ORDERED."4 SO ORDERED."6

On January 24, 1995, petitioners submitted to the labor arbiter a motion to On November 20, 1996, NLRC denied petitioners' motion for
suspend the proceedings invoking the SEC order dated December 28, 1994. reconsideration.
The labor arbiter did not act on the motion and ordered the parties to
submit their respective position papers. Hence, this petition.7

The issue is whether or not the Department of Labor and Employment, the
On December 10, 1995, the labor arbiter rendered a decision, which
provides: Labor Arbiter and the National Labor Relations Commission may legally act
on the claims of respondents despite the order of the Securities and
"In the light of the foregoing, respondents are hereby declared guilty of Exchange Commission suspending all actions against a company under
ILLEGAL SHUTDOWN and that respondents are ordered to pay complainants rehabilitation by a management committee created by the Securities and
their separation pay equivalent to one (1) month pay for every year of Exchange Commission.
service.
Presidential Decree No. 902-A is clear that "all actions for claims against
Considering the malicious act of closing the business precipitately without corporations, partnerships or associations under management or
due regard to the rights of complainants, moral damages and exemplary receivership pending before any court, tribunal, board or body shall be
damage in the sum of P 50,000.00 and P 30,000.00 respectively is hereby suspended accordingly." The law did not make any exception in favor of
awarded for each of the complainants. labor claims.8

Finally 10 % of all sums owing to complainants is hereby adjudged as "The justification for the automatic stay of all pending actions for claims is to
attorney's fees. enable the management committee or the rehabilitation receiver to
effectively exercise its/his powers free from any judicial or extra judicial
SO ORDERED."5 interference that might unduly hinder or prevent the 'rescue' of the debtor
company. To allow such other actions to continue would only add to the
burden of the management committee or rehabilitation receiver, whose
time, effort and resources would be wasted in defending claims against the KANLAON CONSTRUCTION ENTERPRISES CO., INC., petitioner,
corporation instead of being directed toward its restructuring and vs.
rehabilitation."9 NATIONAL LABOR RELATIONS COMMISSION, 5TH DIVISION, and BENJAMIN
RELUYA, JR., EDGARDO GENAYAS, ERNESTO CANETE, PROTACIO ROSALES,
Thus, the labor case would defeat the purpose of an automatic NESTOR BENOYA, RODOLFO GONGOB, DARIO BINOYA, BENJAMIN
stay.1âwphi1 To rule otherwise would open the floodgates to numerous BASMAYOR, ABELARDO SACURA, FLORENCIO SACURA, ISABELO MIRA,
claims and would defeat the rescue efforts of the management committee. NEMESIO LACAR, JOSEPH CABIGKIS, RODRIGO CILLON, VIRGILIO QUIZON,
Besides, even if an award is given to private respondents, the ruling could GUARINO EVANGELISTA, ALEJANDRO GATA, BENEDICTO CALAGO, NILO
not be enforced as long as petitioner is under management committee. 10 GATA, DIONISIO PERMACIO, JUANITO SALUD, ADOR RIMPO, FELIPE ORAEZ,
JULIETO TEJADA, TEOTIMO LACIO, ONOFRE QUIZON, RUDY ALVAREZ,
This finds ratiocination in that the power to hear and decide labor disputes CRESENCIO FLORES, ALFREDO PERMACIO, CRESENCIO ALVIAR, HERNANI
is deemed suspended when the Securities and Exchange Commission puts SURILLA, DIOSDADO SOLON, CENON ALBURO, ZACARIAS ORTIZ, EUSEBIO
the corporation under rehabilitation. BUSTILLO, GREGORIO BAGO, JERRY VARGAS, EDUARDO BUENO, PASCUAL
HUDAYA, ROGELIO NIETES, and REYNALDO NIETES, respondents.
Thus, when NLRC proceeded to decide the case despite the SEC suspension
order, the NLRC acted without or in excess of its jurisdiction to hear and
decide cases. As a consequence, any resolution, decision or order that it
rendered or issued without jurisdiction is a nullity. PUNO, J.:

WHEREFORE, the petition is hereby GRANTED. The decision of the labor In this petition for certiorari, petitioner Kanlaon Construction Enterprises
arbiter dated December 10, 1995 and the NLRC resolution dated August 30, Co., Inc. seeks to annul the decision of respondent National Labor Relations
1996, are SET ASIDE. Commission, Fifth Division and remand the cases to the Arbitration Branch
for a retrial on the merits.
No costs.
Petitioner is a domestic corporation engaged in the construction business
SO ORDERED. nationwide with principal office at No. 11 Yakan St., La Vista Subdivision,
Quezon City. In 1988, petitioner was contracted by the National Steel
Corporation to construct residential houses for its plant employees in
Steeltown, Sta. Elena, Iligan City. Private respondents were hired by
petitioner as laborers in the project and worked under the supervision of
Engineers Paulino Estacio and Mario Dulatre. In 1989, the project neared its
completion and petitioner started terminating the services of private
respondents and its other employees.

In 1990, private respondents filed separate complaints against petitioner


G.R. No. 126625 September 18, 1997 before Sub-Regional Arbitration Branch XII, Iligan City. Numbering forty-one
(41) in all, they claimed that petitioner paid them wages below the by evidence." (Yu Chin Piao v. Lim Tuaco, 33 Phil. 92; Benedicto v. Yulo, 26
minimum and sought payment of their salary differentials and thirteenth- Phil. 160)
month pay. Engineers Estacio and Dulatre were named co-respondents.
WHEREFORE, premises considered, the respondent is hereby ordered to pay
Some of the cases were assigned to Labor Arbiter Guardson A. Siao while the individual claims of the above-named complainants representing their
the others were assigned to Labor Arbiter Nicodemus G. Palangan. wage differentials within ten (10) days from receipt of this order.
Summonses and notices of preliminary conference were issued and served
on the two engineers and petitioner through Engineer Estacio. The The Fiscal Examiner II of this Branch is likewise hereby ordered to compute
the individual claims of the herein complainants.
preliminary conferences before the labor arbiters were attended by
Engineers Estacio and Dulatre and private respondents. At the conference of SO ORDERED. 3
June 11, 1990 before Arbiter Siao, Engineer Estacio admitted petitioner's
liability to private respondents and agreed to pay their wage differentials On June 29, 1990, Arbiter Palangan issued a similar order, thus:
and thirteenth-month pay on June 19, 1990. As a result of this agreement,
When the above-entitled cases were called for hearing on June 19, 1990 at
Engineer Estacio allegedly waived petitioner's right to file its position
10:00 a.m. respondent thru their representative manifested that they were
paper. 1 Private respondents declared that they, too, were dispensing with
willing to pay the claims of the complainants and promised to pay the same
their position papers and were adopting their complaints as their position
on June 28, 1990 at 10:30 a.m.
paper. 2
However, when these cases were called purposely to materialize the
On June 19, 1990, Engineer Estacio appeared but requested for another
promise of the respondent, the latter failed to appear without any valid
week to settle the claims. Labor Arbiter Siao denied this request. On June
reason.
21, 1990, Arbiter Siao issued an order granting the complaint and directing
petitioner to pay private respondents' claims. Arbiter Siao held: Considering therefore that the respondent has already admitted the claims
of the complainants, we believe that the issues raised herein have become
xxx xxx xxx
moot and academic.
Considering the length of time that has elapsed since these cases were filed,
WHEREFORE premises considered, the above-entitled cases are hereby
and what the complainants might think as to how this branch operates
ordered Closed and Terminated, however, the respondent is hereby ordered
and/or conducts its proceedings as they are now restless, this Arbiter has no
to pay the complainants their differential pay and 13th-month pay within a
other alternative or recourse but to order the respondent to pay the claims
period of ten (10) days from receipt hereof based on the employment
of the complainants, subject of course to the computation of the Fiscal
record on file with the respondent.
Examiner II of this Branch pursuant to the oral manifestation of respondent.
The Supreme Court ruled: "Contracts though orally made are binding on the SO ORDERED. 4
parties." (Lao Sok v. Sabaysabay, 138 SCRA 134).
Petitioner appealed to respondent National Labor Relations Commission. It
Similarly, this Branch would present in passing that "a court cannot decide a alleged that it was denied due process and that Engineers Estacio and
case without facts either admitted or agreed upon by the parties or proved
Dulatre had no authority to represent and bind petitioner. Petitioner's In brief, petitioner alleges that the decisions of the labor arbiters and
appeal was filed by one Atty. Arthur Abundiente. respondent Commission are void for the following reasons: (1) there was no
valid service of summons; (2) Engineers Estacio and Dulatre and Atty.
In a decision dated April 27, 1992, respondent Commission affirmed the Abundiente had no authority to appear and represent petitioner at the
orders of the Arbiters. hearings before the arbiters and on appeal to respondent Commission; (3)
Petitioner interposed this petition alleging that the decision of respondent the decisions of the arbiters and respondent Commission are based on
Commission was rendered without jurisdiction and in grave abuse of unsubstantiated and self-serving evidence and were rendered in violation of
discretion. Petitioner claims that: petitioner's right to due process.

I Service of summons in cases filed before the labor arbiters is governed by


Sections 4 and 5 of Rule IV of the New Rules of Procedure of the NLRC. They
THE QUESTIONED DECISION RENDERED BY THE HONORABLE COMMISSION provide:
IS A NULLITY, IT HAVING BEEN ISSUED WITHOUT JURISDICTION;
Sec. 4. Service of Notices and Resolutions. — (a) Notices or summons and
II copies of orders, resolutions or decisions shall be served on the parties to
the case personally by the bailiff or duly authorized public officer within
PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY
three (3) days from receipt thereof or by registered mail; Provided that
ABUSED ITS DISCRETION IN ARBITRARILY, CAPRICIOUSLY AND WHIMSICALLY
where a party is represented by counsel or authorized representative,
MAKING THE FOLLOWING CONCLUSIONS BASED NOT ON FACTS AND BUT
service shall be made on such counsel or authorized
ON SPECULATION, SURMISE AND EVIDENCE CONJECTURE:
representative; provided further that in cases of decision and final awards,
A. Petitioner was deprived of the constitutional right to due process of law copies thereof shall be served on both the parties and their counsel;
when it was adjudged by the NLRC liable without trial on the merits and provided finally, that in case where the parties are so numerous, service
without its knowledge; shall be made on counsel and upon such number of complainants as may be
practicable, which shall be considered substantial compliance with Article
B. The NLRC erroneously, patently and unreasonably interpreted the 224 (a) of the Labor Code, as amended.
principle that the NLRC and its Arbitration Branch are not strictly bound by
the rules of evidence; xxx xxx xxx

C. There is no legal nor actual basis in the NLRC's ruling that petitioner is Sec. 5. Proof and completeness of service. — The return is prima facie proof
already in estoppel to disclaim the authority of its alleged representatives. of the facts indicated therein.Service by registered mail is complete upon
receipt by the addressee or his agent. . . .
D. The NLRC committed manifest error in relying merely on private,
respondents' unsubstantiated complaints to hold petitioner liable for Under the NLRC Rules of Procedure, summons on the respondent shall be
damages. 5 served personally or by registered mail on the party himself. If the party is
represented by counsel or any other authorized representative or agent,
summons shall be served on such person.
It has been established that petitioner is a private domestic corporation with A non-lawyer may appear before the Commission or any Labor Arbiter only
principal address in Quezon City. The complaints against petitioner were if:
filed in Iligan City and summonses therefor served on Engineer Estacio in
(a) he represents himself as party to the case;
Iligan City. The question now is whether Engineer Estacio was an agent and
authorized representative of petitioner. (b) he represents the organization or its members, provided that he shall be
made to present written proof that he is properly authorized; or
To determine the scope or meaning of the term "authorized representative"
or "agent" of parties on whom summons may be served, the provisions of (c) he is a duly-accredited member of any legal aid office duly recognized by
the Revised Rules of Court may be resorted to. 6 the Department of Justice or the Integrated Bar of the Philippines in cases
Under the Revised Rules of Court, 7 service upon a private domestic referred thereto by the latter. . . . 10
corporation or partnership must be made upon its officers, such as the A non-lawyer may appear before the labor arbiters and the NLRC only if: (a)
president, manager, secretary, cashier, agent, or any of its directors. These he represents himself as a party to the case; (b) he represents an
persons are deemed so integrated with the corporation that they know their organization or its members, with written authorization from them: or (c) he
responsibilities and immediately discern what to do with any legal papers is a duly-accredited member of any legal aid office duly recognized by the
served on them. 8 Department of Justice or the Integrated Bar of the Philippines in cases
In the case at bar, Engineer Estacio, assisted by Engineer Dulatre, managed referred to by the latter. 11
and supervised the construction project. 9 According to the Solicitor General Engineers Estacio and Dulatre were not lawyers. Neither were they duly-
and private respondents, Engineer Estacio attended to the project in Iligan accredited members of a legal aid office. Their appearance before the labor
City and supervised the work of the employees thereat. As manager, he had arbiters in their capacity as parties to the cases was authorized under the
sufficient responsibility and discretion to realize the importance of the legal first exception to the rule. However, their appearance on behalf of petitioner
papers served on him and to relay the same to the president or other required written proof of authorization. It was incumbent upon the arbiters
responsible officer of petitioner. Summons for petitioner was therefore to ascertain this authority especially since both engineers were named co-
validly served on him. respondents in the cases before the arbiters. Absent this authority, whatever
Engineer Estacio's appearance before the labor arbiters and his promise to statements and declarations Engineer Estacio made before the arbiters
could not bind petitioner.
settle the claims of private respondents is another matter.

The general rule is that only lawyers are allowed to appear before the labor The appearance of Atty. Arthur Abundiente in the cases appealed to
respondent Commission did not cure Engineer Estacio's representation. Atty.
arbiter and respondent Commission in cases before them. The Labor Code
and the New Rules of Procedure of the NLRC, nonetheless, lists three (3) Abundiente, in the first place, had no authority to appear before the
respondent Commission. The appellants' brief he filed was verified by him,
exceptions to the rule, viz:
not by petitioner. 12 Moreover, respondent Commission did not delve into
Sec. 6. Appearances. — . . . . the merits of Atty. Abundiente's appeal and determine whether Engineer
Estacio was duly authorized to make such promise. It dismissed the appeal
on the ground that notices were served on petitioner and that the latter was Clearly, respondent Commission gravely abused its discretion in affirming
estopped from denying its promise to pay. the decisions of the labor arbiters which were not only based on
unauthorized representations, but were also made in violation of
Nevertheless, even assuming that Engineer Estacio and Atty. Abundiente petitioner's right to due process.
were authorized to appear as representatives of petitioner, they could bind
the latter only in procedural matters before the arbiters and respondent Section 3 of Rule V of the NLRC Rules of Procedure provides:
Commission. Petitioner's liability arose from Engineer Estacio's alleged
promise to pay. A promise to pay amounts to an offer to compromise and Sec. 3. Submission of Position Papers/Memorandum. — Should the parties
fail to agree upon an amicable settlement, in whole or in part, during the
requires a special power of attorney or the express consent of petitioner.
The authority to compromise cannot be lightly presumed and should be duly conferences, the Labor Arbiter shall issue an order stating therein the
matters taken up and agreed upon during the conferences and directing the
established by evidence.13 This is explicit from Section 7 of Rule III of the
NLRC Rules of Procedure, viz: parties to simultaneously file their respective verified position papers

xxx xxx xxx


Sec. 7. Authority to bind party. — Attorneys and other representatives of
parties shall have authority to bind their clients in all matters of procedure; After petitioner's alleged representative failed to pay the workers' claims as
but they cannot, without a special power of attorney or express consent, promised, Labor Arbiters Siao and Palangan did not order the parties to file
enter into a compromise agreement with the opposing party in full or partial their respective position papers. The arbiters forthwith rendered a decision
discharge of a client's claim. on the merits without at least requiring private respondents to substantiate
The promise to pay allegedly made by Engineer Estacio was made at the their complaints. The parties may have earlier waived their right to file
position papers but petitioner's waiver was made by Engineer Estacio on the
preliminary conference and constituted an offer to settle the case amicably.
The promise to pay could not be presumed to be a single unilateral act, premise that petitioner shall have paid and settled the claims of private
respondents at the scheduled conference. Since petitioner reneged on its
contrary to the claim of the Solicitor General. 14 A defendant's promise to pay
and settle the plaintiff's claims ordinarily requires a reciprocal obligation "promise," there was a failure to settle the case amicably. This should have
prompted the arbiters to order the parties to file their position papers.
from the plaintiff to withdraw the complaint and discharge the defendant
from liability. 15 In effect, the offer to pay was an offer to compromise the Article 221 of the Labor Code mandates that in cases before labor arbiters
cases. and respondent Commission, they "shall use every and all reasonable means
In civil cases, an offer to compromise is not an admission of any liability, and to ascertain the facts in each case speedily and objectively and without
regard to technicalities of law or procedure, all in the interest of due
is not admissible in evidence against the offeror. 16 If this rule were
otherwise, no attempt to settle litigation could safely be made. 17 Settlement process." The rule that respondent Commission and the Labor Arbiters are
not bound by technical rules of evidence and procedure should not be
of disputes by way of compromise is an accepted and desirable practice in
courts of law and administrative tribunals. 18 In fact, the Labor Code interpreted so as to dispense with the fundamental and essential right of
due process. 20 And this right is satisfied, at the very least, 'when the parties
mandates the labor arbiter to exert all efforts to enable the parties to arrive
at an amicable settlement of the dispute within his jurisdiction on or before are given the opportunity to submit position papers. 21 Labor Arbiters Siao
and Palangan erred in dispensing with this requirement.
the first hearing. 19
Indeed, the labor arbiters and the NLRC must not, at the expense of due G.R. No. 116568. September 3, 1999]
process, be the first to arbitrarily disregard specific provisions of the Rules
which are precisely intended to assist the parties in obtaining the just, DELFIN GARCIA, doing business under the name NAPCO-LUZMART,
Inc., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and
expeditious and inexpensive settlement of labor disputes. 22
CARLITO LACSON, respondents.
IN VIEW WHEREOF, the petition for certiorari is granted. The decision of the
DECISION
National Labor Relations Commission, Fifth Division, is annulled and set
aside and the case is remanded to the Regional Arbitration Branch, Iligan GONZAGA-REYES, J.:
City for further proceedings.
Before us is a Petition for Certiorari under Rule 65 of the Rules of Court to
SO ORDERED. annul and set aside the decision of the National Labor Relations
Commission[1] in NLRC CA No. L-001268 dated April 12, 1994 which affirmed
the decision of the Sub-Regional Arbitration Branch No. I in Dagupan City
finding that the private respondent Carlito Lacson was constructively
dismissed by the petitioner Delfin Garcia doing business under the name
NAPCO-LUZMART, Inc. and awarding respondent backwages and separation
pay.

The following facts as adopted by the National Labor Relations Commission


(NLRC) are uncontroverted:

“Complainant Carlito Lacson was employed on March 5, 1987 as boiler


operator technician by Northwest Agro-Marine Products Corporation
(NAPCO). On December 12, 1990 respondent Luzmart, Inc., acquired
NAPCO in a foreclosure sale. Both companies were managed by respondent
Delfin Garcia.

On January 28, 1993, there was a mauling incident which involved the
complainant and Julius Z. Viray, his immediate supervisor and allegedly a
friend and compadre of respondent Garcia. As complainant suffered injuries
as a result thereof he reported the matter to police authorities and he
sought treatment at the Teofilo Sison Memorial Provincial Hospital. Both
the complainant and Viray were asked to explain their sides. After the
submission of the written explanations, Delfin Garcia suspended both of
them from work for a period of one month effective April 15, 1993. In the
same suspension order, complainant was further directed to explain in
writing why he should not be dealt with disciplinary action or terminated for pipe, followed him and wanted to kill him (Annex “C” – complainant). Viray
his continued absences from February 15, 1993 up to the date of the also submitted his handwritten explanation on February 2, 1993 (see Annex
memorandum order. Complainant filed a complaint for illegal dismissal and “E-1” of respondent’s position paper). Viray only stated that a “heated
other monetary claims but the same was dismissed without prejudice. On argument transpired”. On March 31, 1993, respondent Garcia issued a
September 1, 1993, the complainant refiled this case.” [2] Memorandum suspending both the complainant and Viray for one (1)
month effective April 15, 1993 and at the same time required the
The Labor Arbiter[3] ruled in favor of the respondent Carlito Lacson complainant to explain why he should not be terminated for being absent
(LACSON). Petitioner NAPCO-Luzmart (LUZMART) appealed to the NLRC from Feb. 15, 1993, (Annex “F”, respondents). The question is, why did it
which affirmed the decision of the Labor Arbiter after finding that the Labor take respondent Delfin Garcia one (1) month or more to decide and issue an
Arbiter did not commit any reversible error. The NLRC however deleted the order suspending the complainant and Viray? Why did he not suspend the
award of attorney’s fees in favor of LACSON. Its decision, which adopted the two immediately after the incident? This leads credence to the
conclusions of the Labor Arbiter, reads: complainant’s allegation that he reported for work after submitting his
“In finding for the complainant, the Labor Arbiter ruled: explanation but respondent Garcia refused to admit him back and told him
to take a vacation or to look for another work, hence he decided to file a
‘The issues to be resolved in this case are: (1) whether or not the complaint against him on Feb. 4, 1993, which was later dismissed without
complainant was dismissed from his employment; (2) whether or not he is prejudice, the reason for the dismissal of which was not explained to us by
entitled to his claim for overtime services, separation pay, 13 th month pay, the complainant. Moreover, it is true that the complainant failed to report
premium pay for working on holidays and rest days, separation pay, for work since Feb. 15, 1993, why did respondent Garcia not issue an order
13th month pay and service incentive leave pay; and, (3) whether or not the or memorandum after the complainant failed to report for a number of days
complainant is considered an employee of the respondents since March and directing the complainant to report immediately otherwise his
1987. employment will be terminated? We also agree with the complainant’s
argument that the respondents should not have asked him to explain his
The first issue: Respondent Delfin Garcia insists that he did not dismiss the
alleged failure to report for work since Feb. 15, 1993, because he has
complainant and that he can return to his work after his one month
already filed a complaint against Garcia earlier.
suspension, (affidavit of respondent Garcia, marked as Annex “H” of his
position paper). On the other hand, complainant Lacson maintains that he The second issue; Annexes “G”, “G-1” to “G-14” of the respondents, which
reported for work several times but respondent Garcia refused to take him are samples of respondents payroll, show that whenever the complainant
back and that the former told him to look for another job. rendered overtime services, he was paid accordingly. Is he entitled to his
claim for 13th monthpay, service incentive leave pay, vacation in sick leave
Let us scrutinize the evidence. The incident involving the complainant and
pay and separation pay? Respondents maintain that since the complainant
Julius Viray, also an employee of the respondents, wherein Viray allegedly
was employed by them only on February 1, 1991, he has no right to claim
mauled the complainant, happened on January 28, 1993. On February
benefits that arose before his employment with them. That since he was
1993, the complainant submitted his handwritten explanation blaming Viray
not dismissed from his employment, he is not also entitled to his claim for
as the aggressor. According to the complainant, Viray was drunk at the time
separation pay. (The resolution of this issue will also resolve the second
of the incident and although he avoided Viray, the latter armed with a lead
issue)
Respondents argue that the services of the complainant with NAPCO since As we have discussed earlier, the complainant herein was constructively
March 1987, cannot be credited or counted to his length of service with dismissed from his employment by respondent Delfin Garcia because of the
LUZMART because his subsequent employment with LUZMART is a new latter’s refusal to admit him back to work inspite of the complainant’s
employment as shown in his employment contract (Annex “D” respondents) insistence to resume his work after he has given his explanation.’
with LUZMART.
On appeal, respondent contends that the Labor Arbiter erred in awarding
In the case of MDII Supervisors and Confidential Employees Association backwages to the complainant from February 1, 1993 up to the date of the
(FFW) vs. Presidential Assistant on Legal Affairs, 79 SCRA 40 (1977), the promulgation of the decision, and in awarding separation pay of one month
Supreme Court ruled that: pay for every year of service.

‘xxx And there is no law which requires the purchaser to absorb the We are in full accord with the Labor Arbiter’s conclusion that the
employees of the selling corporation. complainant was constructively dismissed by the respondent Delfin Garcia
when he refused to admit the complainant despite his insistence to go back
As there is no such law, the most that the purchasing company may do, for to work.
purposes of public policy and social justice, is to give preference to the
qualified separated employees of the selling company, who in their However, we delete the award of attorney’s fees as this is not a case of
judgment are necessary in the continued operation of the business unlawful withholding of wages.
establishment. This RCAM did. It required private respondents to reapply as
WHEREFORE, premises considered, the appealed decision is modified by
new employees as a condition for rehiring subject to the usual probationary
status, the latter’s past services with the petitioners, transferors not deleting the award of attorney’s fees. In all other respect, the same is
affirmed.
recognized (San Felipe Neri School of Mandaluyong, Inc., et. Al. Vs. NLRC,
Roman Catholic Archbishop of Manila (RCAM), et. al., G.R. No. 78350, Sept. SO ORDERED.”[4]
11, 1991.).’
LUZMART’s motion for reconsideration [5] was denied hence, this petition
Except for his bare allegation that LUZMART was only organized by the wherein LUZMART claims that the NLRC committed grave abuse of
controlling stockholders of NAPCO to acquire or gain control of the latter, discretion in holding that LACSON was illegally dismissed.
the complainant did not present sufficient evidence to prove his allegation,
LUZMART is an entirely new corporation or entity with a distinct personality In support of its petition, LUZMART claims that LACSON was not dismissed
from NAPCO, and is not an alter ego of NAPCO. Therefore, LUZMART is not but was merely suspended as shown by the March 31, 1993 memorandum.
[6]
under obligation to absorb the workers of NAPCO or to absorb the length of His suspension was a consequence of the imposition of disciplinary
service earned by its employees. measures on him as fighting within the company premises constitutes
serious misconduct and disorderly behavior. The fact that LUZMART did not
The respondents are therefore correct in their assertion that they should not immediately suspend him after the fighting incident does not establish that
be answerable for the complainant’s claim for benefits that may be due him he was dismissed from his employment as there is no law which requires an
before January 1, 1991. employer to immediately rule on any infraction under investigation after the
filing of the explanation of the person under investigation. Neither is
LACSON entitled to backwages nor separation pay as these are only granted period. Given these circumstances, both documents appear to have been
to employees who have been illegally dismissed from work and not to prepared in contemplation of the pending illegal dismissal case filed against
employees like LACSON who abandoned his employment as he failed to LUZMART.
report to work from February 15, 1993 to March 31, 1993. [7]
The contention that LACSON abandoned his employment is also without
We resolve to affirm the judgment of the NLRC. merit. Mere absence or failure to report for work, after notice to return, is
not enough to amount to such abandonment. [13] For a valid finding of
LUZMART’s claim that LACSON was merely suspended and was still abandonment, two factors must be present, viz; (1) the failure to report for
employed by LUZMART does not convince us that LACSON was not work or absence without valid or justifiable reason; and (2) a clear intention
dismissed from his employment. Said claim was a mere afterthought to to sever the employer-employee relationship, [14] with the second element as
preempt or thwart the impending illegal dismissal case filed by LACSON the more determinative factor being manifested by some overt acts.
against LUZMART. As found by the labor arbiter, LACSON’s failure to report [15]
There must be a concurrence of the intention to abandon and some overt
to work was due to LUZMART’s refusal to admit him back. In fact, LUZMART acts from which an employee may be deduced as having no more intention
told him to go on vacation or to look for other work. [8] to work.[16] Such intent to discontinue the employment must be shown by
LACSON’s dismissal is clearly established by the following chronology of clear proof that it was deliberate and unjustified.[17]
events: The mauling incident occurred on January 28, 1993. LACSON LACSON’s absence from work was not without a valid reason. It was
submitted his written explanation of the event on February 1, 1993. On petitioner who did not allow him to work and in fact told him to go on
February 4, 1993, LACSON attempted to report for work but LUZMART vacation or to look for other work. This is tantamount to a constructive
refused to admit him. On February 11, 1993, LACSON filed an action for dismissal which is defined as a “quitting because continued employment is
illegal dismissal with the NLRC. [9] On April 13, 1993, LUZMART sent LACSON rendered impossible, unreasonable or unlikely; as an offer involving a
the memorandum ordering LACSON’s suspension dated on March 31, demotion in rank and diminution in pay”[18] Since LACSON was denied entry
1993. By this time, LUZMART already knew of the pending illegal dismissal into his workplace, it was impossible for him to return to work. It would be
case against it as it was already directed by the NLRC to submit its position unjust to allow herein petitioners to claim as a ground for abandonment a
paper on April 5, 1993. LUZMART’s reliance on the March 31, 1993 situation which they themselves had brought about. [19] Moreover, LACSON’s
memorandum[10] and the February 1-15, 1993 payroll [11] to prove that filing of the complaint for illegal dismissal on February 11, 1993, or seven
LACSON was merely suspended is therefore unavailing. The March 31, 1993 days after his alleged abandonment, negates said charge. It is highly illogical
memorandum is at most self-serving; a ploy to cover up the dismissal of for an employee to “abandon” his employment and thereafter file a
LACSON since this was issued after LUZMART had knowledge of the illegal complaint for illegal dismissal.[20]
dismissal case filed against it by LACSON on February 11, 1993. Likewise,
the veracity of the February 1-15, 1993 payroll that purportedly shows that We also do not agree with LUZMART that LACSON gave just cause for the
LACSON was included in LUZMART’s payroll is of doubtful probative imposition of disciplinary measures upon him. Although fighting within
value. First of all, it does not contain a certification by Charito Fernandez at company premises may constitute serious misconduct under Article
its back page, unlike the other payrolls [12] attached as annexes to LUZMART’s 282[21] of the Labor Code and may be a just cause to terminate one’s
petition. Secondly, said payroll does not contain the signatures of the other employment[22], every fight within company premises in which an employee
employees as proof that they received their salaries for the said is involved would not warrant his dismissal. This is especially true when the
employee concerned did not instigate the fight and was in fact the victim requirement; to inform LACSON of the decision to dismiss him. Such failure
who was constrained to defend himself. In the present case, it appears that to comply with said requirements taints LACSON’s dismissal with illegality.
LACSON was assaulted by Julius Viray (VIRAY), a co-employee, after they
An illegally dismissed employee is entitled to 1) either reinstatement or
were questioned about missing diesel fuel. LACSON attempted to avoid the
conflict since VIRAY was intoxicated but VIRAY followed him and after an separation pay if reinstatement is no longer viable, and 2) backwages. [25] In
the present case, LACSON is entitled to be reinstated, as there is no
exchange of words, VIRAY punched him while saying “Papatayin Kita” (I will
kill you). After being punched a second time, LACSON punched back. He evidence to show that reinstatement is no longer possible considering
LUZMART’s position in this appeal is that LACSON was never dismissed but
thereafter ran towards the dressing plant after his companion, a certain
DANNY, told him to run. VIRAY was persistent and followed LACSON and merely suspended. He is also entitled to backwages computed from the
time of illegal dismissal, in this case on February 4, 1993 [26] (not February 1,
continued delivering punches at him. LACSON ran away for a second time
but VIRAY still pursued him and even armed himself with a lead 1993 as found by the NLRC) up to the time of actual reinstatement, without
qualification or deduction[27]
pipe. LACSON sustained wounds on his head and forehead due to VIRAY’s
use of the lead pipe. The Medico-Legal Certificate [23] issued by the Gov. WHEREFORE, the assailed decision of the NLRC is AFFIRMED and the instant
Teofilo Sison Memorial Hospital corroborates LACSON’s injuries. Given the petition is hereby DISMISSED with the MODIFICATION that LUZMART
above circumstances, it is not difficult to understand why LACSON had to reinstate LACSON to his former position and pay him backwages computed
defend himself. from the date of illegal dismissal on February 4, 1993 up to the time of
Even assuming that there was just cause to dismiss LACSON, strict actual reinstatement.
compliance by the employer with the demands of both procedural and No pronouncement as to costs.
substantive due process is a condition sine qua non for the termination to be
declared valid. The law requires that the employer must furnish the worker SO ORDERED.
sought to be dismissed with two written notices before termination of
employment can be legally effected:

1. notice which apprises the employee of the particular acts or omissions for
which his dismissal is sought; and

2. the subsequent notice which informs the employee of the employer’s


decision to dismiss him.[24]

It is unclear whether LUZMART complied with the first required written


notice; apparently, LACSON was able to give his account of the
fight. However, even assuming that LUZMART complied with the first
written notice i.e. the charge against LACSON with fighting within company
premises, the evidence fails to show compliance with the second notice
G.R. No. 87297 August 5, 1991

ALFREDO VELOSO and EDITO LIGUATON petitioners,


vs.
DEPARTMENT OF LABOR AND EMPLOYMENT, NOAH'S ARK SUGAR
CARRIERS AND WILSON T. GO,respondents.

CRUZ, J.:p

The law looks with disfavor upon quitclaims and releases by employees who
are inveigled or pressured into signing them by unscrupulous employers
seeking to evade their legal responsibilities. On the other hand, there are
legitimate waivers that represent a voluntary settlement of laborer's claims
that should be respected by the courts as the law between the parties.

In the case at bar, the petitioners claim that they were forced to sign their
respective releases in favor of their employer, the herein private respondent,
by reason of their dire necessity. The latter, for its part, insists that the
petitioner entered into the compromise agreement freely and with open
eyes and should not now be permitted to reject their solemn commitments.

The controversy began when the petitioners, along with several co-
employees, filed a complaint against the private respondent for unfair labor
practices, underpayment, and non-payment of overtime, holiday, and other
benefits. This was decided in favor of the complainants on October 6,1987.
The motion for reconsideration, which was treated as an appeal, was
dismissed in a resolution dated February 17, 1988, the dispositive portion of
which read as follows:

WHEREFORE, the instant appeal is hereby DISMISSED and the questioned


Order affirmed with the modification that the monetary awards to Jeric
Dequito, Custodio Ganuhay Conrado Mori and Rogelio Veloso are hereby
deleted for being settled. Let execution push through with respect to the
awards to Alfredo Veloso and Edito Liguaton.

On February 23, 1988, the private respondent filed a motion for


reconsideration and recomputation of the amount awarded to the
petitioners. On April 15, 1988, while the motion was pending, petitioner Civil Code which provides that no one shall be unjustly enriched at the
Alfredo Veloso, through his wife Connie, signed a Quitclaim and Release for expense of another.
and in consideration of P25,000.00, 1 and on the same day his counsel, Atty.
The Court had deliberated on the issues and the arguments of the parties
Gaga Mauna, manifested "Satisfaction of Judgment" by receipt of the said
sum by Veloso. 2 For his part, petitioner Liguaton filed a motion to dismiss and finds that the petition must fail. The exception and not the rule shall be
applied in this case.
dated July 16, 1988, based on a Release and Quitclaim dated July
19,1988 , 3 for and in consideration of the sum of P20,000.00 he The case cited is not apropos because the quitclaims therein invoked were
acknowledged to have received from the private respondent. 4 secured by the employer after it had already lost in the lower court and
These releases were later impugned by the petitioners on September 20, were subsequently rejected by this Court when the employer invoked it in a
petition for certiorari. By contrast, the quitclaims in the case before us were
1988, on the ground that they were constrained to sign the documents
because of their "extreme necessity." In an Order dated December 16, 1988, signed by the petitioners while the motion for reconsideration was still
pending in the DOLE, which finally deemed it on March 7, 1989.
the Undersecretary of Labor rejected their contention and ruled:
Furthermore, the quitclaims in the cited case were entered into without
IN VIEW THEREOF, complainants Motion to Declare Quitclaim Null and Void leave of the lower court whereas in the case at bar the quitclaims were
is hereby denied for lack of merit and the compromise made with the knowledge and approval of the DOLE, which declared in its
agreements/settlements dated April 15, 1988 and July 19, 1988 are hereby order of December 16, 1988, that "the compromise agreement/settlements
approved. Respondents' motion for reconsideration is hereby denied for dated April 15, 1988 and July 19, 1988 are hereby approved."
being moot and academic.
It is also noteworthy that the quitclaims were voluntarily and knowingly
Reconsideration of the order having been denied on March 7, 1989, the made by both petitioners even if they may now deny this. In the case of
petitioners have come to this Court oncertiorari. They ask that the Veloso, the quitclaim he had signed carried the notation that the sum stated
quitclaims they have signed be annulled and that writs of execution be therein had been paid to him in the presence of Atty. Gaga Mauna, his
issued for the sum of P21,267.92 in favor of Veloso and the sum of counsel, and the document was attested by Atty. Ferdinand Magabilin, Chief
P26,267.92 in favor of Liguaton in settlement of their claims. of the Industrial Relations Division of the National Capitol Region of the
DOLE. In the case of Liguaton, his quitclaim was made with the assistance of
Their petition is based primarily on Pampanga Sugar Development Co., Inc. his counsel, Atty. Leopoldo Balguma, who also notarized it and later
v. Court of Industrial Relations, 5where it was held: confirmed it with the filing of the motion to dismiss Liguaton's complaint.
... while rights may be waived, the same must not be contrary to law, public The same Atty. Balguma is the petitioners' counsel in this proceeding.
order, public policy, morals or good customs or prejudicial to a third person Curiously, he is now challenging the very same quitclaim of Liguaton that he
with a right recognized by law. (Art. 6, New Civil Code) ... himself notarized and invoked as the basis of Liguaton's motion to dismiss,
... The above-quoted provision renders the quitclaim agreements void ab but this time for a different reason. whereas he had earlier argued for
initio in their entirety since they obligated the workers concerned to forego Liguaton that the latter's signature was a forgery, he has abandoned that
their benefits, while at the same time, exempted the petitioner from any contention and now claims that the quitclaim had been executed because of
liability that it may choose to reject. This runs counter to Art. 22 of the new the petitioners' dire necessity.
"Dire necessity" is not an acceptable ground for annulling the releases, Not all waivers and quitclaims are invalid as against public policy. If the
especially since it has not been shown that the employees had been forced agreement was voluntarily entered into and represents a reasonable
to execute them. It has not even been proven that the considerations for the settlement, it is binding on the parties and may not later be disowned simply
quitclaims were unconscionably low and that the petitioners had been because of a change of mind. It is only where there is clear proof that the
tricked into accepting them. While it is true that the writ of execution dated waiver was wangled from an unsuspecting or gullible person, or the terms of
November 24, 1987, called for the collection of the amount of P46,267.92 settlement are unconscionable on its face, that the law will step in to annul
each for the petitioners, that amount was still subject to recomputation and the questionable transaction. But where it is shown that the person making
modification as the private respondent's motion for reconsideration was still the waiver did so voluntarily, with full understanding of what he was doing,
pending before the DOLE. The fact that the petitioners accepted the lower and the consideration for the quitclaim is credible and reasonable, the
amounts would suggest that the original award was exorbitant and they transaction must be recognized as a valid and binding undertaking. As in this
were apprehensive that it would be adjusted and reduced. In any event, no case.
deception has been established on the part of the Private respondent that
would justify the annulment of the Petitioners' quitclaims. We find that the questioned quitclaims were voluntarily and knowingly
executed and that the petitioners should not be relieved of their waivers on
The applicable law is Article 227 of the Labor Code providing clearly as the ground that they now feel they were improvident in agreeing to the
follows: compromise. What they call their "dire necessity" then is no warrant to
nullify their solemn undertaking, which cannot be any less binding on them
Art. 227. Compromise agreements. — Any compromise settlement, including simply because they are laborers and deserve the protection of the
those involving labor standard laws, voluntarily agreed upon by the parties Constitution. The Constitution protects the just, and it is not the petitioners
with the assistance of the Bureau or the regional office of the Department of in this case.
Labor, shall be final and binding upon the parties. The National Labor
Relations Commission or any court shall not assume jurisdiction over issues WHEREFORE, the petition is DISMISSED, with costs against the petitioners. It
involved therein except in case of non-compliance thereof or if there is so ordered.
is prima facie evidence that the settlement was obtained through fraud,
misrepresentation or coercion.

The petitioners cannot renege on their agreement simply because they may
now feel they made a mistake in not awaiting the resolution of the private
respondent's motion for reconsideration and recomputation. The possibility
that the original award might have been affirmed does not justify the
invalidation of the perfectly valid compromise agreements they had entered
into in good faith and with full voluntariness. In General Rubber and
Footwear Corp. vs. Drilon, 6 we "made clear that the Court is not saying that
accrued money claims can never be effectively waived by workers and
employees." As we later declared in Periquet v. NLRC: 7
JAG & HAGGAR JEANS AND SPORTSWEAR CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LAKAS MANGGA-GAWA SA
JAG, DOMINGO NAMIA, RIZALDE FLORES, JULIETA ADRIANO, ROBERTO
ALAMO, JOSE BALDELOBAR, LILIBETH BIDES, NARCISO GARBIN, AMELITA
LEBRIAS, MARIBEL MADRID, VERONICA MAGPILI, IMELDA NEPOMUCENO,
AND DAN VILLAMOR,respondents.

QUIASON, J.:

This is a petition for certiorari to set aside the Decision dated February 26,
1992 of the National Labor Relations Commission (NLRC) in NCR Case No.
00-09-04050-88 and its Resolution dated April 22, 1992, denying petitioner's
motion for reconsideration. The decision held that the members of the
Union who did not ratify or avail of the benefits under the Compromise
Agreement entered into between petitioner and the Union were not bound
thereby (Rollo, pp. 32-41). In our Resolution dated June 29, 1992, we issued
a temporary restraining order.

In September 1988, the Lakas Manggagawa sa Jag (Union) composed of the


rank-and-file employees of Jag & Haggar Jeans and Sportswear Corporation,
petitioner herein, staged a strike. Petitioner filed a petition to declare the
strike illegal.

On November 29, 1988, Labor Arbiter Eduardo Madriaga rendered a


decision, declaring the strike illegal and ordering the dismissal of the
officers, as well as the members of the Union who took part in the illegal
strike. The dispositive portion of said decision reads as follows:

WHEREFORE, premises considered, the strike conducted by respondent


union and individual respondents on September 22, 1988 and subsisting to
date, is hereby declared to be illegal for failure to observe the cooling-off
G.R. No. 105710 February 23, 1995
period as agreed upon by the parties and the conduct of the strike vote as
required by law, as well as for commission of illegal acts in the staging of the 2. The Union Board Members and Shop Stewards may be dismissed by
said strike as averred in the affidavits of witnesses for petitioner. respondent-appellee subject to the payment of separation pay equivalent to
one-half month for every year of service; and
Accordingly, the officers of the union, to wit:
3. The mere union members are directed to report for work within ten (10)
xxx xxx xxx days from receipt of this Decision and management is ordered to accept
are hereby declared to have legally lost their employment status. them to their former or equivalent position. (Rollo, p. 15)

Likewise, for commission of illegal acts as averred in the affidavits of Again, the aggrieved officers and members of the Union filed a motion for
witnesses for petitioner which were not controverted by respondents, the reconsideration while petitioner filed a Manifestation/Motion for
following rank-and-file employees, to wit: Clarification (Rollo, p. 15).

xxx xxx xxx Pending resolution of the two motions by NLRC, both parties agreed to
negotiate a settlement and to defer the enforcement of the decision.
are hereby declared to have legally lost their employment status.
On July 30, 1990, the two motions were dismissed by the NLRC (Rollo, p. 15).
The rest of the striking workers are hereby ordered to immediately
dismantle their pickets and barricades and return to work within seventy- On October 23, 1990, a compromise agreement was executed and signed by
two (72) hours from receipt of copy of this Decision. petitioner and the Union represented by its officers (Rollo, pp. 16-18). The
parties agreed that:
Finally, both parties are hereby enjoined to maintain the status quo prior to
the strike staged by respondents (Rollo, pp. 12-14). 1. The Company shall pay to the officers and members of the Union named
in the aforesaid decision separation pay equivalent to one-half (1/2) month
The affected officers and members of the Union appealed the decision to basic pay for every year of service.
NLRC. On August 31, 1989, NLRC rendered its decision setting aside the
Labor Arbiter's decision and ordering the reinstatement of the affected 2. Additionally, the Company shall pay to the officers of the Union
employees (Rollo, pp. 14-15). mentioned in item No. 2 of the Decision, namely the Union Board members,
and Shop Stewards financial assistance in the amount of One Thousand
Acting on the motion for reconsideration filed by petitioner, NLRC, on May (P1,000.00) Pesos.
31, 1990 modified its earlier decision as follows:
3. The Company shall also pay to the members of the Union mentioned in
WHEREFORE, premises considered, the Commission's Decision dated 31 item No. 3 of the Decision, namely those who should be allowed to work,
August 1989, is hereby modified as follows: financial assistance in the amount of Two Thousand (P2,000.00) Pesos.

1. The following officers of the Union Norma Jocson-President Narciso Sinag- xxx xxx xxx
Vice President; Gloria Gavis-Treasurer; Luzviminda Guspid-Secretary; and
Apolinario Sta. Ana-PRO are hereby declared to have lost their employment; Out of a total of 114 affected employees, 90 of them availed of the benefits
provided for under the Compromise Agreement (Rollo, pp. 16-19).
On May 15, 1991, 24 of the affected employees moved for the execution of Petitioner contends that the Compromise Agreement was deemed ratified
the May 31, 1990 Decision of NLRC (Rollo, p. 19). by the union members considering that 102 out of the 114 affected
employees already availed of and received the benefits under the said
Petitioner filed an opposition, citing the Compromise Agreement, which had agreement and that private respondents were represented in all stages of
been availed of by 90 of the affected employees (Rollo, p. 19) the proceedings without them questioning the authority of their union
On September 12, 1991, Labor Arbiter Salimathar Nambi issued an order, officers and their counsel. It cites the case of Betting Ushers Union (PLUM)
denying the motion for execution (Rollo, p. 19). In the meantime, 12 of the v. Jai-alai, 101 Phil. 822 (1957) wherein we ruled that the "will of the
24 affected employees also availed of the benefits under the Compromise majority should prevail over the minority" and which ruling was reiterated
Agreement. The remaining 12 employees appealed to NLRC from the denial in Dionela v. Court of Industrial Relations, 8 SCRA 832 (1963) and Chua
of their motion for execution. On February 26, 1992, NLRC set aside the v. National Labor Relations Commison, 190 SCRA 558 (1990).
order of Labor Arbiter Nambi and directed petitioner to accept the union On the other hand, private respondents allege that for a compromise
members to their former or equivalent position with back wages from July agreement to be binding upon them, a special power of attorney or their
30, 1990 until they were reinstated (Rollo, p. 40). express consent was necessary for what was being waived or surrendered
A motion for reconsideration was filed by petitioner but this was denied on under the agreement was their right to an employment. Such right is
April 22, 1992 (Rollo, p. 42). protected under the security of tenure provision of the Labor Code of the
Philippines and cannot be lost without due process of law (Rollo, p. 62).
On May 19, 1992, petitioner filed with this Court a petition
for certiorari with prayer for issuance of a restraining order and/or writ of "Settlement of disputes by way of compromise whereby the parties, by
preliminary injunction docketed as G.R. No. 105184. However, the petition making reciprocal concessions, avoid a litigation or put an end to one
was dismissed by the First Division in a resolution dated May 27, 1992 for already commenced, is an accepted, nay desirable practice encouraged by
failure to comply with the Revised Rules of Court and Circular Nos. 1-88 and the courts of law and administrative tribunals" (Santiago v. De Guzman, 177
28-91 (G.R. No. 105184, Rollo, p. 35). SCRA 344 [1989]).

On June 19, 1992, petitioner filed a motion for leave to refile its petition The authority of attorneys to bind their clients is governed by Section 7, Rule
for certiorari (G.R. No. 105710). In a resolution dated June 29, 1992, the IV of the New Rules of Procedure of the National Labor Relations
Third Division of this Court granted the petition and resolved to issue a Commission, which provides:
temporary restraining order (Rollo, p. 44). The case was reassigned to the Authority to bind party. — Attorneys and other representatives of
First Division. parties shall have authority to bind their clients in all matters of procedure;
II but they cannot, without a special power of attorney or express consent,
enter into a compromise agreement with the opposing party in full or partial
The main issue to be resolved is whether or not the Compromise Agreement discharge of a client's claim (Emphasis supplied).
entered into by petitioner and the Union is binding upon private
respondents. It will be noted that the Compromise Agreement provides in paragraphs 2
and 3 thereof that:
2. The union Board Members and Shop Stewards may be dismissed by The authority to compromise cannot lightly be presumed and should be duly
respondent-appellee subject to the payment of separation pay equivalent to established by evidence (General Rubber and Footwear Corporation v.
one-half month for every year of service; and Drilon, supra; Kaisahan ng mga Manggagawa sa La Campana v. Sarmiento,
133 SCRA 220, [1984]).
3. The mere union members are directed to report for work within 10 days
from receipt of this Decision and management is ordered to accept them to We also find no reason for the union members to enter into a compromise
their former or equivalent position (Rollo, pp. 16-17). when the decision of NLRC ordering their reinstatement is more
advantageous to them than their being dismissed from their jobs under said
The Decision dated May 8, 1990 ordered the reinstatement of the union Compromise Agreement.
members to their former or equivalent position while in the case of the
Union board members and shop stewards, petitioner was given the option The Compromise Agreement does not apply to private respondents who did
to dismiss them subject to the payment of separation pay. However, in the not sign the Compromise Agreement, nor avail of its benefits.
Compromise Agreement, not only the union officers, board members and
However, while respondents Domingo Namia and Rizalde Flores are not
shop stewards were considered dismissed from the service but also the
union members subject to the payment of separation pay and financial bound by the terms of the Compromise Agreement, they are bound by the
amended decision of NLRC rendered on May 3, 1990 which provides that
assistance.
members of the board of directors of the union may be dismissed by
The waiver of reinstatement, like waivers of money claims, must be regarded petitioner subject to the payment of separation pay. The two respondents
as a personal right which must be exercised personally by the workers did not appeal the amended decision after the denial by NLRC of their
themselves. "For a waiver thereof to be legally effective, the individual motion for reconsideration thereof.
consent or ratification of the workers or employees involved must be shown.
Neither the officers nor the majority of the union had any authority to waive WHEREFORE, the Decision dated February 26, 1992 of the NLRC is
AFFIRMED with the modification stated above with respect to respondents
the accrued rights pertaining to the dissenting minority members, . . . . The
members of the union need the protective shield of this doctrine not Domingo Namia and Rizalde Flores. The temporary restraining order is lifted
except with respect to aforementioned respondents.
only vis-a-vis their employer but also, at times,vis-a-vis the management of
their own union, and at other times even against their own imprudence or SO ORDERED.
impecuniousaess" (General Rubber and Footwear Corporation v. Drilon, 169
SCRA 808 [1989]).

We have ruled that ". . . when it comes to individual benefits accruing to


members of a union from a favorable final judgment of any court, the
members themselves become the real parties in interest and it is for them,
rather than for the union, to accept or reject individually the fruits of
litigation" (Esso Philippines, Inc. v. Malayang Manggagawa sa Esso (MME),
75 SCRA 73 [1977]).
MARLENE MELQIADES, IRENE JACINTO, NANCY GARCIA, IMELDA
SARMIENTO, LENITA VIRAY, GINA JACINTO, ROSEMARIE DEL ROSARIO,
CATHERINE ASPURNA, WINNIE PENA, VIVIAN BAA, EMILY LAGMAN, LILIAN
MARFIL, NANCY DERACO, JANET DERACO, MELODY JACINTO, CAROLYN
DIZON, IMELDA MANALOTO, NORY VIRAY, ELIZA SALAZAR, GIGI
MANALOTO, JOSEFINA BASILIO, MARY ANN MAYATI, ZENAIDA GARCIA,
MERLY CANLAS, ERLINDA MANALANG, ANGELINA QUIAMBAO, LANIE
GARCIA, ELVIRA PIEDRA, LOURDES PANLILIO, LUISA PANLILIO, LERIZA
PANLILIO, ALMA CASTRO, ALDA DAVID, MYRA T. OLALIA, MARIFE PINLAC,
NENITA DE GUZMAN, JULIE GACAD, EVELYN MANALO, NORA PATIO,
JANETH CARREON, ROWENA MENDOZA, ROWENA MANALO, LENY
GARCIA, FELISISIMA PATIO, SUSANA SALOMON, JOYDEE LANSANGAN,
REMEDIOS AGUAS, JEANIE LANSANGAN, ELIZABETH MERCADO, JOSELYN
MANALESE, BERNADETH RALAR, LOLITA ESPIRITU, AGNES SALAS, VIRGINIA
MENDIOLA, GLENDA SALITA, JANETH RALAR, ERLINDA BASILIO, CORA
PATIO, ANTONIA CALMA, AGNES CARESO, GEMMA BONUS, MARITESS
OCAMPO, LIBERTY GELISANGA, JANETH MANARANG, AMALIA DELA CRUZ,
EVA CUEVAS, TERESA MANIAGO, ARCELY PEREZ, LOIDA BIE, ROSITA
CANLAS, ANALIZA ESGUERRA, LAILA MANIAGO, JOSIE MANABAT, ROSARIO
DIMATULAC, NYMPA TUAZON, DAIZY TUASON, ERLINDA NAVARRO, EMILY
MANARANG, EMELITA CAYANAN, MERCY CAYANAN, LUZVIMINDA
CAYANAN, ANABEL MANALO, SONIA DIZON, ERNA CANLAS, MARIAN
BENEDICTA, DOLORES DOLETIN, JULIE DAVID, GRACE VILLANUEVA,
VIRGINIA MAGBAG, CORAZON RILLION, PRECY MANALILI, ELENA RONOZ,
IMELDA MENDOZA, EDNA CANLAS and ANGELA CANLAS, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, its
Proprietor/President & Manager, MR. GONZALO KEHYENG and MRS.
EVELYN KEHYENG, respondents.

G.R. No. 123938 May 21, 1998 DAVIDE, JR., J.:

LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its In this special civil action for certiorari under Rule 65, petitioners seek to
members, ANA MARIE OCAMPO, MARY INTAL, ANNABEL CARESO, reverse the 29 March 1995 resolution 1of the National Labor Relations
Commission (NLRC) in NLRC RAB III Case No. 01-1964-91 which affirmed the 3. That Management of the Empire Food Products shall make the proper
Decision 2 of Labor Arbiter Ariel C. Santos dismissing their complaint for adjustment of the Employees Wages within fifteen (15) days from the
utter lack of merit. signing of this Agreement and further agreed to register all the employees
with the SSS;
The antecedents of this case, as summarized by the Office of the Solicitor
General in its Manifestation and Motion in Lieu of Comment, 3 are as 4. That Employer, Empire Food Products thru its Management agreed to
follows: deduct thru payroll deduction UNION DUES and other Assessment[s] upon
submission by the LCP Labor Congress individual Check-Off Authorization[s]
The 99 persons named as petitioners in this proceeding were rank-and-file signed by the Union Members indicating the amount to be deducted and
employees of respondent Empire Food Products, which hired them on further agreed all deduction[s] made representing Union Dues and
various dates (Paragraph 1, Annex "A" of Petition, Annex "B;" Page 2, Annex Assessment[s] shall be remitted immediately to the LCP Labor Congress
"F" of Petition). Treasurer or authorized representative within three (3) or five (5) days upon
Petitioners filed against private respondents a complaint for payment of deductions [sic], Union dues not deducted during the period due, shall be
money claim[s] and for violation of labor standard[s] laws (NLRC Case No. refunded or reimbursed by the Employer/Management.
RAB-111-10-1817-90). They also filed a petition for direct certification of Employer/Management further agreed to deduct Union dues from non-
petitioner Labor Congress of the Philippines as their bargaining union members the same amount deducted from union members without
representative (Case No. R0300-9010-RU-005). need of individual Check-Off Authorizations [for] Agency Fee;

On October 23, 1990, petitioners represented by LCP President Benigno B. 5. That in consideration [of] the foregoing covenant, parties jointly and
Navarro, Sr. and private respondents Gonzalo Kehyeng and Evelyn Kehyeng mutually agreed that NLRC CASE NO. RAB-III-10-1817-90 shall be considered
in behalf of Empire Food Products, Inc. entered into a Memorandum of provisionally withdrawn from the Calendar of the National Labor Relations
Agreement which provided, among others, the following: Commission (NLRC), while the Petition for direct certification of the LCP
Labor Congress parties jointly move for the direct certification of the LCP
1. That in connection with the pending Petition for Direct Certification filed Labor Congress;
by the Labor Congress with the DOLE, Management of the Empire Food
Products has no objection [to] the direct certification of the LCP Labor 6. That parties jointly and mutually agreed that upon signing of this
Congress and is now recognizing the Labor Congress of the Philippines (LCP) Agreement, no Harassments [sic], Threats, Interferences [sic] of their
and its Local Chapter as the SOLE and EXCLUSIVE Bargaining Agent and respective rights under the law, no Vengeance or Revenge by each partner
Representative for all rank and file employees of the Empire Food Products nor any act of ULP which might disrupt the operations of the business;
regarding "WAGES, HOURS Of WORK, AND OTHER TERMS AND CONDITIONS 7. Parties jointly and mutually agreed that pending negotiations or
OF EMPLOYMENT;" formalization of the propose[d] CBA, this Memorandum of Agreement shall
2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90 pending with govern the parties in the exercise of their respective rights involving the
the NLRC parties jointly and mutually agreed that the issues thereof, shall be Management of the business and the terms and condition[s] of
discussed by the parties and resolve[d] during the negotiation of the employment, and whatever problems and grievances may arise by and
Collective Bargaining Agreement; between the parties shall be resolved by them, thru the most cordial and
good harmonious relationship by communicating the other party in writing violation of the memorandum of agreement, underpayment of wages and
indicating said grievances before taking any action to another forum or denied petitioners' prayer for actual, moral and exemplary damages. Labor
government agencies; Arbiter Santos, however, directed the reinstatement of the individual
complainants:
8. That parties [to] this Memorandum of Agreement jointly and mutually
agreed to respect, abide and comply with all the terms and conditions The undersigned Labor Arbiter is not oblivious to the fact that respondents
hereof. Further agreed that violation by the parties of any provision herein have violated a cardinal rule in every establishment that a payroll and other
shall constitute an act of ULP. (Annex "A" of Petition). papers evidencing hours of work, payments, etc. shall always be maintained
and subjected to inspection and visitation by personnel of the Department
In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez of Labor and Employment. As such penalty, respondents should not escape
approved the memorandum of agreement and certified LCP "as the sole and liability for this technicality, hence, it is proper that all individual
exclusive bargaining agent among the rank-and-file employee of Empire complainants except those who resigned and executed quitclaim[s] and
Food Products for purposes of collective bargaining with respect to wages, releases prior to the filing of this complaint should be reinstated to their
hours of work and other terms and conditions of employment" (Annex "B" former position[s] with the admonition to respondents that any harassment,
of Petition). intimidation, coercion or any form of threat as a result of this immediately
On November 9, 1990, petitioners through LCP President Navarro submitted executory reinstatement shall be dealt with accordingly.
to private respondents a proposal for collective bargaining (Annex "C" of SO ORDERED. (Annex "G" of petition)
Petition).
On appeal, the National Labor Relations Commission vacated the Decision
On January 23, 1991, petitioners filed a complaint docketed as NLRC Case dated April 14, 1972 [sic] and remanded the case to the Labor Arbiter for
No. RAB-III-01-1964-91 against private respondents for: further proceedings for the following reasons:
a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal; The Labor Arbiter, through his decision, noted that ". . . complainant did not
b. Union busting thru Harassments [sic], threats, and interfering with the present any single witness while respondent presented four (4) witnesses in
rights of employees to self-organization; the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira
Bulagan . . ." (p. 183, Records), that ". . . complainant before the National
c. Violation of the Memorandum of Agreement dated October 23, 1990; Labor Relations Commission must prove with definiteness and clarity the
offense charged. . . ." (Record, p. 183); that ". . . complainant failed to
d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727,
specify under what provision of the Labor Code particularly Art. 248 did
such as Wages promulgated by the Regional Wage Board;
respondents violate so as to constitute unfair labor practice . . ." (Record, p.
e. Actual, Moral and Exemplary Damages. (Annex "D" of Petition) 183); that "complainants failed to present any witness who may describe in
what manner respondents have committed unfair labor practice . . ."
After the submission by the parties of their respective position papers and (Record, p. 185); that ". . . complainant LCP failed to present anyone of the
presentation of testimonial evidence, Labor Arbiter Ariel C. Santos absolved so-called 99 complainants in order to testify who committed the threats and
private respondents of the charges of unfair labor practice, union busting, intimidation . . ." (Record, p. 185).
Upon review of the minutes of the proceedings on record, however, it required in order to declare respondents/employers guilty of unfair labor
appears that complainant presented witnesses, namely, BENIGNO practice. Failing in this regard is fatal to the cause of complainants. Besides,
NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, even the charge of illegal lockout has no leg to stand on because of the
p. 92, who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT, as testimony of respondents through their guard Orlando Cairo (TSN, July 31,
Exhibit "A" and the annexes thereto as Exhibit "B", "B-1" to "B-9", 1991 hearing; p. 5-35) that on January 21, 1991, complainants refused and
inclusive. Minutes of the proceedings on record show that complainant failed to report for work, hence guilty of abandoning their post without
further presented other witnesses, namely: ERLINDA BASILIO (13 March permission from respondents. As a result of complainants['] failure to report
1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENIE GARCIA for work, the cheese curls ready for repacking were all spoiled to the
(16 April 1991, Record, p. 96, see back portion thereof ; 2 May 1991, Record, prejudice of respondents. Under cross-examination, complainants failed to
p. 102; 16 May 1991, Record, p. 103, 11 June 1991, Record, p. 105). Formal rebut the authenticity of respondents' witness testimony.
offer of Documentary and Testimonial Evidence was made by complainant
As regards the issue of harassments [sic], threats and interference with the
on June 24, 1991 (Record, p. 106-109)
rights of employees to self-organization which is actually an ingredient of
The Labor Arbiter must have overlooked the testimonies of some of the unfair labor practice, complainants failed to specify what type of threats or
individual complainants which are now on record. Other individual intimidation was committed and who committed the same. What are the
complainants should have been summoned with the end in view of receiving acts or utterances constitutive of harassments [sic] being complained of?
their testimonies. The complainants should be afforded the time and These are the specifics which should have been proven with definiteness
opportunity to fully substantiate their claims against the respondents. and clarity by complainants who chose to rely heavily on its position paper
Judgment should be rendered only based on the conflicting positions of the through generalizations to prove their case.
parties. The Labor Arbiter is called upon to consider and pass upon the
Insofar as violation of [the] Memorandum of Agreement dated October 23,
issues of fact and law raised by the parties.
1990 is concerned, both parties agreed that:
Toward this end, therefore, it is Our considered view [that] the case should
2 — That with regards [sic] to the NLRC Case No. RAB III-10-1817-90 pending
be remanded to the Labor Arbiter of origin for further proceedings. (Annex
"H" of Petition) with the NLRC, parties jointly and mutually agreed that the issues thereof
shall be discussed by the parties and resolve[d] during the negotiation of the
In a Decision dated July 27, 1994, Labor Arbiter Santos made the following CBA.
determination:
The aforequoted provision does not speak of [an] obligation on the part of
Complainants failed to present with definiteness and clarity the particular respondents but on a resolutory condition that may occur or may not
act or acts constitutive of unfair labor practice. happen. This cannot be made the basis of an imposition of an obligation
over which the National Labor Relations Commission has exclusive
It is to be borne in mind that a declaration of unfair labor practice connotes jurisdiction thereof.
a finding of prima facieevidence of probability that a criminal offense may
have been committed so as to warrant the filing of a criminal information Anent the charge that there was underpayment of wages, the evidence
before the regular court. Hence, evidence which is more than a scintilla is points to the contrary. The enumeration of complainants' wages in their
consolidated Affidavits of merit and position paper which implies Their motion for reconsideration having been denied by the NLRC in its
underpayment has no leg to stand on in the light of the fact that Resolution of 31 October 1995, 6petitioners filed the instant special civil
complainants' admission that they are piece workers or paid on action for certiorari raising the following issues:
a pakiao [basis] i.e. a certain amount for every thousand pieces of cheese
curls or other products repacked. The only limitation for piece workers I
or pakiao workers is that they should receive compensation no less than the WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR RELATIONS
minimum wage for an eight (8) hour work [sic]. And compliance therewith COMMISSION GRAVELY ABUSED ITS DISCRETION WHEN IT DISREGARDED OR
was satisfactorily explained by respondent Gonzalo Kehyeng in his testimony IGNORED NOT ONLY THE EVIDENCE FAVORABLE TO HEREIN PETITIONERS,
(TSN, p. 12-30) during the July 31, 1991 hearing. On cross-examination, APPLICABLE JURISPRUDENCE BUT ALSO ITS OWN DECISIONS AND THAT OF
complainants failed to rebut or deny Gonzalo Kehyeng's testimony that THIS HONORABLE HIGHEST TRIBUNAL WHICH [WAS] TANTAMOUNT NOT
complainants have been even receiving more than the minimum wage for ONLY TO THE DEPRIVATION OF PETITIONERS' RIGHT TO DUE PROCESS BUT
an average workers [sic]. Certainly, a lazy worker earns less than the WOULD RESULT [IN] MANIFEST INJUSTICE.
minimum wage but the same cannot be attributable to respondents but to
the lazy workers. II

Finally, the claim for moral and exemplary damages has no leg to stand on WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS
when no malice, bad faith or fraud was ever proven to have been DISCRETION WHEN IT DEPRIVED THE PETITIONERS OF THEIR
perpetuated by respondents. CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, SECURITY OF TENURE,
PROTECTION TO LABOR, JUST AND HUMANE CONDITIONS OF WORK AND
WHEREFORE, premises considered, the complaint is hereby DISMISSED for DUE PROCESS.
utter lack of merit. (Annex "I" of Petition). 4
III
On appeal, the NLRC, in its Resolution dated 29 March 1995, 5 affirmed in
toto the decision of Labor Arbiter Santos. In so doing, the NLRC sustained WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT [OF] OR
the Labor Arbiter's findings that: (a) there was a dearth of evidence to prove CONSTRUCTIVELY DISMISSED FROM THEIR ONLY MEANS OF LIVELIHOOD.
the existence of unfair labor practice and union busting on the part of
IV
private respondents; (b) the agreement of 23 October 1990 could not be
made the basis of an obligation within the ambit of the NLRC's jurisdiction, WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM THE DATE
as the provisions thereof, particularly Section 2, spoke of a resolutory OF THEIR DISMISSAL UP TO THE TIME OF THEIR REINSTATEMENT, WITH
condition which could or could not happen; (c) the claims for underpayment BACKWAGES, STATUTORY BENEFITS, DAMAGES AND ATTORNEY'S FEES. 7
of wages were without basis as complainants were
admittedly"pakiao" workers and paid on the basis of their output subject to We required respondents to file their respective Comments.
the lone limitation that the payment conformed to the minimum wage rate
In their Manifestation and Comment, private respondents asserted that the
for an eight-hour workday; and (d) petitioners were not underpaid.
petition was filed out of time. As petitioners admitted in their Notice to File
Petition for Review on Certiorari that they received a copy of the resolution
(denying their motion for reconsideration) on 13 December 1995, they had weighing and evaluating the evidence in support thereof, as well as the
only until 29 December 1995 to file the petition. Having failed to do so, the pertinent provisions of law and jurisprudence.
NLRC thus already entered judgment in private respondents' favor.
In their Reply, petitioners claim that the decisions of the NLRC and the Labor
In their Reply, petitioners averred that Mr. Navarro, a non-lawyer who filed Arbiter were not supported by substantial evidence; that abandonment was
the notice to file a petition for review on their behalf, mistook which not proved; and that much credit was given to self-serving statements of
reglementary period to apply. Instead of using the "reasonable time" Gonzalo Kehyeng, owner of Empire Foods, as to payment of just wages.
criterion forcertiorari under Rule 65, he used the 15-day period for petitions
On 7 July 1997, we gave due course to the petition and required the parties
for review on certiorari under Rule 45. They hastened to add that such was a
mere technicality which should not bar their petition from being decided on to file their respective memoranda. However, only petitioners and private
respondents filed their memoranda, with the NLRC merely adopting its
the merits in furtherance of substantial justice, especially considering that
respondents neither denied nor contradicted the facts and issues raised in Comment as its Memorandum.
the petition. We find for petitioners.
In its Manifestation and Motion in Lieu of Comment, the Office of the Invocation of the general rule that factual findings of the NLRC bind this
Solicitor General (OSG) sided with petitioners. It pointed out that the Labor Court is unavailing under the circumstances. Initially, we are unable to
Arbiter, in finding that petitioners abandoned their jobs, relied solely on the discern any compelling reason justifying the Labor Arbiter's volte facefrom
testimony of Security Guard Rolando Cairo that petitioners refused to work his 14 April 1992 decision reinstating petitioners to his diametrically
on 21 January 1991, resulting in the spoilage of cheese curls ready for opposed 27 July 1994 decision, when in both instances, he had before him
repacking. However, the OSG argued, this refusal to report for work for a substantially the same evidence. Neither do we find the 29 March 1995
single day did not constitute abandonment, which pertains to a clear, NLRC resolution to have sufficiently discussed the facts so as to comply with
deliberate and unjustified refusal to resume employment, and not mere the standard of substantial evidence. For one thing, the NLRC confessed its
absence. In fact, the OSG stressed, two days after allegedly abandoning their reluctance to inquire into the veracity of the Labor Arbiter's factual findings,
work, petitioners filed a complaint for, inter alia, illegal lockout or illegal staunchly declaring that it was "not about to substitute [its] judgment on
dismissal. Finally, the OSG questioned the lack of explanation on the part of matters that are within the province of the trier of facts." Yet, in the 21 July
Labor Arbiter Santos as to why he abandoned his original decision to 1992 NLRC resolution, 8 it chastised the Labor Arbiter for his errors both in
reinstate petitioners. judgment and procedure; for which reason it remanded the records of the
case to the Labor Arbiter for compliance with the pronouncements therein.
In view of the stand of the OSG, we resolved to require the NLRC to file its
own Comment. What cannot escape from our attention is that the Labor Arbiter did not
heed the observations and pronouncements of the NLRC in its resolution of
In its Comment, the NLRC invokes the general rule that factual findings of an
administrative agency bind a reviewing court and asserts that this case does 21 July 1992, neither did he understand the purpose of the remand of the
records to him. In said resolution, the NLRC summarized the grounds for the
not fall under the exceptions. The NLRC further argues that grave abuse of
discretion may not be imputed to it, as it affirmed the factual findings and appeal to be:
legal conclusions of the Labor Arbiter only after carefully reviewing,
1. that there is a prima facie evidence of abuse of discretion and acts of 96, see back portion thereof; 2 May 1991, Record, p. 102; 16 May 1991,
gross incompetence committed by the Labor Arbiter in rendering the Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of Documentary
decision. and Testimonial Evidence was made by the complainant on June 24, 1991
(Record, p.106-109).
2. that the Labor Arbiter in rendering the decision committed serious errors
in the findings of facts. The Labor Arbiter must have overlooked the testimonies of some of the
individual complainants which are now on record. Other individual
After which, the NLRC observed and found: complainants should have been summoned with the end in view of receiving
Complainant alleged that the Labor Arbiter disregarded the testimonies of their testimonies. The complainants should [have been] afforded the time
the 99 complainants who submitted their Consolidated Affidavit of Merit and opportunity to fully substantiate their claims against the respondents.
and Position Paper which was adopted as direct testimonies during the Judgment should [have been] rendered only based on the conflicting
hearing and cross-examined by respondents' counsel. positions of the parties. The Labor Arbiter is called upon to consider and
pass upon the issues of fact and law raised by the parties.
The Labor Arbiter, through his decision, noted that ". . . complainant did not
present any single witness while respondent presented four (4) witnesses in Toward this end, therefore, it is Our considered view the case should be
the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira remanded to the Labor Arbiter of origin for further proceedings.
Bulagan . . ." (Records, p. 183), that ". . . complainant before the National Further, We take note that the decision does not contain a dispositive
Labor Relations Commission must prove with definiteness and clarity the portion or fallo. Such being the case, it may be well said that the decision
offense charged. . . ." (Record, p. 183; that ". . . complainant failed to specify does not resolve the issues at hand. On another plane, there is no portion of
under what provision of the Labor Code particularly Art. 248 did the decision which could be carried out by way of execution.
respondents violate so as to constitute unfair labor practice . . ." (Record, p.
183); that "complainants failed to present any witness who may describe in It may be argued that the last paragraph of the decision may be categorized
what manner respondents have committed unfair labor practice . . ." as the dispositive portion thereof:
(Record, p. 185); that ". . . complainant a [sic] LCP failed to present anyone
xxx xxx xxx
of the so called 99 complainants in order to testify who committed the
threats and intimidation . . ." (Record, p.185). The undersigned Labor Arbiter is not oblivious [to] the fact that respondents
have violated a cardinal rule in every establishment that a payroll and other
Upon review of the minutes of the proceedings on record, however, it
appears that complainant presented witnesses, namely BENIGNO NAVARRO, papers evidencing hour[s] of work, payment, etc. shall always be maintained
and subjected to inspection and visitation by personnel of the Department
JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92), who
adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT as Exhibit A of Labor and Employment. As such penalty, respondents should not escape
liability for this technicality, hence, it is proper that all the individual
and the annexes thereto as Exhibit B, B-1 to B-9, inclusive. Minutes of the
proceedings on record show that complainant further presented other complainants except those who resigned and executed quitclaim[s] and
release[s] prior to the filing of this complaint should be reinstated to their
witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93;
LOURDES PANTILLO, MARIFE PINLAC, LENI GARCIA (16 April 1991, Record, p. former position with the admonition to respondents that any harassment,
intimidation, coercion or any form of threat as a result of this immediately Consolidated Mining and Development Corp. v. NLRC, 190 SCRA 505; Hua
executory reinstatement shall be dealt with accordingly. Bee Shirt Factory v. NLRC, 186 SCRA 586; Mabaylan v. NLRC, 203 SCRA 570
and Flexo Manufacturing v. NLRC, 135 SCRA 145). In Atlas Consolidated,
SO ORDERED. supra, this Honorable Court explicitly stated:
It is Our considered view that even assuming arguendo that the respondents It would be illogical for Caballo, to abandon his work and then immediately
failed to maintain their payroll and other papers evidencing hours of work, file an action seeking for his reinstatement. We can not believe that Caballo,
payment etc., such circumstance, standing alone, does not warrant the who had worked for Atlas for two years and ten months, would simply walk
directive to reinstate complainants to their former positions. It is [a] well away from his job unmindful of the consequence of his act. i.e. the forfeiture
settled rule that there must be a finding of illegal dismissal before of his accrued employment benefits. In opting to finally to [sic] contest the
reinstatement be mandated. legality of his dismissal instead of just claiming his separation pay and other
In this regard, the LABOR ARBITER is hereby directed to include in his benefits, which he actually did but which proved to be futile after all, ably
clarificatory decision, after receiving evidence, considering and resolving the supports his sincere intention to return to work, thus negating Atlas' stand
same, the requisite dispositive portion. 9 that he had abandoned his job.

Apparently, the Labor Arbiter perceived that if not for petitioners, he would In De Ysasi III v. NLRC (supra), this Honorable Court stressed that it is the
not have fallen victim to this stinging rebuke at the hands of the NLRC. Thus clear, deliberate and unjustified refusal to resume employment and not
does it appear to us that the Labor Arbiter, in concluding in his 27 July 1994 mere absence that constitutes abandonment. The absence of petitioner
Decision that petitioners abandoned their work, was moved by, at worst, employees for one day on January 21, 1991 as testified [to] by Security
spite, or at best, lackadaisically glossed over petitioner's evidence. On this Guard Orlando Cairo did not constitute abandonment.
score, we find the following observations of the OSG most persuasive: In his first decision, Labor Arbiter Santos expressly directed the
In finding that petitioner employees abandoned their work, the Labor reinstatement of the petitioner employees and admonished the private
Arbiter and the NLRC relied on the testimony of Security Guard Rolando respondents that "any harassment, intimidation, coercion or any form of
Cairo that on January 21, 1991, petitioners refused to work. As a result of threat as a result of this immediately executory reinstatement shall be dealt
their failure to work, the cheese curls ready for repacking on said date were with accordingly.
spoiled. In his second decision, Labor Arbiter Santos did not state why he was
The failure to work for one day, which resulted in the spoilage of cheese abandoning his previous decision directing the reinstatement of petitioner
curls does not amount to abandonment of work. In fact two (2) days after employees.
the reported abandonment of work or on January 23, 1991, petitioners filed By directing in his first decision the reinstatement of petitioner employees,
a complaint for, among others, unfair labor practice, illegal lockout and/or the Labor Arbiter impliedly held that they did not abandon their work but
illegal dismissal. In several cases, this Honorable Court held that "one could were not allowed to work without just cause.
not possibly abandon his work and shortly thereafter vigorously pursue his
complaint for illegal dismissal (De Ysasi III v. NLRC, 231 SCRA 173; Ranara v. That petitioner employees are "pakyao" or piece workers does not imply
NLRC, 212 SCRA 631; Dagupan Bus Co. v. NLRC, 191 SCRA 328; Atlas that they are not regular employees entitled to reinstatement. Private
respondent Empire Food Products, Inc. is a food and fruit processing That being said, the amount of back wages to which each petitioner is
company. In Tabas v. California Manufacturing Co., Inc. (169 SCRA 497), this entitled, however, cannot be fully settled at this time. Petitioners, as piece-
Honorable Court held that the work of merchandisers of processed food, rate workers having been paid by the piece, 14 there is need to determine
who coordinate with grocery stores and other outlets for the sale of the the varying degrees of production and days worked by each worker. Clearly,
processed food is necessary in the day-to-day operation[s] of the company. this issue is best left to the National Labor Relations Commission.
With more reason, the work of processed food repackers is necessary in the
day-to-day operation[s] of respondent Empire Food Products. 10 As to the other benefits, namely, holiday pay, premium pay, 13th month pay
and service incentive leave which the labor arbiter failed to rule on but
It may likewise be stressed that the burden of proving the existence of just which petitioners prayed for in their complaint, 15 we hold that petitioners
cause for dismissing an employee, such as abandonment, rests on the are so entitled to these benefits. Three (3) factors lead us to conclude that
employer, 11 a burden private respondents failed to discharge. petitioners, although piece-rate workers, were regular employees of private
respondents. First, as to the nature of petitioners' tasks, their job of
Private respondents, moreover, in considering petitioners' employment to repacking snack food was necessary or desirable in the usual business of
have been terminated by abandonment, violated their rights to security of private respondents, who were engaged in the manufacture and selling of
tenure and constitutional right to due process in not even serving them with such food products; second, petitioners worked for private respondents
a written notice of such termination. 12 Section 2, Rule XIV, Book V of the throughout the year, their employment not having been dependent on a
Omnibus Rules Implementing the Labor Code provides: specific project or season; and third, the length of time 16that petitioners
Sec. 2. Notice of Dismissal — Any employer who seeks to dismiss a worker worked for private respondents. Thus, while petitioners' mode of
shall furnish him a written notice stating the particular acts or omission compensation was on a "per piece basis," the status and nature of their
constituting the grounds for his dismissal. In cases of abandonment of work, employment was that of regular employees.
the notice shall be served at the worker's last known address. The Rules Implementing the Labor Code exclude certain employees from
Petitioners are therefore entitled to reinstatement with full back wages receiving benefits such as nighttime pay, holiday pay, service incentive
pursuant to Article 279 of the Labor Code, as amended by R.A. No. 6715. leave 17 and 13th month pay, 18 inter alia, "field personnel and other
Nevertheless, the records disclose that taking into account the number of employees whose time and performance is unsupervised by the employer,
employees involved, the length of time that has lapsed since their dismissal, including those who are engaged on task or contract basis, purely
and the perceptible resentment and enmity between petitioners and private commission basis, or those who are paid a fixed amount for performing
respondents which necessarily strained their relationship, reinstatement work irrespective of the time consumed in the performance thereof."
would be impractical and hardly promotive of the best interests of the Plainly, petitioners as piece-rate workers do not fall within this group. As
parties. In lieu of reinstatement then, separation pay at the rate of one mentioned earlier, not only did petitioners labor under the control of private
month for every year of service, with respondents as their employer, likewise did petitioners toil throughout the
a fraction of at least six (6) months of service considered as one (1) year, is in year with the fulfillment of their quota as supposed basis for compensation.
order. 13 Further, in Section 8 (b), Rule IV, Book III which we quote hereunder, piece
workers are specifically mentioned as being entitled to holiday pay.

Sec. 8. Holiday pay of certain employees. —


(b) Where a covered employee is paid by results or output, such as payment more, the National Labor Relations Commission would be in a better
on piece work, his holiday pay shall not be less than his average daily position to determine the exact amounts owed petitioners, if any.
earnings for the last seven (7) actual working days preceding the regular
As to the claim that private respondents violated petitioners' right to self-
holiday: Provided, however, that in no case shall the holiday pay be less than
the applicable statutory minimum wage rate. organization, the evidence on record does not support this claim. Petitioners
relied almost entirely on documentary evidence which, per se, did not prove
In addition, the Revised Guidelines on the Implementation of the 13th any wrongdoing on private respondents' part. For example, petitioners
Month Pay Law, in view of the modifications to P.D. No. 851 19 by presented their complaint 21 to prove the violation of labor laws committed
Memorandum Order No. 28, clearly exclude the employer of piece rate by private respondents. The complaint, however, is merely "the pleading
workers from those exempted from paying 13th month pay, to wit: alleging the plaintiff's cause or causes of action." 22 Its contents are merely
allegations, the verity of which shall have to be proved during the trial. They
2. EXEMPTED EMPLOYERS likewise offered their Consolidated Affidavit of Merit and Position
The following employers are still not covered by P.D. No. 851: Paper 23which, like the offer of their Complaint, was a tautological exercise,
and did not help nor prove their cause. In like manner, the petition for
d. Employers of those who are paid on purely commission, boundary or task certification election 24 and the subsequent order of certification 25 merely
basis, and those who are paid a fixed amount for performing specific work, proved that petitioners sought and acquired the status of bargaining agent
irrespective of the time consumed in the performance thereof, except where for all rank-and-file employees. Finally, the existence of the memorandum of
the workers are paid on piece-rate basis in which case the employer shall agreement 26 offered to substantiate private respondents' non-compliance
grant the required 13th month pay to such workers. (emphasis supplied) therewith, did not prove either compliance or non-compliance, absent
evidence of concrete, overt acts in contravention of the provisions of the
The Revised Guidelines as well as the Rules and Regulations identify those
memorandum.
workers who fall under the piece-rate category as those who are paid a
standard amount for every piece or unit of work produced that is more or IN VIEW WHEREOF, the instant petition is hereby GRANTED. The Resolution
less regularly replicated, without regard to the time spent in producing the of the National Labor Relations Commission of 29 March 1995 and the
same. 20 Decision of the Labor Arbiter of 27 July 1994 in NLRC Case No. RAB-III-01-
1964-91 are hereby SET ASIDE, and another is hereby rendered:
As to overtime pay, the rules, however, are different. According to Sec. 2(e),
Rule I, Book III of the Implementing Rules, workers who are paid by results 1. DECLARING petitioners to have been illegally dismissed by private
including those who are paid on piece-work, takay, pakiao, or task basis, if respondents, thus entitled to full back wages and other privileges, and
their output rates are in accordance with the standards prescribed under separation pay in lieu of reinstatement at the rate of one month's salary for
Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been every year of service with a fraction of six months of service considered as
fixed by the Secretary of Labor in accordance with the aforesaid section, are one year;
not entitled to receive overtime pay. Here, private respondents did not
allege adherence to the standards set forth in Sec. 8 nor with the rates 2. REMANDING the records of this case to the National Labor Relations
prescribed by the Secretary of Labor. As such, petitioners are beyond the Commission for its determination of the back wages and other benefits and
ambit of exempted persons and are therefore entitled to overtime pay. Once separation pay, taking into account the foregoing observations; and
3. DIRECTING the National Labor Relations Commission to resolve the
referred issues within sixty (60) days from its receipt of a copy of this
decision and of the records of the case and to submit to this Court a report PADILLA, J.:p
of its compliance hereof within ten (10) days from the rendition of its This is a petition for certiorari with prayer for the issuance of a writ of
resolution. preliminary injunction, seeking to set aside or modify the Order of the
respondent National Labor Relations Commission (NLRC), dated 6
Costs against private respondents.
September 1988, which set aside the order of the Labor Arbiter dated 31
SO ORDERED. October 1984. 1

On 5 December 1988, a temporary restraining order was issued by this Court


enjoining the respondents from enforcing the questioned NLRC Order until
further orders from the Court. 2

The antecedent facts of the case are as follows:

On 30 April 1973, the Court of Industrial Relations (CIR) rendered a decision


in Case No. 5478-ULP, entitled "Alba Patio de Makati Employees Association,
et al, complainants, vs. Alba Patio de Makati, et al., respondents," the
dispositive part of which reads as follows:

WHEREFORE, respondents are hereby declared guilty of unfair labor


practices as charged and are ordered to cease and desist from further
committing said acts, to reinstate the herein four (4) individual complainants
with full back wages and to pay them their respective shares in the service
charges for May 1 to 15, 1970 and for the rest of that month until their
G.R. No. 85393 September 5, 1991 forced resignation.

ALBA PATIO DE MAKATI, ANASTACIO ALBA and CLAUDIO A motion for reconsideration of the said decision filed by respondents
OLABARRIETA, petitioners, (herein petitioners) was denied on 6 November 1973.
vs.
NATIONAL LABOR RELATIONS COMMISSION, ALBA PATIO DE MAKATI Petitioners then sought a review by this Court of the CIR's decision and
EMPLOYEES ASSOCIATION, HERMOGENES CAGANO, LUCIO CAGANO, resolution. The case was docketed as "Alba Patio de Makati, Anastacio Alba
RUPERTO CRUZ and BONIFACIO ACIADO respondents. and Claudio Olabarrieta, petitioners, vs. Alba Patio de Makati Employees
Association, Hermogenes Cagano, Ruperto Cruz, Lucio Cagano, and Bonifacio
Justo & Magpale Law Offices for petitioners. Aclado, respondents, G.R. No. L-37922." 3

Felipe P. Fuentes, Jr. for private respondents.


On 16 March 1984, this Court rendered a decision in the above-mentioned Acting on the foregoing documents, Labor Arbiter Tirona issued the order of
case, dismissing the petition for review and affirming the decision and 31 October 1984. the dispositive part of which reads:
resolution of the CIR.
Finding said "Satisfaction of Judgment, Release and Quit-claim" to be in
Thereafter, the National Labor Relations Commission (which had succeeded order and it appearing thereon that complainants have already received
the Court of Industrial Relations), through Labor Arbiter Antonio Tria Tirona P54,000.00 for and in consideration thereof, the instant case is hereby
directed the Chief of the Research and Information Division of the NLRC to considered CLOSED and TERMINATED. 6
have the award due the complainants computed. The pertinent part of the
On 10 December 1985, private co-respondent Bonifacio Aclado wrote his
"Report of Examiner" submitted stated that the total money value of the
backwages and service charges due herein private respondents amounts to counsel Atty. Felipe P. Fuentes, Jr., informing the latter that as of said date,
he had not been reinstated and paid his back wages by the petitioners. The
P196,270.84, and that the herein petitioners had not as of the date of the
report reinstated the private respondents. following day, or on 11 December 1985, Atty. Fuentes filed before the NLRC
a motion for the immediate execution of the CIR decision. Petitioners
With the submission of the Report of Examiner, private respondents moved opposed the motion, alleging that the case was already considered closed
for the issuance of a writ of execution. Petitioners opposed the motion, and terminated as per order of 31 October 1.984 and that the said order
contending, among other things, that the computation of back wages should was issued pursuant to the "Satisfaction of Judgment, Release and Quit-
be limited to three (3) years without qualification or deduction, in claim" which had been executed by Lucio Cagano as the attorney-in-fact of
accordance with the rulings of this Court on the matter, and that if complainant (private co-respondent) Bonifacio Aclado.
complainants would insist on payment based on the "Report of Examiner",
Thereafter, on 3 March 1986, other private co-respondent Ruperto Cruz filed
they should then render an accounting of their income realized elsewhere
from 1 May 1970 up to 15 August 1984. a similar motion for execution and to annul and set aside the order dated 31
October 1984, alleging that he had not executed any specific power of
The Report and the petitioners' opposition to the motions were set for attorney naming Lucio Cagano as his attorney-in-fact. 7 Petitioners filed an
hearing on 29 October 1984. At the said hearing, Lucio Cagano, for himself Omnibus Motion 8 alleging, among other things, that the Labor Arbiter/
and as the alleged attorney-in-fact of the other complainants, filed a NLRC had already lost jurisdiction over the case by reason of the satisfaction
document entitled "Satisfaction of Judgment, Release and Quit-claim" which of the judgment and that any question as to the validity of the "Satisfaction
declares inter alia that complainants have received the sum of P54,000.00 of Judgment, Release and Quit-claim" which is in the nature of a
from the Alba Patio de Makati, which amount corresponds to three (3) years compromise agreement must be brought before the regular courts.
back wages, including attorney's fees, in full and complete satisfaction of the
judgment and releasing the petitioners from any further liability in On 6 September 1988, the NLRC promulgated the questioned Order,
annulling and setting aside the order of Labor Arbiter Antonio Tria Tirona
connection with their claims against petitioners. 4 Filed with the above-said
document were the respective special powers of attorney purportedly dated 31 October 1984 and directing the immediate enforcement of the
decision of the Court of Industrial Relations dated 30 April 1973 as affirmed
executed by Bonifacio Aclado, Ruperto Cruz, and Esteban Cagano, father of
deceased Hermogenes Cagano, appointing Lucio Cagano as their attorney- by this Court. It held:
in-fact. 5Said documents were notarized by Atty. Eugenio Tumulak, counsel
for Lucio Cagano.
Resolving this issue, we rule that the special power of attorney executed by Hence, the present petition for certiorari filed by petitioners with prayer for
Esteban Cagano in behalf of his deceased son, Hermogenes Cagano, one of the issuance of a writ of preliminary injunction.
the complainants in this case, who have (sic) children but still minors and
The only issue to be resolved in this case is whether or not the NLRC still had
the mother of said children (alleged common law wife of the deceased), and
in favor of Lucio Cagano as attorney-in-fact is patently null and void since jurisdiction to issue the resolution or order of 6 September 1988, setting
aside the Labor Arbiter's order of 31 October 1984.
Esteban Cagano had no legal authority to execute a special power of
attorney in behalf of a deceased person or represent the minor children of Petitioners claim that the jurisdiction of the National Labor Relations
the deceased complainant. If an agency is extinguished by death of the Commission over the case had already been lost by virtue of the order dated
principal, with more reason that an agency cannot be constituted for and in 31 October 1984, wherein the Labor Arbiter declared the case closed and
behalf of a deceased person or the latter's minor children unless duly terminated in view of the document filed by the private respondents
authorized by the Court. A cursory reading of these (sic) special power of entitled "Satisfaction of Judgment, Release and Quit-claim"; that the
attorney shows that the attorney-in-fact was practically granted blanket aforesaid document, petitioners allege, is in the nature of a compromise
authority to negotiate with respondent any amount of back wages due the agreement which has, upon the parties, the effect of res judicata; that the
complainants. However, such back wages awarded to them and which the allegations in the private respondents' subsequent motions set forth a cause
attorney-in-fact is allowed to negotiate or receive in their behalf under the of action that does not involve a question arising out of employer employee
special power of attorney is an 'amount (shall) be due in accordance with relations but the validity and enforceability of a compromise agreement
law.'A fortiori, We should carefully scrutinize and determine in what manner between petitioners and private respondents, for which reason, the matter
and to what extent was this express authority exercised and whether or not should properly be raised before the regular courts.
the settlement arrived at by the complainants through their attorney-in-fact
and respondents is in accordance with the terms of the special power of On the other hand, the Solicitor General maintains that petitioners, having
attorney and that the same is not contrary to law, morals, good customs, submitted themselves to the jurisdiction of the NLRC, should not be snowed,
public order, or public policy. for reasons of public policy, to repudiate the very same jurisdiction they had
invoked to seek affirmative relief, citing in support of his submission the case
To Us, the settlement of the computed award of P196,270.84 for only a of Tijam vs. Sibonghanoy, 23 SCRA 29.
minuscule sum of P54,000.00 is grossly disproportionate, unconscionable
and inequitable. We cannot therefore give imprimatur to such settlement, In addition, private respondents insist that they had not executed any
release and quitclaim for being clearly contrary to the authority granted to special power of attorney in favor of their co-complainant Lucio Cagano; that
the attorney-in-fact and also violative of law and public policy. We cannot they have not received their backwages and have not been reinstated to
allow this miscarriage of justice. Accordingly, the approval of the settlement their former respective positions by petitioners pursuant to the CIR decision
constitutes a reversible error. Labor justice may not be thwarted or as affirmed by this Court.
frustrated by strait-jacketed technicalities by denying this Commission its
The petition is bereft of merit.
jurisdiction to pass upon these issues. For Us to refer this matter to another
forum would necessarily make the complainants who are affected thereby Time and again, this Court has set aside technicalities in the interest of
to undergo their calvary twice after so many long years of litigation. substantial justice. In the present case, the judgment of the Court of
Industrial Relations had long become final and executory. A final and
executory judgment can no longer be altered. As we held in a recent Finally, we agree with the Solicitor General, that having submitted
case, 9 "(t)he judgment may no longer be modified in any respect, even if the themselves to the jurisdiction of the NLRC, petitioners should not be
modification is meant to correct what is perceived to be an erroneous allowed to repudiate that same jurisdiction simply because they have failed
conclusion of fact or law, and regardless of whether the modification is to obtain a favorable decision.
attempted to be made by the court rendering it or by the highest court of
This case has been pending for almost eighteen (18) years since the order of
the land." Moreover, a final and executory judgment cannot be negotiated,
hence, any act to subvert it is contemptuous. 10 the CIR was rendered on 30 April 1973. The private respondents have
already suffered for a long time. To further prolong the proceedings in this
The NLRC was correct in setting aside the order of the Labor Arbiter dated case would be tantamount to a denial of justice to private respondents. It is
31 October 1984, as the same was void. It rendered the very decision of this about time that the decision of the Court of Industrial Relations of 30 April
Court meaningless, and showed disrespect for the administration of 1973, as affirmed by this Court, be fully and finally implemented.
justice. 11 This should not be sanctioned.
WHEREFORE, the petition is DISMISSED, and the temporary restraining order
It was incumbent upon the counsel for the complainant (now respondent) LIFTED. Costs against petitioners.
Lucio Cagano to have seen to it that the interest of an complainants (now
SO ORDERED.
private respondents) was protected. The quitclaim and release in the
preparation of which he assisted clearly worked to the grave disadvantage of
the complainants (private respondents). As we have stated earlier, to render
the decision of this Court meaningless by paying the backwages of the
affected employees in a much lesser amount clearly manifested a disregard
of the authority of this Court as the final arbiter of cases brought to it. 12

As for the Labor Arbiter, he should have consciensciously examined the


veracity and reliability of the quitclaim purportedly executed by the other
complainants (now respondents) through Lucio Cagano, especially so when
the counsel of record of private respondents Cruz and Aclado, Atty. Felipe
Fuentes, Jr., was not present when the document was filed. Moreover, he
should have been aware of this Court's standing rulings that quit-claims and
releases signed by employees are normally frowned upon as contrary to
public policy. His precipitate approval of the release and quitclaim resulted
in the reduction of the backwages to a much lesser amount due the private
respondents and in releasing petitioners from their obligation to reinstate
the complainants under a final judgment of this Court. This is indeed
lamentable.
employees of the Progressive Development Corporation (Pizza Hut)
docketed as NCR Case No. NCR-OD-M-9307-020. 1

Petitioner filed on August 20, 1993, a verified Motion to Dismiss the petition
alleging fraud, falsification and misrepresentation in the respondent. Union's
registration making it void and invalid. The motion specifically alleged that:
a) respondent Union's registration was tainted with false, forged, double or
multiple signatures of those who allegedly took part in the ratification of the
respondent Union's constitution and by-laws and in the election of its
officers that there were two sets of supposed attendees to the alleged
organizational meeting that was alleged to have taken place on June 26,
1993; that the alleged chapter is claimed to have been supported by 318
members when in fact the persons who actually signed their names were
much less; and b) while the application for registration of the charter was
supposed to have been approved in the organizational meeting held on June
27, 1993, the charter certification issued by the federation KATIPUNAN was
dated June 26, 1993 or one (1) day prior to the formation of the chapter,
thus, there were serious falsities in the dates of the issuance of the charter
certification and the organization meeting of the alleged chapter.

Citing other instances of misrepresentation and fraud, petitioner, on August


29, 1993, filed a Supplement to its Motion to Dismiss, 2 claiming that:

1) Respondent Union alleged that the election of its officers was held on
G.R. No. 115077 April 18, 1997 June 27, 1993; however, it appears from the documents submitted by
respondent union to the BIR-DOLE that the Union's constitution and by-laws
PROGRESSIVE DEVELOPMENT CORPORATION-PIZZA HUT, petitioner, were adopted only on July 7, 1993, hence, there was no bases for the
vs. supposed election of officers on June 27, 1993 because as of this date, there
HON. BIENVENIDO LAGUESMA, in his capacity as Undersecretary of Labor, existed no positions to which the officers could be validly elected;
and NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)-
KATIPUNAN, respondents. 2) Voting was not conducted by secret ballot in violation of Article 241,
section (c) of the Labor Code;
KAPUNAN, J.:
3) The Constitution and by Laws submitted in support of its petition were
On July 9, 1993, Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan not properly acknowledged and notarized. 3
(respondent Union) filed a petition for certification election with the
Department of Labor (National Capital Region) in behalf of the rank and file
On August 30, 1993, petitioner filed a Petition 4 seeking the cancellation of In the public respondent's assailed Resolution dated December 29, 1993,
the Union's registration on the grounds of fraud and falsification, docketed the suggestion is made that once a labor organization has filed the
as BIR Case No. 8-21-83. 5 Motion was likewise filed by petitioner with the necessary documents and papers and the same have been certified under
Med-Arbiter requesting suspension of proceedings in the certification oath and attested to, said organization necessarily becomes clothed with the
election case until after the prejudicial question of the Union's legal character of a legitimate labor organization. The resolution declares:
personality is determined in the proceedings for cancellation of registration.
Records show that at the time of the filing of the subject petition on 9 July
6
However, in an Order dated September 29, 1993, Med-Arbiter Rasidali C. 1993 by the petitioner NLM-KATIPUNAN, for and in behalf of its local affiliate
Abdullah directed the holding of a certification election among petitioner's Sumasaklaw sa Manggagawa ng Pizza Hut, the latter has been clothed with
rank and file employees. The Order explained: the status and/or character of a legitimate labor organization. This is so,
because on 8 July 1993, petitioner submitted to the Bureau of Labor
. . . Sumasaklaw sa Manggagawa ng Pizza Hut is a legitimate labor Relations (BLR), this Department, the following documents: Charter
organization in contemplation of law and shall remain as such until its very Certificate, Minutes of the Organizational Meeting, List of Officers, and their
charter certificate is canceled or otherwise revoked by competent authority. respective addresses, financial statement, Constitution and By-Laws (CBL,
The alleged misrepresentation, fraud and false statement in connection with and the minutes of the ratification of the CBL). Said documents (except the
the issuance of the charter certificate are collateral issues which could be charter certificate) are certified under oath and attested to by the local
properly ventilated in the cancellation proceedings. 7 union's Secretary/Treasurer and President, respectively.
On appeal to the office of the Secretary of Labor, Labor Undersecretary As to the contention that the certification election proceedings should be
Bienvenido E. Laguesma in a Resolution dated December 29, 1993 8 denied suspended in view of the pending case for the cancellation of the
the same. petitioner's certificate of registration, let it be stressed that the pendency of
A motion for reconsideration of the public respondent's resolution was a cancellation case is not a ground for the dismissal or suspension of a
denied in his Order 9 dated January 27, 1994, hence, this special civil action representation proceedings considering that a registered labor organization
for certiorari under Rule 65 of the Revised Rules of Court where the continues to be a legitimate one entitled to all the rights appurtenant
principal issue raised is whether or not the public respondent committed thereto until a final valid order is issued canceling such registration. 11
grave abuse of discretion in affirming the Med-Arbiter's order to conduct a In essence, therefore, the real controversy in this case centers on the
certification election among petitioner's rank and file employees, question of whether or not, after the necessary papers and documents have
considering that: (1) respondent Union's legal personality was squarely put been filed by a labor organization, recognition by the Bureau of Labor
in issue; (2) allegations of fraud and falsification, supported by documentary Relations merely becomes a ministerial function.
evidence were made; and (3) a petition to cancel respondent Union's
registration is pending with the regional office of the Department of Labor We do not agree.
and Employment. 10
In the first place, the public respondent's views as expressed in his
We grant the petition. December 29, 1993 Resolution miss the entire point behind the nature and
purpose of proceedings leading to the recognition of unions as legitimate accordance with Articles 238 and 239 of the Labor Code, or indirectly, by
labor organizations. Article 234 of the Labor Code provides: challenging its petition for the issuance of an order for certification election.

Art. 234. Requirements of registration. — Any applicant labor organization, These measures are necessary — and may be undertaken simultaneously —
association or group of unions or workers shall acquire legal personality and if the spirit behind the Labor Code's requirements for registration are to be
shall be entitled to the rights and privileges granted by law to legitimate given flesh and blood. Registration requirements specifically afford a
labor organizations upon issuance of the certificate of registration based on measure of protection to unsuspecting employees who may be lured into
the following requirements: joining unscrupulous or fly-by-night unions whose sole purpose is to control
union funds or use the labor organization for illegitimate ends. 12 Such
(a) Fifty pesos (P50.00) registration fee; requirements are a valid exercise of the police power, because the activities
(b) The names of its officers, their addresses, the principal address of the in which labor organizations, associations and unions of workers are
labor organization, the minutes of the organizational meetings and the list of engaged directly affect the public interest and should be protected. 13
the workers who participated in such meetings; Thus, in Progressive Development Corporation vs. Secretary of Labor and
(c) The names of all its members comprising at least twenty percent (20%) of Employment, 14 we held:
all the employees in the bargaining unit where it seeks to operate; The controversy in this case centers on the requirements before a local or
(d) If the applicant union has been in existence for one or more years, copies chapter of a federation may file a petition for certification election and be
of its annual financial reports; and certified as the sole and exclusive bargaining agent of the petitioner's
employees.
(e) Four (4) copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification, and the list of the members who xxx xxx xxx
participated in it. But while Article 257 cited by the Solicitor General directs the automatic
A more than cursory reading of the aforecited provisions clearly indicates conduct of a certification election in an unorganized establishment, it also
that the requirements embodied therein are intended as preventive requires that the petition for certification election must be filed by a
measures against the commission of fraud. After a labor organization has legitimate labor organization . . .
filed the necessary papers and documents for registration, it becomes xxx xxx xxx
mandatory for the Bureau of Labor Relations to check if the requirements
under Article 234 have been sedulously complied with. If its application for . . . The employer naturally needs assurance that the union it is dealing with
registration is vitiated by falsification and serious irregularities, especially is a bona-fide organization, one which has not submitted false statements or
those appearing on the face of the application and the supporting misrepresentations to the Bureau. The inclusion of the certification and
documents, a labor organization should be denied recognition as a attestation requirements will in a marked degree allay these apprehensions
legitimate labor organization. And if a certificate of recognition has been of management. Not only is the issuance of any false statement and
issued, the propriety of the labor organization's registration could be misrepresentation or ground for cancellation of registration (see Article 239
assailed directly through cancellation of registration proceedings in (a), (c) and (d)); it is also a ground for a criminal charge of perjury.
The certification and attestation requirements are preventive measures The thirty-day period in the aforecited provision ensures that any action
against the commission of fraud. They likewise afford a measure of taken by the Bureau of Labor Relations is made in consonance with the
protection to unsuspecting employees who may be lured into joining mandate of the Labor Code, which, it bears emphasis, specifically requires
unscrupulous or fly-by-night unions whose sole purpose is to control union that the basis for the issuance of a certificate of registration should be
funds or to use the union for dubious ends. compliance with the requirements for recognition under Article 234. Since,
obviously, recognition of a labor union or labor organization is not merely a
xxx xxx xxx ministerial function, the question now arises as to whether or not the public
. . . It is not this Court's function to augment the requirements prescribed by respondent committed grave abuse of discretion in affirming the Med-
law in order to make them wiser or to allow greater protection to the Arbiter's order in spite of the fact that the question of the Union's legitimacy
workers and even their employer. Our only recourse is, as earlier discussed, was squarely put in issue and that the allegations of fraud and falsification
to exact strict compliance with what the law provides as requisites for local were adequately supported by documentary evidence.
or chapter formation. The Labor Code requires that in organized and
15
xxx xxx xxx unorganized establishments, a petition for certification electionmust be
filed by a legitimate labor organization. The acquisition of rights by any
The Court's conclusion should not be misconstrued as impairing the local union or labor organization, particularly the right to file a petition for
union's right to be certified as the employees' bargaining agent in the certification election, first and foremost, depends on whether or not the
petitioner's establishment. We are merely saying that the local union must labor organization has attained the status of a legitimate labor organization.
first comply with the statutory requirements in order to exercise this right.
Big federations and national unions of workers should take the lead in In the case before us, the Med-Arbiter summarily disregarded the
requiring their locals and chapters to faithfully comply with the law and the petitioner's prayer that the former look into the legitimacy of the
rules instead of merely snapping union after union into their folds in a respondent. Union by a sweeping declaration that the union was in the
furious bid with rival federations to get the most number of members possession of a charter certificate so that "for all intents and purposes,
Sumasaklaw sa Manggagawa sa Pizza Hut (was) a legitimate labor
Furthermore, the Labor Code itself grants the Bureau of Labor Relations a organization." 16 Glossing over the transcendental issue of fraud and
period of thirty (30) days within which to review all applications for misrepresentation raised by herein petitioner, Med-Arbiter Rasidali Abdullah
registration. Article 235 provides: held that:

Art. 235. Action on application. — The Bureau shall act on all applications for The alleged misrepresentation, fraud and false statement in connection with
registration within thirty (30) days from filing. the issuance of the charter certificate are collateral issues which could be
ventilated in the cancellation proceedings. 17
All requisite documents and papers shall be certified under oath by the
secretary or the treasurer of the organization, as the case may be, and It cannot be denied that the grounds invoked by petitioner for the
attested to by its president. cancellation of respondent Union's registration fall under paragraph (a) and
(c) of Article 239 of the Labor Code, to wit:
(a) Misrepresentation, false statement or fraud in connection with the Once a labor organization attains the status of a legitimate labor
adoption or ratification of the constitution and by-laws or amendments organization it begins to possess all of the rights and privileges granted by
thereto, the minutes of ratification, the list of members who took part in the law to such organizations. As such rights and privileges ultimately affect
ratification of the constitution and by-laws or amendments thereto, the areas which are constitutionally protected, the activities in which labor
minutes of ratification, the list of members who took part in the ratification; organizations, associations and unions are engaged directly affect the public
interest and should be zealously protected. A strict enforcement of the
xxx xxx xxx Labor Code's requirements for the acquisition of the status of a legitimate
(c) Misrepresentation, false statements or fraud in connection with the labor organization is in order.
election of officers, minutes of the election of officers, the list of voters, or Inasmuch as the legal personality of respondent Union had been seriously
failure to submit these documents together with the list of the newly challenged, it would have been more prudent for the Med-Arbiter and
elected-appointed officers and their postal addresses within thirty (30) days public respondent to have granted petitioner's request for the suspension of
from election. proceedings in the certification election case, until the issue of the legality of
xxx xxx xxx the Union's registration shall have been resolved. Failure of the Med-Arbiter
and public respondent to heed the request constituted a grave abuse of
The grounds ventilated in cancellation proceedings in accordance with discretion.
Article 239 of the Labor Code constitute a grave challenge to the right of
respondent Union to ask for certification election. The Med-Arbiter should WHEREFORE, PREMISES CONSIDERED, the instant petition is GRANTED and
have looked into the merits of the petition for cancellation before issuing an the Resolution and Order of the public respondent dated December 29,
order calling for certification election. Registration based on false and 1993 and January 24, 1994, respectively, are hereby SET ASIDE.
fraudulent statements and documents confer no legitimacy upon a labor The case is REMANDED to the Med-Arbiter to resolve with reasonable
organization irregularly recognized, which, at best, holds on to a mere scrap dispatch petitioner's petition for cancellation of respondent Union's
of paper. Under such circumstances, the labor organization, not being a registration.
legitimate labor organization, acquires no rights, particularly the right to ask
for certification election in a bargaining unit. SO ORDERED.

As we laid emphasis in Progressive Development Corporation Labor, 18 "[t]he


employer needs the assurance that the union it is dealing with is a bona fide
organization, one which has not submitted false statements or
misrepresentations to the Bureau." Clearly, fraud, falsification and
misrepresentation in obtaining recognition as a legitimate labor organization
are contrary to the Med-Arbiter's conclusion not merely collateral issues.
The invalidity of respondent Union's registration would negate its legal
personality to participate in certification election.
GUTIERREZ, JR., J.:

The sole issue in this petition for review on certiorari is whether or not the
public respondent committed grave abuse of discretion in ruling that the
private respondent is entitled to the financial aid from the compulsory
contributions of the petitioner-union afforded to its members who have
been suspended or terminated from work without reasonable cause.

The provision for the grant of financial aid in favor of a union member is
embodied in the petitioner-union's Constitution and By-laws, Article XIII,
Section 5, of which reads:

A member who have (sic) been suspended or terminated without


reasonable cause shall be extended a financial aid from the compulsory
contributions in the amount of SEVENTY FIVE CENTAVOS (P0. 75) from each
member weekly. (p. 18, Rollo)

On May 6, 1985, the private respondent, a member of the petitioner-union


was dismissed from his employment by employer Johnson & Johnson (Phil.)
Inc., for non-disclosure in his job application form of the fact that he had a
relative in the company in violation of company policies.

On July 1985, a complaint was filed by the private respondent against the
G.R. No. 76427 February 21, 1989 officers of the petitioner-union docketed as NRC- LRD-M-7-271-85 alleging,
among others, that the union officers had refused to provide the private
JOHNSON AND JOHNSON LABOR UNION-FFW, DANTE JOHNSON respondent the financial aid as provided in the union constitution despite
MORANTE, MYRNA OLOVEJA AND ITS OTHER INDIVIDUAL UNION demands for payment thereof The petitioner-union and its officers counter-
MEMBERS, petitioners alleged, in their answer, that the said financial aid was to be given only in
vs. cases of termination or suspension without any reasonable cause; that the
DIRECTOR OF LABOR RELATIONS, AND OSCAR PILI, respondents. union's executive board had the prerogative to determine whether the
suspension or termination was for a reasonable cause or not; and that the
Rogelio R. Udarbe for petitioners.
union, in a general membership meeting, had resolved not to extend
The Solicitor General for public respondent. financial aid to the private respondent.

Manuel V. Nepomuceno for private respondent.


While the grievance procedure as contained in the union's collective complaint against the company was still pending with the National Labor
bargaining agreement was being undertaken, the private respondent, on Relation Commission.
August 26, 1985, filed a case for unfair labor practice and illegal dismissal
The public respondent separately resolved the above motions. On June 26,
against his employer docketed as NLRC-NCR Case No. 6-1912-85.
1986, an order was issued denying the petitioners' motion for
On September 27, 1985, Med-Arbiter Anastacio L. Bactin issued an order reconsideration. On August 19, 1986, the public respondent modified its
dismissing for lack of merit the complaint of the private respondent against decision dated April 17, 1986 and its aforestated order as follows:
the petitioners for alleged violation of the union constitution and by-laws.
Considering that complainant Pili is similarly situated as Jerwin Taguba
On appeal, the then public respondent Director Cresenciano B. Trajano, on coupled with the need to obviate any discriminating treatment to the
April 17, 1986, rendered the decision assailed in this petition. The former, it is only just and appropriate that our Decision dated 17 April 1986
dispositive portion of the said decision reads: be modified in such a manner that respondents immediately pay the
complainant the sum of P0.75/ week per union member to be computed
WHEREFORE, premises considered, the appeal of complainant Oscar Pili is from the time of his dismissal from the company, without prejudice to
hereby granted and the Order appealed from is hereby set aside. Appellees, refund of the amount that shall be paid to Pili in the event the pending case
therefore, are hereby ordered to pay the complainant the sum of is finally resolved against him.
P0.75/week per union member to be computed from the time of the
complainant's termination from employment to the time he acquired WHEREFORE, and as above qualified, this Bureau's Decision dated 17 April
another employment should his complaint for illegal dismissal against the 1986 and the Order dated 26 June 1986 are hereby modified to the extent
company be resolved in his favor; provided, that if his complaint against the that the respondents are directed to immediately pay complainant the sum
company be dismissed, appellees are absolved from paying the complainant of P0.75/week per union member to be computed from the time of his
anything. (p. 115, Records) termination from his employment until his case against the employer
company shall have been finally resolved and/or disposed. (p. 53, Rollo)
Both parties moved for reconsideration. The petitioners reiterated that since
the private respondent's termination was for a reasonable cause, it would Meanwhile, on July 25, 1986, a motion for issuance of a writ of execution
be unjust and unfair if financial aid were to be given in the event that the was filed by the private respondent in order to collect from the petitioners
latter's case for illegal dismissal is decided against him. The private the amount of financial aid to which the former was entitled.
respondent, on the other hand, prayed for the amendment of the
dispositive portion in order that the grant of financial aid be made without On September 1, 1986, the petitioners moved for a reconsideration of the
public respondent's resolution dated August 19, 1986 on the grounds that
any qualifications.
Taguba's affidavit cannot support the private respondent's claim that he is
On June 16, 1986, a Manifestation and/or Opposition to the Motion for also entitled to the financial aid provided in the union's constitution and
Reconsideration filed by the petitioners was filed by the private respondent that the union cannot be compelled to grant the said aid in the absence of a
stating that he was being discriminated against considering that one Jerwin special fund for the purpose.
Taguba, another union member, was terminated for dishonesty and loss of
confidence but was granted financial aid by the petitioners while Taguba's On October 28, 1986, the public respondent through Director Pura Ferrer-
Calleja denied the petitioners' motion for reconsideration stating that Article
XIII, Section 5 of the union's constitution and by-laws does not require a We find unmeritorious the contention of the petitioners that the questioned
special fund so that all union members similarly situated as the private decision and order are contrary to law for being tantamount to compelling
respondent must be entitled to the same right and privilege regarding the the union to disburse it funds without the authority of the general
grant of financial aid as therein provided. membership and to collect from its members without the benefit of
individual payroll authorization.
On December 18, 1986, a writ of execution was issued by the public
respondent in the following tenor: Section 5, Article XIII of the petitioner-union's constitution and by-laws
earlier aforequoted is self-executory. The financial aid extended to any
NOW THEREFORE, you are hereby directed to proceed to the premises of suspended or terminated union member is realized from the contributions
Johnson and Johnson (FFW) located at Edison Road, Bo. Ibayo, Paranaque, declared to be compulsory under the said provision in the amount of
Metro Manila to collect from the said union through its Treasurer, Myrna seventy-five centavos due weekly from each union member. The nature of
Oloveja or to any responsible officer of the union the amount of Twenty the said contributions being compulsory and the fact that the purpose as
Thousand Five Hundred Twenty Pesos (P20,520.00), more or less stated is for financial aid clearly indicate that individual payroll
representing financial assistance to complainant under the union's authorizations of the union members are not necessary. The petitioner-
constitution and by-laws. In case you fail to collect said amount in cash, you union's constitution and by-laws govern the relationship between and
are to cause the satisfaction of the same on the union's movable or among its members. As in the interpretation of contracts, if the terms are
immovable properties not exempt from execution. You are to return this clear and leave no doubt as to the intention of the parties, the literal
writ within fifteen (15) days from your compliance hereby together with meaning of the stipulations shall control. (See Government Service
your report thereon. You may collect your legal fees from the respondent Insurance System v. Court of Appeals, 145 SCRA 311 [1986]). Section 5,
union. (p. 55, Rollo) Article XIII of the said constitution and by-laws is in line with the petitioner-
On December 24, 1986, the instant petition was filed with prayer for a union's aims and purposes which under Sec. 2, Article II include
preliminary injunction. The temporary restraining order issued by the Chief To promote, establish and devise schemes of mutual assistance among the
Justice on December 24, 1986 was confirmed in our resolution dated members in labor disputes.
January 7, 1987.
Thus, there is no doubt that the petitioner-union can be ordered to release
The grounds relied upon by the petitioners are as follows: its funds intended for the promotion of mutual assistance in favor of the
A. THAT THE DECISION/ORDER IN QUESTION IS CONTRARY TO LAW. private respondent.

B. THAT RESPONDENT OFFICIAL ACTED WITH GRAVE ABUSE OF DISCRETION We likewise find untenable the argument of the petitioners that the public
AMOUNTING TO LACK OF JURISDICTION. respondent, in granting financial aid to the private respondent, in effect,
substituted the decision of the petitioner-union to do otherwise and that in
C. THAT WITH RESPECT TO PETITIONING MEMBERS, THEY HAVE BEEN so doing, the public respondent gravely abused its discretion amounting to
DEPRIVED OF THEIR CONSTITUTIONAL RIGHT TO DUE PROCESS OF LAW. (P. lack of jurisdiction. The union constitution is a covenant between the union
13, Rollo) and its members and among the members. There is nothing in their
constitution which leaves the legal interpretation of its terms unilaterally to
the union or its officers or even the general membership. It is noteworthy to members form the membership. If there is any violation of the right to due
quote the ruling made by the public respondent in this respect, to wit: process in the case at bar it is as regards the private respondent since the
petitioners-union has dispensed with due process in deciding not to extend
The union constitution and by-laws clearly show that any member who is financial aid to the private respondent in the absence yet of a ruling by the
suspended or terminated from employment without reasonable cause is labor arbiter on whether his dismissal was for a reasonable cause or not.
entitled to financial assistance from the union and its members. The
problem, however, is that the constitution does not indicate which body has The remedy of the petitioners is to strike out or amend the objectionable
the power to determine whether a suspension or dismissal is for reasonable features of their constitution. They cannot expect the public respondent to
cause or not. To our mind, the constitution's silence on this matter is a clear assist them in its non- enforcement or violation.
recognition of the labor arbiter's exclusive jurisdiction over dismissal cases.
WHEREFORE, PREMISES CONSIDERED, the instant petition is hereby
After all, the union's constitution and by-laws is valid only insofar as it is not
inconsistent with existing laws. ... . (BLR decision, p. 2; p. 115, Records) DISMISSED in the absence of a showing of grave abuse of discretion on the
part of the public respondent. The decision of the public respondent dated
An aggrieved member has to resort to a government agency or tribunal. April 17, 1986 as modified in a resolution dated August 17, 1986 is
Considering that quasi-judicial agencies like the public respondent's office AFFIRMED. The temporary restraining order issued by the Court on
have acquired expertise since their jurisdiction is confined to specific matter, December 24,1986 is SET ASIDE.
their findings of fact in connection with their rulings are generally accorded
SO ORDERED.
not only respect but at times even finality if supported by substantial
evidence. (See Manila Mandarin Employees Union v. National Labor
Relations Commission, 154 SCRA 368 [1987]) Riker v. Ople, 155 SCRA 85
[1987]; and Palencia v. National Labor Relations Commission, 153 SCRA 247
[1987]. We note from the records that the petitioners have conflicting
interpretations of the same disputed provision one in favor of Jerwin Taguba
and another against the private respondent.

On the ancillary issue presented by the petitioners whether or not the


petitioning union members have been deprived of their right to due process
of law because they were never made parties to the case under
consideration, we rule that the fact that the union officers impleaded since
the inception of the case acted in a representative capacity on behalf of the
entire union's membership substantially meets the requirements of due
process with respect to the said union members. Moreover, the complaint
filed against the union involves the interpretation of its constitution favoring
an aggrieved member. The members are bound by the terms of their own
constitution. A suit to enforce a union constitution does not have to be
brought against each individual member, especially where several thousand
RESTITUTO HANDAYAN, VICTORINO ESPEDILLA, NOEL CHUA, ARMANDO
ALCORANO, ELEUTERIO TAGUIK, SAMSON CRUDA, DANILO CASTRO,
CENON VALLENAS, DANILO CAWALING, SIMPLICIO GALLEROS, PERFECTO
CUIZON, PROCESO LAUROS, ANICETO BAYLON, EDISON ANDRES,
REYNALDO BAGOHIN, IRENEO SUPANGAN, RODRIGO CAGATIN, TEODORO
ORENCIO, ARMANDO LUAYON, JAIME NERVA, NARCISO CUIZON, ALFREDO
DEL ROSARIO, EDUARDO LORENZO, PEDRO ARANGO, VICENTE SUPANGAN,
JACINTO BANAL AND BONIFACIO PUERTO, petitioners,
vs.
TROPICAL HUT FOOD MARKET, INC., ESTELITA J. QUE, ARTURO DILAG,
MARCELINO LONTOK JR., NATIONAL ASSOCIATION OF TRADE UNIONS
(NATU), NATIONAL LABOR RELATIONS COMMISSION (NLRC), HON. DIEGO
P. ATIENZA, GERONIMO Q. QUADRA, FEDERICO C. BORROMEO, AND HON.
BLAS F. OPLE,respondents.

Pacifico C. Rosal for petitioners.

Marcelino Lontok, Jr. for private respondents.

Dizon, Vitug & Fajardo Law Office for Tropical Hut Food Market, Inc. and
Que.
G.R. No. L-43495-99 January 20, 1990

TROPICAL HUT EMPLOYEES' UNION-CGW, JOSE ENCINAS, JOSE LUIS


TRIBINO, FELIPE DURAN, MANUEL MANGYAO, MAMERTO CAHUCOM, MEDIALDEA, J.:
NEMESIO BARRO, TEODULFO CAPAGNGAN, VICTORINO ABORRO, VIDAL
This is a petition for certiorari under Rule 65 seeking to set aside the
MANTOS, DALMACIO DALDE, LUCIO PIASAN, CANUTO LABADAN, TERESO
decisions of the public respondents Secretary of Labor and National Labor
ROMERDE, CONRADO ENGALAN, SALVADOR NERVA, BERNARDO
Relations Commission which reversed the Arbitrators rulings in favor of
ENGALAN, BONIFACIO CAGATIN, BENEDICTO VALDEZ, EUSEBIO SUPILANAS,
petitioners herein.
ALFREDO HAMAYAN, ASUERO BONITO, GAVINO DEL CAMPO, ZACARIAS
DAMING, PRUDENCIO LADION, FULGENCIO BERSALUNA, ALBERTO The following factual background of this case appears from the record:
PERALES, ROMEO MAGRAMO, GODOFREDO CAMINOS, GILDARDO
DUMAS, JORGE SALDIVAR, GENARO MADRIO, SEGUNDINO KUIZON, LUIS On January 2, 1968, the rank and file workers of the Tropical Hut Food
SANDOVAL, NESTOR JAPAY, ROGELIO CUIZON, RENATO ANTIPADO, Market Incorporated, referred to herein as respondent company, organized
GREGORIO CUEVO, MARTIN BALAZUELA, CONSTANCIO CHU, CRISPIN a local union called the Tropical Hut Employees Union, known for short as
TUBLE, FLORENCIO CHIU, FABIAN CAHUCOM, EMILIANO VILLAMOR, the THEU, elected their officers, adopted their constitution and by-laws and
immediately sought affiliation with the National Association of Trade Unions Coverage and Effectivity
(NATU). On January 3, 1968, the NATU accepted the THEU application for
affiliation. Following such affiliation with NATU, Registration Certificate No. Sec. 1. The COMPANY recognizes the UNION as the sole and exclusive
collective bargaining agent for all its workers and employees in all matters
5544-IP was issued by the Department of Labor in the name of the Tropical
Hut Employees Union — NATU. It appears, however, that NATU itself as a concerning wages, hours of work, and other terms and conditions of
employment.
labor federation, was not registered with the Department of Labor.

After several negotiations were conducted between THEU-NATU, xxx xxx xxx
represented by its local president and the national officers of the NATU, Article III
particularly Ignacio Lacsina, President, Pacifico Rosal, Executive Vice-
President and Marcelino Lontok, Jr., Vice President, and respondent Tropical Union Membership and Union Check-off
Hut Food Market, Incorporated, thru its President and General Manager,
Sec. 1 —. . . Employees who are already members of the UNION at the time
Cesar Azcona, Sr., a Collective Bargaining Agreement was concluded
of the signing of this Agreement or who become so thereafter shall be
between the parties on April 1, 1968, the term of which expired on March
required to maintain their membership therein as a condition of continued
31, 1971. Said agreement' contained these clear and unequivocal terms:
employment.
This Agreement made and entered into this __________ day of
xxx xxx xxx
___________, 1968, by and between:
Sec. 3—Any employee who is expelled from the UNION for joining another
The Tropical Hut Food Market, Inc., a corporation duly organized and existing
federation or forming another union, or who fails or refuses to maintain his
under and by virtue of the laws of the Republic of the Philippines, with
membership therein as required, . . . shall, upon written request of the
principal office at Quezon City, represented in this Act by its President, Cesar
UNION be discharged by the COMPANY. (Rollo, pp. 667-670)
B. Azcona (hereinafter referred to as the Company)
And attached to the Agreement as Appendix "A" is a check-off Authorization
—and—
Form, the terms of which are as follows:
The Tropical Hut Employees Union — NATU, a legitimate labor organization
We, the undersigned, hereby designate the NATIONAL Association of Trade
duly organized and existing in accordance with the laws of the Republic of
Unions, of which the TROPICAL HUT EMPLOYEES UNION is an affiliate as sole
the Philippines, and affiliated with the National Association of Trade Unions,
collective bargaining agent in all matters relating to salary rates, hours of
with offices at San Luis Terraces, Ermita, Manila, and represented in this Act
work and other terms and conditions of employment in the Tropical Hut
by its undersigned officers (hereinafter referred to as the UNION)
Food Market, Inc. and we hereby authorize the said company to deduct the
Witnesseth: amount of Four (P 4.00) Pesos each every month as our monthly dues and to
deliver the amount to the Treasurer of the Union or his duly authorized
xxx xxx xxx representatives. (Rollo, pp. 680-684)
Article I
On May 21, 1971, respondent company and THEU-NATU entered into a new of President of the THEU-NATU in place of Jose Encinas, but the position was
Collective Bargaining Agreement which ended on March 31, 1974. This new declined by Mantos. On the same day, Lontok, Jr., informed Encinas in a
CBA incorporated the previous union-shop security clause and the attached letter, concerning the request made by the NATU federation to the
check-off authorization form. respondent company to dismiss him (Encinas) in view of his violation of
Section 3 of Article III of the Collective Bargaining Agreement. Encinas was
Sometime in July, 1973, Arturo Dilag, incumbent President of THEU-NATU, also advised in the letter that NATU was returning the letter of disaffiliation
was appointed by the respondent company as Assistant Unit Manager. On on the ground that:
July 24, 1973, he wrote the general membership of his union that for reason
of his present position, he was resigning as President of the THEU-NATU 1. Under the restructuring program NOT of the Bureau of Labor but of the
effective that date. As a consequence thereof, his Vice-President, Jose Philippine National Trade Union Center in conjunction with the NATU and
Encinas, assumed and discharged the duties of the presidency of the THEU- other established national labor centers, retail clerks and employees such as
NATU. our members in the Tropical Hut pertain to Industry II which by consensus,
has been assigned already to the jurisdiction of the NATU;
On December 19,1973, NATU received a letter dated December 15, 1973,
jointly signed by the incumbent officers of the local union informing the 2. The right to disaffiliate belongs to the union membership who — on the
NATU that THEU was disaffiliating from the NATU federation. On December basis of verified reports received by — have not even been consulted by you
20, 1973, the Secretary of the THEU, Nemesio Barro, made an regarding the matter;
announcement in an open letter to the general membership of the THEU,
concerning the latter's disaffiliation from the NATU and its affiliation with 3. Assuming that the disaffiliation decision was properly reached; your letter
nevertheless is unacceptable in view of Article V, Section 1, of the NATU
the Confederation of General Workers (CGW). The letter was passed around
among the members of the THEU-NATU, to which around one hundred and Constitution which provides that "withdrawal from the organization shall he
valid provided three (3) months notice of intention to withdraw is served
thirty-seven (137) signatures appeared as having given their consent to and
acknowledgment of the decision to disaffiliate the THEU from the NATU. upon the National Executive Council." (p. 281, Rollo)

In view of NATU's request, the respondent company, on the same day, which
On January 1, 1974, the general membership of the so-called THEU-CGW
held its annual election of officers, with Jose Encinas elected as President. was January 11, 1974, suspended Encinas pending the application for
clearance with the Department of Labor to dismiss him. On January 12,
On January 3, 1974, Encinas, in his capacity as THEU-CGW President,
informed the respondent company of the result of the elections. On January 1974, members of the THEU-CGW passed a resolution protesting the
suspension of Encinas and reiterated their ratification and approval of their
9, 1974, Pacifico Rosal, President of the Confederation of General Workers
(CGW), wrote a letter in behalf of complainant THEU-CGW to the union's disaffiliation from NATU and their affiliation with the Confederation
of General Workers (CGW). It was Encinas' suspension that caused the filing
respondent company demanding the remittance of the union dues collected
by the Tropical Hut Food Mart, Incorporated to the THEU-CGW, but this was of NLRC Case No. LR-2511 on January 11, 1974 against private respondents
herein, charging them of unfair labor practice.
refused by the respondent company.

On January 11, 1974, the NATU thru its Vice-President Marcelino Lontok, Jr., On January 15,1974, upon the request of NATU, respondent company
applied for clearance with the Secretary of Labor to dismiss the other
wrote Vidal Mantos, requiring the latter to assume immediately the position
officers and members of THEU-CGW. The company also suspended them As a consequence thereof, NLRC Case Nos. LR-2971, LR-3015 and an
effective that day. NLRC Case No. LR-2521 was filed by THEU-CGW and unnumbered case were filed by petitioners against Tropical Hut Food
individual complainants against private respondents for unfair labor Market, Incorporated, Estelita Que, Hernando Sarmiento and Arturo Dilag.
practices.
It is significant to note that the joint letter petition signed by sixty-seven (67)
On January 19, 1974, Lontok, acting as temporary chairman, presided over employees was filed with the Secretary of Labor, the NLRC Chairman and
the election of officers of the remaining THEU-NATU in an emergency Director of Labor Relations to cancel the words NATU after the name of
meeting pending the holding of a special election to be called at a later date. Tropical Hut Employee Union under Registration Certificate No. 5544 IP.
In the alleged election, Arturo Dilag was elected acting THEU-NATU Another letter signed by one hundred forty-six (146) members of THEU-CGW
President together with the other union officers. On February 14, 1974, was sent to the President of the Philippines informing him of the unfair
these temporary officers were considered as having been elected as regular labor practices committed by private respondents against THEU-CGW
officers for the year 1974. members.

On January 30, 1974, petitioner THEU-CGW wrote a letter to Juan Ponce After hearing the parties in NLRC Cases Nos. 2511 and 2521 jointly filed with
Enrile, Secretary of National Defense, complaining of the unfair labor the Labor Arbiter, Arbitrator Daniel Lucas issued an order dated March 21,
practices committed by respondent company against its members and 1974, holding that the issues raised by the parties became moot and
requesting assistance on the matter. The aforementioned letter contained academic with the issuance of NLRC Order dated February 25, 1974 in NLRC
the signatures of one hundred forty-three (143) members. Case No. LR-2670, which directed the holding of a certification election
among the rank and file workers of the respondent company between the
On February 24,1974, the secretary of THEU-NATU, notified the entire rank THEU-NATU and THEU-CGW. He also ordered: a) the reinstatement of all
and file employees of the company that they will be given forty-eight (48) complainants; b) for the respondent company to cease and desist from
hours upon receipt of the notice within which to answer and affirm their committing further acts of dismissals without previous order from the NLRC
membership with THEU-NATU. When the petitioner employees failed to and for the complainant Tropical Hut Employees UNION-CGW to file
reply, Arturo Dilag advised them thru letters dated February 26, March 2 and representation cases on a case to case basis during the freedom period
5, 1974, that the THEU-NATU shall enforce the union security clause set provided for by the existing CBA between the parties (pp. 91-93, Rollo).
forth in the CBA, and that he had requested respondent company to dismiss
them. With regard to NLRC Case Nos. LR-2971, LR-3015, and the unnumbered case,
Arbitrator Cleto T. Villatuya rendered a decision dated October 14, 1974, the
Respondent company, thereafter, wrote the petitioner employees dispositive portion of which states:
demanding the latter's comment on Dilag's charges before action was taken
thereon. However, no comment or reply was received from petitioners. In Premises considered, a DECISION is hereby rendered ordering respondent
view of this, Estelita Que, President/General Manager of respondent company to reinstate immediately the sixty three (63) complainants to their
company, upon Dilag's request, suspended twenty four (24) workers on former positions with back wages from the time they were illegally
March 5, 1974, another thirty seven (37) on March 8, 1974 and two (2) more suspended up to their actual reinstatement without loss of seniority and
on March 11, 1974, pending approval by the Secretary of Labor of the other employment rights and privileges, and ordering the respondents to
application for their dismissal. desist from further committing acts of unfair labor practice. The respondent
company's application for clearance filed with the Secretary of Labor to membership and loyalty to the Tropical Hut Employees Union-NATU and the
terminate the subject complainants' services effective March 20 and 23, National Association of Trade Unions in the event it hires additional
1974, should be denied. personnel.

SO ORDERED. (pp. 147-148, Rollo) SO ORDERED. (pp. 312-313, Rollo)

From the orders rendered above by Abitrator Daniel Lucas in NLRC Cases No. The petitioner employees appealed the decision of the respondent National
LR-2511 and LR-2521 and by Arbitrator Cleto Villatuya in NLRC Cases Nos. Labor Relations Commission to the Secretary of Labor. On February 23,
LR-2971, LR-3015, and the unnumbered case, all parties thereto, namely, 1976, the Secretary of Labor rendered a decision affirming the findings of
petitioners herein, respondent company, NATU and Dilag appealed to the the Commission, which provided inter alia:
National Labor Relations Commission.
We find, after a careful review of the record, no sufficient justification to
In a decision rendered on August 1, 1975, the National Labor Relations alter the decision appealed from except that portion of the dispositive part
Commission found the private respondents' appeals meritorious, and which states:
stated, inter alia:
. . . this Commission . . . hereby orders respondent company under pain of
WHEREFORE, in view of the foregoing premises, the Order of Arbitrator being cited for contempt for failure to do so, to give the individual
Lucas in NLRC CASE NOS. LR-2511, 2521 and the decision of Arbitrator complainants a second chance by reemploying them upon their voluntary
Villatuya in NLRC CASE NOS. LR-2971, 3015 and the unnumbered Case are reaffirmation of membership and loyalty to the Tropical Hut Employees
hereby REVERSED. Accordingly, the individual complainants are deemed to UNION-NATU and the National Association of Trade Union in the event it
have lost their status as employees of the respondent company. However, hires additional personnel.
considering that the individual complainants are not presumed to be
familiar with nor to have anticipated the legal mesh they would find Compliance by respondent of the above undertaking is not immediately
feasible considering that the same is based on an uncertain event, i.e.,
themselves in, after their "disaffiliation" from National Association of Trade
Unions and the THEU-NATU, much less the legal consequences of the said reemployment of individual complainants "in the event that management
hires additional personnel," after they shall have reaffirmed their loyalty to
action which we presume they have taken in all good faith; considering,
further, that the thrust of the new orientation in labor relations is not THEU-NATU, which is unlikely.
towards the punishment of acts violative of contractual relations but rather In lieu of the foregoing, and to give complainants positive relief pursuant to
towards fair adjustments of the resulting complications; and considering, Section 9, Implementing Instruction No. 1. dated November 9, 1972,
finally, the consequent economic hardships that would be visited on the respondent is hereby ordered to grant to all the individual complainants
individual complainants, if the law were to be strictly enforced against them, financial assistance equivalent to one (1) month salary for every year of
this Commission is constrained to be magnanimous in this instant, service.
notwithstanding its obligation to give full force and effect to the majesty of
the law, and hereby orders the respondent company, under pain of being WHEREFORE, with the modification as above indicated, the Decision of the
cited for contempt for failure to do so, to give the individual complainants a National Labor Relations Commission is hereby affirmed.
second chance by reemploying them upon their voluntary reaffirmation of
SO ORDERED.(pp. 317-318, Rollo) controversy, this Court can properly take cognizance of and resolve the
issues raised herein.
From the various pleadings filed and arguments adduced by petitioners and
respondents, the following issues appear to be those presented for This brings Us to the question of the legality of the dismissal meted to
resolution in this petition to wit: 1) whether or not the petitioners failed to petitioner employees. In the celebrated case of Liberty Cotton Mills Workers
exhaust administrative remedies when they immediately elevated the case Union v. Liberty Cotton Mills, L-33187, September 4, 1975, 66 SCRA 512, We
to this Court without an appeal having been made to the Office of the held that the validity of the dismissals pursuant to the union security clause
President; 2) whether or not the disaffiliation of the local union from the in the collective bargaining agreement hinges on the validity of the
national federation was valid; and 3) whether or not the dismissal of disaffiliation of the local union from the federation.
petitioner employees resulting from their unions disaffiliation for the
The right of a local union to disaffiliate from its mother federation is well-
mother federation was illegal and constituted unfair labor practice on the
part of respondent company and federation. settled. A local union, being a separate and voluntary association, is free to
serve the interest of all its members including the freedom to disaffiliate
We find the petition highly meritorious. when circumstances warrant. This right is consistent with the constitutional
guarantee of freedom of association (Volkschel Labor Union v. Bureau of
The applicable law then is the Labor Code, PD 442, as amended by PD 643 Labor Relations, No. L-45824, June 19, 1985, 137 SCRA 42).
on January 21, 1975, which states:
All employees enjoy the right to self organization and to form and join labor
Art. 222. Appeal — . . . organizations of their own choosing for the purpose of collective bargaining
xxx xxx xxx and to engage in concerted activities for their mutual aid or protection. This
is a fundamental right of labor that derives its existence from the
Decisions of the Secretary of Labor may be appealed to the President of the Constitution. In interpreting the protection to labor and social justice
Philippines subject to such conditions or limitations as the President may provisions of the Constitution and the labor laws or rules or regulations, We
direct. (Emphasis ours) have always adopted the liberal approach which favors the exercise of labor
rights.
The remedy of appeal from the Secretary of Labor to the Office of the
President is not a mandatory requirement before resort to courts can be Relevant on this point is the basic principle We have repeatedly in affirmed
had, but an optional relief provided by law to parties seeking expeditious in many rulings:
disposition of their labor disputes. Failure to avail of such relief shall not in
any way served as an impediment to judicial intervention. And where the . . . The locals are separate and distinct units primarily designed to secure
issue is lack of power or arbitrary or improvident exercise thereof, decisions and maintain an equality of bargaining power between the employer and
of the Secretary of Labor may be questioned in a certiorari proceeding their employee-members in the economic struggle for the fruits of the joint
without prior appeal to the President (Arrastre Security Association —TUPAS productive effort of labor and capital; and the association of the locals into
v. Ople, No. L-45344, February 20, 1984, 127 SCRA 580). Since the instant the national union (PAFLU) was in furtherance of the same end. These
petition raises the same issue of grave abuse of discretion of the Secretary associations are consensual entities capable of entering into such legal
of Labor amounting to lack of or in excess of jurisdiction in deciding the relations with their member. The essential purpose was the affiliation of the
local unions into a common enterprise to increase by collective action the and acquire, in the first place, the legal personality to enforce its
common bargaining power in respect of the terms and conditions of labor. constitution and laws, much less the right and privilege under the Labor
Yet the locals remained the basic units of association, free to serve their own Code to organize and affiliate chapters or locals within its group, and
and the common interest of all, subject to the restraints imposed by the secondly, the act of non-compliance with the procedure on withdrawal is
Constitution and By-Laws of the Association, and free also to renounce the premised on purely technical grounds which cannot rise above the
affiliation for mutual welfare upon the terms laid down in the agreement fundamental right of self-organization.
which brought it into existence. (Adamson & Adamson, Inc. v. CIR, No. L-
Respondent Secretary of Labor, in affirming the decision of the respondent
35120, January 31, 1984, 127 SCRA 268; Elisco-Elirol Labor Union (NAFLU) v.
Noriel, No. L-41955, December 29, 1977, 80 SCRA 681; Liberty Cotton Mills Commission, concluded that the supposed decision to disaffiliate was not
the subject of a free and open discussion and decision on the part of the
Workers Union v. Liberty Cotton Mills, Inc., supra).
THEU-NATU general membership (p. 305, Rollo). This, however, is
The inclusion of the word NATU after the name of the local union THEU in contradicted by the evidence on record. Moreover, We are inclined to
the registration with the Department of Labor is merely to stress that the believe Arbitrator Villatuya's findings to the contrary, as follows:
THEU is NATU's affiliate at the time of the registration. It does not mean that
. . . . However, the complainants refute this allegation by submitting the
the said local union cannot stand on its own. Neither can it be interpreted to
mean that it cannot pursue its own interests independently of the following: a) Letter dated December 20, 1.973 signed by 142 members
(Exhs. "B to B-5") resolution dated January 12, 1974, signed by 140 members
federation. A local union owes its creation and continued existence to the
will of its members and not to the federation to which it belongs. (Exhs. "H to H-6") letter dated February 26, 1974 to the Department of Labor
signed by 165 members (Exhs. "I to I-10"); d) letter dated January 30, 1974
When the local union withdrew from the old federation to join a new to the Secretary of the National Defense signed by 144 members (Exhs. "0 to
federation, it was merely exercising its primary right to labor organization for 0-5") and; e) letter dated March 6, 1974 signed by 146 members addressed
the effective enhancement and protection of common interests. In the to the President of the Philippines (Exhs. "HH to HH-5"), to show that in
absence of enforceable provisions in the federation's constitution preventing several instances, the members of the THEU-NATU have acknowledged their
disaffiliation of a local union a local may sever its relationship with its parent disaffiliation from NATU. The letters of the complainants also indicate that
(People's Industrial and Commercial Employees and Workers Organization an overwhelming majority have freely and voluntarily signed their union's
(FFW) v. People's Industrial and Commercial Corporation, No. 37687, March disaffiliation from NATU, otherwise, if there was really deception employed
15, 1982, 112 SCRA 440). in securing their signatures as claimed by NATU/ Dilag, it could not be
possible to get their signatures in five different documents. (p. 144, Rollo)
There is nothing in the constitution of the NATU or in the constitution of the
THEU-NATU that the THEU was expressly forbidden to disaffiliate from the We are aware of the time-honored doctrine that the findings of the NLRC
federation (pp. 62, 281, Rollo), The alleged non-compliance of the local and the Secretary of Labor are binding on this Court if supported by
union with the provision in the NATU Constitution requiring the service of substantial evidence. However, in the same way that the findings of facts
three months notice of intention to withdraw did not produce the effect of unsupported by substantial and credible evidence do not bind this Court,
nullifying the disaffiliation for the following grounds: firstly, NATU was not neither will We uphold erroneous conclusions of the NLRC and the Secretary
even a legitimate labor organization, it appearing that it was not registered of Labor when We find that the latter committed grave abuse of discretion in
at that time with the Department of Labor, and therefore did not possess reversing the decision of the labor arbiter (San Miguel Corporation v. NLRC,
L-50321, March 13, 1984, 128 SCRA 180). In the instant case, the factual Records show that Arturo Dilag had resigned in the past as President of
findings of the arbitrator were correct against that of public respondents. THEU-NATU because of his promotion to a managerial or supervisory
position as Assistant Unit Manager of respondent Company. Petitioner Jose
Further, there is no merit in the contention of the respondents that the act Encinas replaced Dilag as President and continued to hold such position at
of disaffiliation violated the union security clause of the CBA and that their the time of the disaffiliation of the union from the federation. It is therefore
dismissal as a consequence thereof is valid. A perusal of the collective improper and contrary to law for Dilag to reassume the leadership of the
bargaining agreements shows that the THEU-NATU, and not the NATU remaining group which was alleged to be the true union since he belonged
federation, was recognized as the sole and exclusive collective bargaining to the managerial personnel who could not be expected to work for the
agent for all its workers and employees in all matters concerning wages, betterment of the rank and file employees. Besides, managers and
hours of work and other terms and conditions of employment (pp. 667- supervisors are prohibited from joining a rank and file union (Binalbagan
706, Rollo). Although NATU was designated as the sole bargaining agent in Isabela Sugar Co., Inc. (BISCOM) v. Philippine Association of Free Labor
the check-off authorization form attached to the CBA, this simply means it Unions (PAFLU), et al., L-18782, August 29, 1963, 8 SCRA 700).
was acting only for and in behalf of its affiliate. The NATU possessed the Correspondingly, if a manager or supervisor organizes or joins a rank and file
status of an agent while the local union remained the basic principal union union, he will be required to resign therefrom (Magalit, et al. v. Court of
which entered into contract with the respondent company. When the THEU Industrial Relations, et al., L-20448, May 25, 1965,14 SCRA 72).
disaffiliated from its mother federation, the former did not lose its legal
personality as the bargaining union under the CBA. Moreover, the union Public respondents further submit that several employees who disaffiliate
security clause embodied in the agreements cannot be used to justify the their union from the NATU subsequently retracted and reaffirmed their
dismissals meted to petitioners since it is not applicable to the membership with the THEU-NATU. In the decision which was affirmed by
circumstances obtaining in this case. The CBA imposes dismissal only in case respondent Secretary of Labor, the respondent Commission stated that:
an employee is expelled from the union for joining another federation or for
forming another union or who fails or refuses to maintain membership . . . out of the alleged one hundred and seventy-one (171) members of the
THEU-CGW whose signatures appeared in the "Analysis of Various
therein. The case at bar does not involve the withdrawal of merely some
employees from the union but of the whole THEU itself from its federation. Documents Signed by Majority Members of the THEU-CGW, (Annex "T",
Complainants), which incidentally was relied upon by Arbitrator Villatuya in
Clearly, since there is no violation of the union security provision in the CBA,
there was no sufficient ground to terminate the employment of petitioners. holding that complainant THEU-CGW commanded the majority of
employees in respondent company, ninety-three (93) of the alleged
Public respondents considered the existence of Arturo Dilag's group as the signatories reaffirmed their membership with the THEU-NATU and
remaining true and valid union. We, however, are inclined to agree instead renounced whatever connection they may have had with other labor unions,
with the Arbitrator's findings when he declared: (meaning the complainant THEU-CGW) either through resolution or
membership application forms they have unwittingly signed." (p. 306, Rollo)
. . . . Much more, the so-called THEU-NATU under Dilag's group which
assumes to be the original THEU-NATU has a very doubtful and questionable Granting arguendo, that the fact of retraction is true, the evidence on record
existence not to mention that the alleged president is performing shows that the letters of retraction were executed on various dates
supervisory functions and not qualified to be a bona fide member of the beginning January 11, 1974 to March 8, 1974 (pp. 278-280, Rollo). This
rank and file union. (p. 146, Rollo) shows that the retractions were made more or less after the suspension
pending dismissal on January 11, 1974 of Jose Encinas, formerly THEU-NATU be limited to the immediate reinstatement of the workers. And since their
President, who became THEU-CGW President, and the suspension pending dismissals were effected without previous hearing and at the instance of
their dismissal of the other elected officers and members of the THEU-CGW NATU, this federation should be held liable to the petitioners for the
on January 15, 1974. It is also clear that some of the retractions occurred payment of their backwages, as what We have ruled in the Liberty Cotton
after the suspension of the first set of workers numbering about twenty-four Mills Case (supra).
(24) on March 5, 1974. There is no use in saying that the retractions
obliterated the act of disaffiliation as there are doubts that they were freely ACCORDINGLY, the petition is hereby GRANTED and the assailed decision of
respondent Secretary of Labor is REVERSED and SET ASIDE, and the
and voluntarily done especially during such time when their own union
officers and co-workers were already suspended pending their dismissal. respondent company is hereby ordered to immediately reinstate all the
petitioner employees within thirty (30) days from notice of this decision. If
Finally, with regard to the process by which the workers were suspended or reinstatement is no longer feasible, the respondent company is ordered to
dismissed, this Court finds that it was hastily and summarily done without pay petitioners separation pay equivalent to one (1) month pay for every
the necessary due process. The respondent company sent a letter to year of service. The respondent NATU federation is directed to pay
petitioners herein, advising them of NATU/Dilag's recommendation of their petitioners the amount of three (3) years backwages without deduction or
dismissal and at the same time giving them forty-eight (48) hours within qualification. This decision shall be immediately executory upon
which to comment (p. 637, Rollo). When petitioners failed to do so, promulgation and notice to the parties.
respondent company immediately suspended them and thereafter effected
their dismissal. This is certainly not in fulfillment of the mandate of due SO ORDERED.
process, which is to afford the employee to be dismissed an opportunity to
be heard.

The prerogative of the employer to dismiss or lay-off an employee should be


done without abuse of discretion or arbitrainess, for what is at stake is not
only the employee's name or position but also his means of livelihood. Thus,
the discharge of an employee from his employment is null and void where
the employee was not formally investigated and given the opportunity to
refute the alleged findings made by the company (De Leon v. NLRC, L-52056,
October 30, 1980, 100 SCRA 691). Likewise, an employer can be adjudged
guilty of unfair labor practice for having dismissed its employees in line with
a closed shop provision if they were not given a proper hearing (Binalbagan-
Isabela Sugar Co., Inc.,(BISCOM) v. Philippine Association of Free Labor
Unions (PAFLU) et al., L-18782, August 29, 1963, 8 SCRA 700).

In view of the fact that the dispute revolved around the mother federation
and its local, with the company suspending and dismissing the workers at
the instance of the mother federation then, the company's liability should
The petitioner, Kapatiran sa Meat and Canning Division TUPAS Local Chapter
No. 1027) hereinafter referred to as "TUPAS," seeks a review of the
resolution dated January 27, 1988 (Annex D) of public respondent Pura
Ferrer-Calleja, Director of the Bureau of Labor Relations, dismissing its
appeal from the Order dated November 17, 1987 (Annex C) of the Med-
Arbiter Rasidali C. Abdullah ordering a certification election to be conducted
among the regular daily paid rank and file employees/workers of Universal
Robina Corporation-Meat and Canning Division to determine which of the
contending unions:

a) Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027 (or
"TUPAS" for brevity);

b) Meat and Canning Division New Employees and Workers United Labor
Organization (or "NEW ULO" for brevity);

c) No union.

G.R. No. 82914 June 20, 1988 shall be the bargaining unit of the daily wage rank and file employees in the
Meat and Canning Division of the company.
KAPATIRAN SA MEAT AND CANNING DIVISION (TUPAS Local Chapter No.
1027), petitioner, From 1984 to 1987 TUPAS was the sole and exclusive collective bargaining
vs. representative of the workers in the Meat and Canning Division of the
THE HONORABLE BLR DIRECTOR PURA FERRER CALLEJA, MEAT AND Universal Robina Corporation, with a 3-year collective bargaining agreement
CANNING DIVISION UNIVERSAL ROBINA CORPORATION and MEAT AND (CBA) which was to expire on November 15, 1987.
CANNING DIVISION NEW EMPLOYEES AND WORKERS UNITED LABOR
ORGANIZATION, respondents. Within the freedom period of 60 days prior to the expiration of its CBA,
TUPAS filed an amended notice of strike on September 28, 1987 as a means
Alar, Comia, Manalo and Associates for petitioner. of pressuring the company to extend, renew, or negotiate a new CBA with it.

Danilo Bolos for respondent Robina Corporation. On October 8, 1987, the NEW ULO, composed mostly of workers belonging
to the IGLESIA NI KRISTO sect, registered as a labor union.
RESOLUTION
On October 12, 1987, the TUPAS staged a strike. ROBINA obtained an
injunction against the strike, resulting in an agreement to return to work and
GRIÑO-AQUINO, J.: for the parties to negotiate a new CBA.
The next day, October 13, 1987, NEW ULO, claiming that it has "the majority The fact that TUPAS was able to negotiate a new CBA with ROBINA within
of the daily wage rank and file employees numbering 191," filed a petition the 60-day freedom period of the existing CBA, does not foreclose the right
for a certification election at the Bureau of Labor Relations (Annex A). of the rival union, NEW ULO, to challenge TUPAS' claim to majority status, by
filing a timely petition for certification election on October 13, 1987 before
TUPAS moved to dismiss the petition for being defective in form and that the TUPAS' old CBA expired on November 15, 1987 and before it signed a new
members of the NEW ULO were mostly members of the Iglesia ni Kristo sect CBA with the company on December 3, 1987. As pointed out by Med-Arbiter
which three (3) years previous refused to affiliate with any labor union. It Abdullah, a "certification election is the best forum in ascertaining the
also accused the company of using the NEW ULO to defeat TUPAS' majority status of the contending unions wherein the workers themselves
bargaining rights (Annex B). can freely choose their bargaining representative thru secret ballot." Since it
On November 17, 1987, the Med-Arbiter ordered the holding of a has not been shown that this order is tainted with unfairness, this Court will
certification election within 20 days (Annex C). not thwart the holding of a certification election (Associated Trade Unions
[ATU] vs. Noriel, 88 SCRA 96).
TUPAS appealed to the Bureau of Labor Relations BLR. In the meantime, it
was able to negotiate a new 3-year CBA with ROBINA, which was signed on WHEREFORE, the petition for certiorari is denied, with costs against the
December 3, 1987 and to expire on November 15, 1990. petitioner.

On January 27, 1988, respondent BLR Director Calleja dismissed the appeal SO ORDERED.
(Annex D).

TUPAS' motion for reconsideration (Annex E) was denied on March 17, 1988
(Annex F). On April 30, 1988, it filed this petition alleging that the public
respondent acted in excess of her jurisdiction and with grave abuse of
discretion in affirming the Med-Arbiter's order for a certification election.

After deliberating on the petition and the documents annexed thereto, We


find no merit in the Petition. The public respondent did not err in dismissing
the petitioner's appeal in BLR Case No. A-12-389-87. This Court's decision
inVictoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, upholding the
right of members of the IGLESIA NI KRISTO sect not to join a labor union for
being contrary to their religious beliefs, does not bar the members of that
sect from forming their own union. The public respondent correctly
observed that the "recognition of the tenets of the sect ... should not
infringe on the basic right of self-organization granted by the constitution to
workers, regardless of religious affiliation."
Benjamin Victoriano (hereinafter referred to as Appellee), a member of the
religious sect known as the "Iglesia ni Cristo", had been in the employ of the
Elizalde Rope Factory, Inc. (hereinafter referred to as Company) since 1958.
As such employee, he was a member of the Elizalde Rope Workers' Union
(hereinafter referred to as Union) which had with the Company a collective
bargaining agreement containing a closed shop provision which reads as
follows:

Membership in the Union shall be required as a condition of employment


for all permanent employees workers covered by this Agreement.

The collective bargaining agreement expired on March 3, 1964 but was


renewed the following day, March 4, 1964.

Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its
amendment by Republic Act No. 3350, the employer was not precluded
"from making an agreement with a labor organization to require as a
condition of employment membership therein, if such labor organization is
G.R. No. L-25246 September 12, 1974
the representative of the employees." On June 18, 1961, however, Republic
BENJAMIN VICTORIANO, plaintiff-appellee, Act No. 3350 was enacted, introducing an amendment to — paragraph (4)
vs. subsection (a) of section 4 of Republic Act No. 875, as follows: ... "but such
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE FACTORY, INC., agreement shall not cover members of any religious sects which prohibit
defendants, ELIZALDE ROPE WORKERS' UNION, defendant-appellant. affiliation of their members in any such labor organization".

Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-appellee. Being a member of a religious sect that prohibits the affiliation of its
members with any labor organization, Appellee presented his resignation to
Cipriano Cid & Associates for defendant-appellant. appellant Union in 1962, and when no action was taken thereon, he
reiterated his resignation on September 3, 1974. Thereupon, the Union
wrote a formal letter to the Company asking the latter to separate Appellee
ZALDIVAR, J.:p from the service in view of the fact that he was resigning from the Union as
a member. The management of the Company in turn notified Appellee and
Appeal to this Court on purely questions of law from the decision of the his counsel that unless the Appellee could achieve a satisfactory
Court of First Instance of Manila in its Civil Case No. 58894. arrangement with the Union, the Company would be constrained to dismiss
him from the service. This prompted Appellee to file an action for injunction,
The undisputed facts that spawned the instant case follow:
docketed as Civil Case No. 58894 in the Court of First Instance of Manila to
enjoin the Company and the Union from dismissing Appellee. 1 In its answer,
the Union invoked the "union security clause" of the collective bargaining containing a "closed shop provision," the Act relieves the employer from its
agreement; assailed the constitutionality of Republic Act No. 3350; and reciprocal obligation of cooperating in the maintenance of union
contended that the Court had no jurisdiction over the case, pursuant to membership as a condition of employment; and that said Act, furthermore,
Republic Act No. 875, Sections 24 and 9 (d) and (e). 2 Upon the facts agreed impairs the Union's rights as it deprives the union of dues from members
upon by the parties during the pre-trial conference, the Court a who, under the Act, are relieved from the obligation to continue as such
quorendered its decision on August 26, 1965, the dispositive portion of members. 7
which reads:
Thirdly, the Union contended that Republic Act No. 3350 discriminatorily
IN VIEW OF THE FOREGOING, judgment is rendered enjoining the defendant favors those religious sects which ban their members from joining labor
Elizalde Rope Factory, Inc. from dismissing the plaintiff from his present unions, in violation of Article Ill, Section 1 (7) of the 1935 Constitution; and
employment and sentencing the defendant Elizalde Rope Workers' Union to while said Act unduly protects certain religious sects, it leaves no rights or
pay the plaintiff P500 for attorney's fees and the costs of this action. 3 protection to labor organizations. 8

From this decision, the Union appealed directly to this Court on purely Fourthly, Republic Act No. 3350, asserted the Union, violates the
questions of law, assigning the following errors: constitutional provision that "no religious test shall be required for the
exercise of a civil right," in that the laborer's exercise of his civil right to join
I. That the lower court erred when it did not rule that Republic Act No. 3350 associations for purposes not contrary to law has to be determined under
is unconstitutional. the Act by his affiliation with a religious sect; that conversely, if a worker has
II. That the lower court erred when it sentenced appellant herein to pay to sever his religious connection with a sect that prohibits membership in a
plaintiff the sum of P500 as attorney's fees and the cost thereof. labor organization in order to be able to join a labor organization, said Act
would violate religious freedom. 9
In support of the alleged unconstitutionality of Republic Act No. 3350, the
Union contented, firstly, that the Act infringes on the fundamental right to Fifthly, the Union contended that Republic Act No. 3350, violates the "equal
form lawful associations; that "the very phraseology of said Republic Act protection of laws" clause of the Constitution, it being a discriminately
3350, that membership in a labor organization is banned to all those legislation, inasmuch as by exempting from the operation of closed shop
belonging to such religious sect prohibiting affiliation with any labor agreement the members of the "Iglesia ni Cristo", it has granted said
organization" 4 , "prohibits all the members of a given religious sect from members undue advantages over their fellow workers, for while the Act
joining any labor union if such sect prohibits affiliations of their members exempts them from union obligation and liability, it nevertheless entitles
thereto" 5 ; and, consequently, deprives said members of their constitutional them at the same time to the enjoyment of all concessions, benefits and
right to form or join lawful associations or organizations guaranteed by the other emoluments that the union might secure from the employer. 10
Bill of Rights, and thus becomes obnoxious to Article III, Section 1 (6) of the Sixthly, the Union contended that Republic Act No. 3350 violates the
1935 Constitution. 6 constitutional provision regarding the promotion of social justice. 11
Secondly, the Union contended that Republic Act No. 3350 is Appellant Union, furthermore, asserted that a "closed shop provision" in a
unconstitutional for impairing the obligation of contracts in that, while the collective bargaining agreement cannot be considered violative of religious
Union is obliged to comply with its collective bargaining agreement
freedom, as to call for the amendment introduced by Republic Act No. unconstitutionality must prove its invalidity beyond a reasonable doubt, that
3350; 12and that unless Republic Act No. 3350 is declared unconstitutional, a law may work hardship does not render it unconstitutional; that if any
trade unionism in this country would be wiped out as employers would reasonable basis may be conceived which supports the statute, it will be
prefer to hire or employ members of the Iglesia ni Cristo in order to do away upheld, and the challenger must negate all possible bases; that the courts
with labor organizations. 13 are not concerned with the wisdom, justice, policy, or expediency of a
statute; and that a liberal interpretation of the constitution in favor of the
Appellee, assailing appellant's arguments, contended that Republic Act No. constitutionality of legislation should be adopted. 19
3350 does not violate the right to form lawful associations, for the right to
join associations includes the right not to join or to resign from a labor 1. Appellant Union's contention that Republic Act No. 3350 prohibits and
organization, if one's conscience does not allow his membership therein, bans the members of such religious sects that forbid affiliation of their
and the Act has given substance to such right by prohibiting the compulsion members with labor unions from joining labor unions appears nowhere in
of workers to join labor organizations; 14 that said Act does not impair the the wording of Republic Act No. 3350; neither can the same be deduced by
obligation of contracts for said