granting private respondents' petition for injunction and ordering the petitioner to reinstate private respondents.
1. CITIBANK VS. COURT OF APPEALS, NOV. 27, 1998
FACTS:
Citibank and El Toro Security Agency, Inc. (hereafter El Toro) entered into a contract for the latter to provide
security and protective services to safeguard and protect the bank's premises. Under the contract, El Toro
obligated itself to provide the services of security guards to safeguard and protect the premises and
property of Citibank against theft, robbery or any other unlawful acts committed by any person or persons,
and assumed responsibility for losses and/or damages that may be incurred by Citibank due to or as a result
of the negligence of El Toro or any of its assigned personnel. Citibank renewed the security contract with El
Toro yearly until it expired. Then, Citibank Integrated Guards Labor Alliance-SEGA-TUPAS/FSM (hereafter
CIGLA) filed with the National Conciliation and Mediation Board(NCMB) a request for preventive mediation
based on Unfair labor practice; Dismissal of union officers/members; and Union busting. CIGLA converted its
request for preventive mediation into a notice of strike for failure of the parties to reach a mutually acceptable
settlement of the issues, which it followed with a supplemental notice of strike alleging as supplemental issue
the mass dismissal of all union officers and members.
Citibank filed with the Regional Trial Court, Makati, a complaint for injunction and damages. CIGLA filed with
the trial court a motion to dismiss the complaint alleging among others that the Court had no jurisdiction, this
being labor dispute.
ISSUE: WON the case involves a labor dispute?
HELD: No.
Article 212, paragraph l of the Labor Code provides the definition of a " Labor dispute". It includes any
controversy or matter concerning terms or conditions of employment or the association or representation of
persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of
employment, regardless of whether the disputants stand in the proximate relation of employer and
employee."El Toro was an independent contractor. Thus, no EER existed between Citibank and the security
guard members of the union in the security agency who were assigned to secure the bank's premises
and property. Hence, there was no labor dispute and no right to strike against the bank. The dispute involved
is a civil one and the jurisdiction over the subject matter of the complaint lies with the regional trial court.
[G.R. No. 120567. March 20, 1998]
2. PHILIPPINE AIRLINES, INC., petitioner, vs., NATIONAL LABOR RELATIONS COMMISSION,
FERDINAND PINEDA and GODOFREDO CABLING, respondents.
Facts: Private respondents are flight stewards of the petitioner. Both were dismissed from the service for their
alleged involvement in the currency smuggling in Hong Kong. Aggrieved by said dismissal, private
respondents filed with the NLRC a petition for injunction. The NLRC issued a temporary mandatory injunction
enjoining petitioner to cease and desist from enforcing its Memorandum of dismissal.
In support of the issuance of the writ of temporary injunction, the NLRC adopted the view that: (1)
private respondents cannot be validly dismissed on the strength of petitioner's Code of Discipline which was
declared illegal by this Court for the reason that it was formulated by the petitioner without the participation of
its employees (2) the whimsical, baseless and premature dismissals of private respondents which "caused
them grave and irreparable injury" is enjoinable as private respondents are left "with no speedy and adequate
remedy at law' except the issuance of a temporary mandatory injunction; (3) the NLRC is empowered not only
to restrain any actual or threatened commission of any or all prohibited or unlawful acts but also to require the
performance of a particular act in any labor dispute, which, if not restrained or performed forthwith, may cause
grave or irreparable damage to any party; and (4) the temporary mandatory power of the NLRC was
recognized by this Court.
Petitioner moved for reconsideration arguing that the NLRC erred in granting a temporary
injunction order when it has no jurisdiction to issue an injunction or restraining order since this may be issued
only under Article 218 of the Labor Code if the case involves or arises from labor disputes.
The NLRC denied petitioner's motion for reconsideration. The now petitioner, for one, cannot
validly claim that NLRC cannot exercise its injunctive power under Article 218 (e) of the Labor Code on the
pretext that what NLRC have here is not a labor dispute as long as it concedes that as defined by law, Labor
Dispute includes any controversy or matter concerning terms or conditions of employment.
Issue: WON the NLRC even without a complaint for illegal dismissal filed 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.
Ruling: No. It is an essential requirement that there must first be a labor dispute between the contending
parties before the labor arbiter. In the present case, there is no labor dispute between the petitioner and
private respondents as there has yet been no complaint for illegal dismissal filed with the labor arbiter by the
private respondents against the petitioner. The petition for injunction directly filed before the NLRC is in reality
an action for illegal dismissal. Thus, the NLRC exceeded its jurisdiction when it issued the assailed Order
Under the Labor Code, the ordinary and proper recourse of an illegally dismissed employee is to file a
complaint for illegal dismissal with the labor arbiter. In the case at bar, private respondents disregarded this
rule and directly went to the NLRC through a petition for injunction praying that petitioner be enjoined from
enforcing its dismissal orders. Furthermore, an examination of private respondents' petition for injunction
reveals that it has no basis since there is no showing of any urgency or irreparable injury which the private
respondents might suffer.
An injunction, as an extraordinary remedy, is not favored in labor law considering that it generally
has not proved to be an effective means of settling labor disputes. It has been the policy of the State to
encourage the parties to use the non-judicial process of negotiation and compromise, mediation and
arbitration. Thus, injunctions may be issued only in cases of extreme necessity based on legal grounds clearly
established, after due consultations or hearing and when all efforts at conciliation are exhausted which factors,
however, are clearly absent in the present case.
Injunction is a preservative remedy for the protection of one's substantive rights or interest. It is not
a cause of action in itself but merely a provisional remedy, an adjunct to a main suit. It is resorted to only when
there is a pressing necessity to avoid injurious consequences which cannot be remedied under any standard
of compensation. The application of the injunctive writ rests upon the existence of an emergency or of a
special reason before the main case be regularly heard. The essential conditions for granting such temporary
injunctive relief are that the complaint alleges facts which appear to be sufficient to constitute a proper basis
for injunction and that on the entire showing from the contending parties, the injunction is reasonably
necessary to protect the legal rights of the plaintiff pending the litigation. Injunction is also a special equitable
relief granted only in cases where there is no plain, adequate and complete remedy at law.
1. Charlito Penaranda v Banganga Plywood Corporation and Chua
Facts:
Charlito Penaranda was hired as an employee of Baganga Corporation with a monthly salary of P5,000 as
Foreman/Boiler Head/ Shift Engineer to take charge of the operations and maintenance of its steam plant
boiler.
He alleges that he was illegally terminated and that his termination was without due process and valid
grounds. Furthermore, he was not paid his OT pay, premium pay for working during holidays, and night shift
differentials. So he filed an action for illegal dismissal.
Hudson Chua, the General Manager of Baganga alleges that Penaranda’s separation was done pursuant to
Art. 238 of the Labor Code. The company was on temporary closure due to repair and general maintenance
and it applied for clearance with the DOLE to shut down and dismiss employees. He claims that due to the
insistence of complainant, he was paid his separation benefits. But when the company partially re-opened,
Penaranda faild to re-apply.
Chua also alleges that since he is a managerial employee, he is not entitled to OT pay and if ever he rendered
services beyond the normal hours of work, there was no office order/authorization for him to do so.
The Labor Arbiter ruled that there was no illegal dismissal and that Penaranda’s complaint was premature
because he was still employed with Baganga. As regards the benefits, the Labor Arbiter found petitioner
entitled to OT pay, premium pay for working on rest days and attorney’s fees.
On appeal, NLRC deleted the award of OT pay, premium pay and attorney’s fees.
The CA dismissed Penaranda’s Petition for Certiorari based on procedural failures.
Issue:
Whether or not Penaranda is a regular employee entitled to monetary benefits under Art. 82 of the Labor
Code.
Held:
NO. Penaranda is part of the managerial staff which takes him out of the coverage of labor standards. The
Implementing Rules define members of a managerial staff as those with the ff. responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies of the
employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the
management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general
supervision work along specialized or technical lines requiring special training, experience, or knowledge; or
(iii) execute under general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not
directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above."
Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the
operation of the machines and the performance of the workers in the engineering section. This work
necessarily required the use of discretion and independent judgment to ensure the proper functioning of the
steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff.
Even Penaranda admitted that he was a supervisor. In his Position Paper, he stated that he was the foreman
responsible for the operation of the boiler. The term foreman implies that he was the representative of
management over the workers and the operation of the department. His classification as supervisor is further
evident from the manner his salary was paid. He belonged to the 10% of respondent’s 354 employees who
were paid on a monthly basis; the others were paid only on a daily basis.
*No justification to award overtime pay and premium pay for rest days to Penaranda.
2. SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF UNIONS IN THE
PHILIPPINES FOR EMPOWERMENT AND REFORMS (SMCC-SUPER) v. CHARTER CHEMICAL AND
COATING CORPORATION G.R. No. 169717, March 16, 2011
Facts: Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment
and Reforms (petitioner union) filed a petition for certification election among the regular rank-and-file
employees of Charter Chemical and Coating Corporation (respondent company) with the Mediation Arbitration
Unit of the DOLE, National Capital Region. Respondent company filed an Answer with Motion to Dismiss on
the ground that petitioner union is not a legitimate labor organization because of (1) failure to comply with the
documentation requirements set by law, and (2) the inclusion of supervisory employees within petitioner union.
Issue: Is the alleged failure to certify under oath the local charter certificate issued by its mother federation and
list of the union membership attending the organizational meeting as well as the inclusion of supervisory
employees grounds for the cancellation of petitioner [union's] legal personality as a labor organization and for
the dismissal of the petition for certification election?
Laws Applicable: Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series
of 1997 Section 1. Chartering and creation of a local chapter -- A duly registered federation or national union
may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the
following: (a) A charter certificate issued by the federation or national union indicating the creation or
establishment of the local/chapter;(b) The names of the local/chapter's officers, their addresses, and the
principal office of the local/chapter; and (c) The local/chapter's constitution and by-laws provided that where
the local/chapter's constitution and by-laws [are] the same as [those] of the federation or national union, this
fact shall be indicated accordingly. All the foregoing supporting requirements shall be certified under oath by
the Secretary or the Treasurer of the local/chapter and attested to by its President.
R.A. No. 6715
Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules) which supplied the
deficiency by introducing the following amendment to Rule II (Registration of Unions): "Sec. 1. Who may join
unions. – xxx xxx xxx Supervisory employees and security guards shall not be eligible for membership in a
labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of
their own; Provided, that those supervisory employees who are included in an existing rank-and-file bargaining
unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x. (Emphasis supplied) Rule V
(Representation Cases and Internal-Union Conflicts) of the Omnibus Rules, viz: Sec. 1. Where to file. - A
petition for certification election may be filed with the Regional Office which has jurisdiction over the principal
office of the employer. The petition shall be in writing and under oath. Sec. 2. Who may file. - Any legitimate
labor organization or the employer, when requested to bargain collectively, may file the petition. The petition,
when filed by a legitimate labor organization, shall contain, among others: xxx xxx xxx (c) description of the
bargaining unit which shall be the employer unit unless circumstances otherwise require; and provided further,
that the appropriate bargaining unit of the rank-and-file employees shall not include supervisory employees
and/or security guards.
Ruling: As readily seen, the Sama-samang Pahayag ng Pagsapi at Authorization and Listahan ng mga
Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas are not among the
documents that need to be submitted to the Regional Office or Bureau of Labor Relations in order to register a
labor organization. As to the charter certificate, the above-quoted rule indicates that it should be executed
under oath. Petitioner union concedes and the records confirm that its charter certificate was not executed
under oath. However, in San Miguel Corporation (Mandaue Packaging Products Plants) v. Mandaue Packing
Products Plants-San Miguel Corporation Monthlies Rank-and-File Union-FFW (MPPP-SMPP-SMAMRFU-
FFW), which was decided under the auspices of D.O. No. 9, Series of 1997, we ruled: In San Miguel Foods-
Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil. 356 (1996), the Court ruled that it was not necessary for
the charter certificate to be certified and attested by the local/chapter officers. While this ruling was based on
the interpretation of the previous Implementing Rules provisions which were supplanted by the 1997
amendments, we believe that the same doctrine obtains in this case. Considering that the charter certificate is
prepared and issued by the national union and not the local/chapter, it does not make sense to have the
local/chapter's officers x x x certify or attest to a document which they had no hand in the preparation of. In
accordance with this ruling, petitioner union's charter certificate need not be executed under oath.
Consequently, it validly acquired the status of a legitimate labor organization upon submission of (1) its charter
certificate, (2) the names of its officers, their addresses, and its principal office, and (3) its constitution and by-
laws - the last two requirements having been executed under oath by the proper union officials as borne out
by the records. With respect to co-mingling of supervisory employees, under Article 245 of the Labor Code,
supervisory employees are not eligible for membership in a labor organization of rank-and-file employees.
Thus, the appellate court ruled that petitioner union cannot be considered a legitimate labor organization
pursuant to Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor Union (hereinafter
Toyota). Preliminarily, we note that petitioner union questions the factual findings of the Med-Arbiter, as
upheld by the appellate court, that 12 of its members, consisting of batchman, mill operator and leadman, are
supervisory employees. However, petitioner union failed to present any rebuttal evidence in the proceedings
below after respondent company submitted in evidence the job descriptions of the aforesaid employees. The
job descriptions indicate that the aforesaid employees exercise recommendatory managerial actions which are
not merely routinary but require the use of independent judgment, hence, falling within the definition of
supervisory employees under Article 212(m) of the Labor Code. For this reason, we are constrained to agree
with the Med-Arbiter, as upheld by the appellate court, that petitioner union consisted of both rank-and-file and
supervisory employees. Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner union
does not divest it of its status as a legitimate labor organization. The appellate court's reliance on Toyota is
misplaced in view of this Court's subsequent ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc.
(hereinafter Kawashima). In Kawashima, we explained at length how and why the Toyota doctrine no longer
holds sway under the altered state of the law and rules applicable to this case, viz: R.A. No. 6715 omitted
specifying the exact effect any violation of the prohibition [on the co-mingling of supervisory and rank-and-file
employees] would bring about on the legitimacy of a labor organization. It was the Rules and Regulations
Implementing R.A. No. 6715 (1989 Amended Omnibus Rules) which supplied the deficiency by introducing the
following amendment to Rule II (Registration of Unions): "Sec. 1. Who may join unions. - x x x Supervisory
employees and security guards shall not be eligible for membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor organizations of their own; Provided, that those
supervisory employees who are included in an existing rank-and-file bargaining unit, upon the effectivity of
Republic Act No. 6715, shall remain in that unit x x x. (Emphasis supplied) And Rule V (Representation Cases
and Internal-Union Conflicts) of the Omnibus Rules, viz: "Sec. 1. Where to file. - A petition for certification
election may be filed with the Regional Office which has jurisdiction over the principal office of the employer.
The petition shall be in writing and under oath. Sec. 2. Who may file. - Any legitimate labor organization or the
employer, when requested to bargain collectively, may file the petition. The petition, when filed by a legitimate
labor organization, shall contain, among others: x x x x (c) description of the bargaining unit which shall be the
employer unit unless circumstances otherwise require; and provided further, that the appropriate bargaining
unit of the rank-and-file employees shall not include supervisory employees and/or security guards. (Emphasis
supplied) By that provision, any questioned mingling will prevent an otherwise legitimate and duly registered
labor organization from exercising its right to file a petition for certification election. Additionally, the applicable
law and rules in the instant case are the same as those in Kawashima because the present petition for
certification election was filed in 1999 when D.O. No. 9, series of 1997, was still in effect. Hence, Kawashima
applies with equal force here. As a result, petitioner union was not divested of its status as a legitimate labor
organization even if some of its members were supervisory employees; it had the right to file the subject
petition for certification election. Opinion: The status of being a legitimate labor organization can be acquired
upon the submission of: 1. The Charter Certificate; 2. Names of the officers, their addresses and the principal
office of the labor organization; and 3. The Constitution and By-laws. Of these requirements, (2) and (3) would
be the operative fact with which such status would be acquired as these are executed under oath by the
person concerned. This is the product of the liberalization of the registration requirements of unions. However,
the agencies must exercise discretion in accepting the applications for registration and must still put diligent
efforts in ascertaining whether such documents submitted are genuine and duly executed and not merely
fabricated. This is to protect the interests of the members as well as the employers and to prevent the
proliferation of fly-by-night unions.
Title: PAMELA FLORENTINA P. JUMUAD, Petitioner, - versus - HI-FLYER FOOD, INC. Jumuad was illegally dismissed
and/or JESUS R. MONTEMAYOR, Respondents.
NLRC Decision:
Summary There was no habitual neglect of her duties as the incidents happened in separate  Echoing the finding of the LA that the dismissal of Jumuad was too harsh,
instances and with a period of a year in between. However, there was breach of trust the NLRC affirmed in toto the LA decision dated August 10, 2006.
and confidence for failing to discipline EEs under her control. Furthermore, by virtue of CA Decision
the doctrine of respondeat superior,  Contrary to the findings of the LA and the NLRC, the CA was of the opinion
she can be held liable for the anomalies committed by employees under her control. that the requirements of substantive and procedural due process were
complied with affording Jumuad an opportunity to be heard first, when she
submitted her written explanation and then, when she was informed of the
decision and the basis of her termination. [28] As for the e-mail exchanges
between Montemayor and the officers of Hi-Flyer, the CA opined that they
Facts: On May 22, 1995, petitioner Pamela Florentina P. Jumuad (Jumuad) began her did not equate to a predetermination of Jumuads termination. It was of the
employment with respondent Hi-Flyer Food, Inc. (Hi-Flyer), as management trainee. Hi- view that the e-mail exchanges were mere discussions between
Flyer is a corporation licensed to operate (KFC) restaurants in the Philippines. Based Montemayor and other officers of Hi-Flyer on whether grounds for
on her performance through the years, Jumuad received several promotions until she disciplinary action or termination existed. To the mind of the CA, the e-mails
became the area manager for the entire Visayas-Mindanao 1 region, comprising the just showed that Hi-Flyer extensively deliberated the nature and cause of
provinces of Cebu, Bacolod, Iloilo and Bohol. the charges against Jumuad. [29]
Aside from being responsible in monitoring her subordinates, Jumuad was tasked to: 1) On the issue of loss of trust and confidence, the CA considered the deplorable sanitary
be highly visible in the restaurants under her jurisdiction; 2) monitor and support day-to- conditions and the cash shortages uncovered at three of the seven KFC branches
day operations; and 3) ensure that all the facilities and equipment at the restaurant supervised by Jumuad as enough bases for Hi-Flyer to lose its trust and confidence in
were properly maintained and serviced. Among the branches under her supervision her. having been paid directly to Shanrgi-la.
were the KFC branches in Gaisano Mall, Cebu City (KFC-Gaisano); in Cocomall, Cebu
City (KFC-Cocomall); and in Island City Mall, Bohol (KFC-Bohol).
Issues: Whether Jumuad was illegally dismissed
On October 4, 2004, Hi Flyer conducted a food safety, service and sanitation audit at
Decision Jumuad was terminated for neglect of duty and breach of trust and confidence.
KFC-Gaisano. The audit, denominated as CHAMPS Excellence Review (CER),
revealed several sanitation violations, such as the presence of rodents and the use of a
The Court is convinced that Jumuad cannot be dismissed on the ground of gross
defective chiller for the storage of food. When asked to explain, Jumuad first pointed
and habitual neglect of duty. The Court notes the apparent neglect of Jumuad of her
out that she had already taken steps to prevent the further infestation of the branch. As
duty in ensuring that her subordinates were properly monitored and that she had
to why the branch became infested with rodents, Jumuad faulted managements
dutifully done all that was expected of her to ensure the safety of the consuming public
decision to terminate the services of the branchs pest control program and to rely solely
who continue to patronize the KFC branches under her jursidiction. Had Jumuad
on the pest control program of the mall. As for the defective chiller, she explained that it
discharged her duties to be highly visible in the restaurants under her jurisdiction,
was under repair at the time of the CER. Soon thereafter, Hi-Flyer ordered the KFC-
monitor and support the day to day operations of the branches and ensure that all the
Gaisano branch closed.
facilities and equipment at the restaurant were properly maintained and serviced, the
deplorable conditions and irregularities at the various KFC branches under her
Then, sometime in June of 2005, Hi-Flyer audited the accounts of KFC-Bohol amid
jurisdiction would have been prevented.
reports that certain employees were covering up cash shortages. As a result, the
following irregularities were discovered: 1) cash shortage amounting to ₱62,290.85; 2)
It cannot be denied that Jumuad willfully breached her duties as to be unworthy
delay in the deposits of cash sales by an average of three days; 3) the presence of two
of the trust and confidence of Hi-Flyer. First, there is no denying that Jumuad was a
sealed cash-for-deposit envelopes containing paper cut-outs instead of cash; 4)
managerial employee. As correctly noted by the appellate court, Jumuad executed
falsified entries in the deposit logbook; 5) lapses in inventory control; and 6) material
management policies and had the power to discipline the employees of KFC branches
product spoilage. In her report regarding the incident, Jumuad disclaimed any fault in
in her area. She recommended actions on employees to the head office. Pertinent is
the incident by pointing out that she was the one responsible for the discovery of this
Article 212 (m) of the Labor Code defining a managerial employee as one who is
irregularity.
vested with powers or prerogatives to lay down and execute management policies
and/or hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees.
On August 7, 2005, Hi-Flyer conducted another CER, this time at its KFC-Cocomall
branch. Grout and leaks at the branchs kitchen wall, dried up spills from the marinator,
Based on established facts, the mere existence of the grounds for the loss of trust and
as well as a live rat under postmix, and signs of rodent gnawing/infestation were found.
confidence justifies petitioners dismissal. Pursuant to the Courts ruling in Lima Land,
This time, Jumuad explained to management that she had been busy conducting
Inc. v. Cuevas,1[38] as long as there is some basis for such loss of confidence, such as
management team meetings at the other KFC branches and that, at the date the CER
when the employer has reasonable ground to believe that the employee concerned is
was conducted, she had no scheduled visit at the KFC-Cocomall branch.
responsible for the purported misconduct, and the nature of his participation therein
renders him unworthy of the trust and confidence demanded of his position, a
Seeking to hold Jumuad accountable for the irregularities uncovered in the branches
managerial employee may be dismissed.
under her supervision, Hi-Flyer sent Jumuad an Irregularities Report and Notice of
Charges which she received on September 5, 2005. On September 7, 2005 Jumuad
In the present case, the CERs reports of Hi-Flyer show that there were anomalies
submitted her written explanation. On September 28, 2005, Hi-Flyer held an
committed in the branches managed by Jumuad. On the principle of respondeat
administrative hearing where Jumuad appeared with counsel. Apparently not satisfied
with her explanations, Hi-Flyer served her a Notice of Dismissal dated October 14,
2005, effecting her termination on October 17, 2005.

This prompted Jumuad to file a complaint against Hi-Flyer and/or Jesus R. Montemayor
(Montemayor) for illegal dismissal.

LA Decision:
 After finding that no serious cause for termination existed, the LA ruled that
 superior or command responsibility alone, Jumuad may be held liable for negligence in
the performance of her managerial duties. She may not have been directly involved in
causing the cash shortages in KFC-Bohol, but her involvement in not performing her
duty monitoring and supporting the day to day operations of the branches and ensure
that all the facilities and equipment at the restaurant were properly maintained and
serviced, could have truly prevented the whole debacle from ever occurring.

Moreover, it is observed that rather than taking proactive steps to prevent the
anomalies at her branches, Jumuad merely effected remedial measures. In the
restaurant business where the health and well-being of the consuming public is at
stake, this does not suffice. Thus, there is reasonable basis for Hi-Flyer to withdraw its
trust in her and dismissing her from its service.

Ratio Gross negligence connotes want or absence of or failure to exercise slight care or
diligence, or the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. Fraud and wilful neglect of
duties imply bad faith of the employee in failing to perform his job, to the detriment of
the employer and the latters business. Habitual neglect, on the other hand, implies
repeated failure to perform one's duties for a period of time, depending upon the
circumstances. It has been said that a single or an isolated act of negligence cannot
constitute as a just cause for the dismissal of an employee.2[35] To be a ground for
removal, the neglect of duty must be both gross and habitual.3[36]

On the other hand, breach of trust and confidence, as a just cause for termination of
employment, is premised on the fact that the employee concerned holds a position of
trust and confidence, where greater trust is placed by management and from whom
greater fidelity to duty is correspondingly expected. The betrayal of this trust is the
essence of the offense for which an employee is penalized.

In breach of trust and confidence, so long as it is shown there is some basis for
management to lose its trust and confidence and that the dismissal was not used as an
occasion for abuse, as a subterfuge for causes which are illegal, improper, and
unjustified and is genuine, that is, not a mere afterthought intended to justify an earlier
action taken in bad faith, the free will of management to conduct its own business
affairs to achieve its purpose cannot be denied.

Continental Micronesia v. Basso
GR No. 178382-83
Labor Relations: Jurisdiction
Facts:
Petitioner Continental Micronesia is a foreign corporation organized and existing under the laws of and
domiciled in the United States of America. It is licensed to do business in the Philippines. Respondent, a US
citizen residing in the Philippines, accepted an offer to be a General Manager position by Mr. Braden,
Managing Director-Asia of Continental Airlines. On November 7, 1992, CMI took over the Philippine
operations of Continental, with respondent retaining his position as General Manager. Thereafter, respondent
received a letter from Mr. Schulz, who was then CMI’s Vice President of Marketing and Sales, informing him
that he has agreed to work in CMI as a consultant on an “as needed basis.” Respondent wrote a counter-
proposal that was rejected by CMI.
Respondent then filed a complaint for illegal dismissal against the petitioner corporation. Alleging the presence
of foreign elements, CMI filed a Motion to Dismiss on the ground of lack of jurisdiction over the person of CMI
and the subject matter of the controversy.
The Labor Arbiter agreed with CMI that the employment contract was executed in the US “since the letter-offer
was under the Texas letterhead and the acceptance of Complainant was returned there.” Thus, applying the
doctrine of lex loci celebrationis, US laws apply. Also, applying lex loci contractus, the Labor Arbiter ruled that
the parties did not intend to apply Philippine laws.
The NLRC ruled that the Labor Arbiter acquired jurisdiction over the case when CMI voluntarily submitted to
his office’s jurisdiction by presenting evidence, advancing arguments in support of the legality of its acts, and
praying for reliefs on the merits of the case.
The Court of Appeals ruled that the Labor Arbiter and the NLRC had jurisdiction over the subject matter of the
case and over the parties.
Issue:
Whether labor tribunals have jurisdiction over the case.
Held:
Yes. The Court ruled that the labor tribunals had jurisdiction over the parties and the subject matter of the
case. The employment contract of Basso was replete with references to US laws, and that it originated from
and was returned to the US, do not automatically preclude our labor tribunals from exercising jurisdiction to
hear and try this case.
On the other hand, jurisdiction over the person of CMI was acquired through the coercive process of service of
summons. CMI never denied that it was served with summons. CMI has, in fact, voluntarily appeared and
participated in the proceedings before the courts. Though a foreign corporation, CMI is licensed to do
business in the Philippines and has a local business address here. The purpose of the law in requiring that
foreign corporations doing business in the country be licensed to do so, is to subject the foreign corporations
to the jurisdiction of our courts.
Where the facts establish the existence of foreign elements, the case presents a conflicts-of-laws issue. Under
the doctrine of forum non conveniens, a Philippine court in a conflict-of-laws case may assume jurisdiction if it
chooses to do so, provided, that the following requisites are met: (1) that the Philippine Court is one to which
the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent
decision as to the law and the facts; and (3) that the Philippine Court has or is likely to have power to enforce
its decision. All these requisites are present here.
World’s Best Gas Inc. v. Vital
GR No. 211588
Labor Relations: Jurisdiction
Facts:
Mr. Vital was one of the incorporators of WBGI, holding P500, 000.00 worth of shares of stocks therein. As a
separate business venture, respondents (Mr. and Mrs. Vital) sourced LPG from WBGI and distributed the
same through ERJ Enterprises owned by them. The respondents have outstanding balance with WBGI for
unpaid LPG amounted to P923,843.59. Thereafter, Mr. Vital was appointed as Internal Auditor and Personnel
Manager. Upon his mandatory retirement, WBGI computed his retirement benefits. WBGI also agreed to
acquire his shares of stocks. After offsetting his shares of stocks against ERJ Enterprises’ P923,843.59
outstanding balance to WBGI, Vital claimed that the unpaid salaries and separation pay due him amounted to
P845,000.00 and P250,000.00, respectively, leaving a net amount of P671,156.41 payable to him. WBGI
rejected his claim and contended that after offsetting, Vital actually owed it P369, 156.19.
Mr. Vital filed a complaint for non-payment of separation and retirement benefits, underpayment of
salaries/wages and 13th month pay, illegal reduction of salary and benefits, and damages. WBGI averred that
LA has no jurisdiction over the complaint having no existing employer-employee relationship between the
parties, and that Mr. Vital is a mere incorporator and stockholder.
The LA dismissed the case for lack of jurisdiction. The LA found that the issues between Vital and WBGI are
intra-corporate in nature as they arose between the relations of a stockholder and the corporation, and not
from an employee and employer relationship
The RTC, acting as a special commercial court, oppositely found that Vital was an employee of WBGI and
thereby, upheld his claim of unpaid salaries and separation pay.
The CA ruled that Mr. Vital is an employee of WBGI.
Issue:
Whether the RTC has jurisdiction over the case.
Held:
Partly. The Court pointed out that the case involves three distinct causes of action, namely, (1) Vital’s claim for
P845, 000.00 and P250, 000.00 in unpaid salaries and separation pay; (2) the P923, 843.59 in arrearages
payable to WBGI from ERJ Enterprises, which was admitted by Vital but not claimed by WBGI; and (3) Vital’s
claim of P500, 000.00 due from WBGI’s acquisition of Vital’s shares of stocks.
The RTC’s adjudication of the first cause of action was improper since the same is one which arose from Vital
and WBGI’s employer-employee relations, involving an amount exceeding P 5,000.00, hence, belonging to the
jurisdiction of the labor arbiters pursuant to Article 217 of the Labor Code.
On the contrary, RTC has: (a) general jurisdiction to adjudicate on the P923,843.59 in arrearages payable to
WBGI from ERJ Enterprises, which was admitted by Vital but not claimed by WBGI; and (b) special
jurisdiction, as a special commercial court, to adjudicate on Vital’s claim of P500,000.00 from WBGI’s
acquisition of his shares of stocks.
MENDOZA vs OFFICERS OF MWEU
G.R. No. 201595 | January 25, 2016 | Del Castillo, J.
Facts:
Petitioner Allan Mendoza was a member of the Manila Water Employees Union (MWEU),a DOLE-registered
labor organization consisting of rank-and-file employees within Manila Water Company (MWC) while the
respondents were MWEU officers. In 2007, petitioners were approved to be suspended for 30 days by the
MWEU Executive Board’s through a "unanimous approval" due to the non-payment of union dues. Due notice
was made to the petitioners to attend a scheduled hearing. Petitioners have repeatedly indicated their
intention to appeal the same to the General Membership Assembly; however, petitioner’s appeal had been
repeatedly denied.
Meanwhile, MWEU scheduled an election of officers. Petitioner filed his certificate of candidacy for Vice-
President, but he was disqualified for not being a member in good standing on account of his suspension. In
addition, petitioner was charged with non-payment of union dues for the third time. He did not attend the
scheduled hearing; hence, he was later on expelled from the union.In 2008, during the freedom period and
negotiations for a new CBA with MWC,
petitioner joined another union, the Workers Association for Transparency, Empowerment andReform, All-
Filipino Workers Confederation (WATER-AFWC). He was elected union President. Other MWEU members
were inclined to join WATER-AFWC, but MWEU director Torres threatened that they would not get benefits
from the new CBA. The MWEU leadership submitted a proposed CBA which contained provisions to the effect
that in the event of retrenchment, non-MWEU members shall be removed first, and that upon the signing of
the CBA, only MWEU members shall receive a signing bonus. On 13 October 2008, petitioner filed a
Complaint against respondents for unfair labor practices, damages, and attorney's fees and accused the
respondents of illegal termination from MWEU in connection with the events relative to his non-payment of
union dues; unlawful interference, coercion, and violation of the rights of MWC employees to self-organization
– in connection with the proposed CBA submitted byway leadership, which petitioner claims contained
provisions that discriminated against non-MWEU members. Petitioner claims that he was suspended and
expelled from MWEU illegally as a result of the denial of his right to appeal his case to the general
membership assembly in accordance with the union’s constitution and by-laws. On the other hand,
respondents counter that such charge is intra-union in nature, and that petitioner lost his right to appeal when
he failed to petition to convene the general assembly through the required signature of 30% of the union
membership in good standing.
Issue:
WON the Respondents are guilty of unfair labor practice under Article 249 (a) and (b) of the Labor Code
Held:
Yes. Respondents are guilty of unfair labor practices under Article 249 (a) and (b) – that is, violation of
petitioner’s right to self -organization, unlawful discrimination, and illegal termination of his union membership.
Guaranteed to all employees or workers is the ‘right to self -organization and to form, join, or assist labor
organizations of their own choosing for purposes of collective bargaining.’
The right of self-organization includes the right to organize or affiliate with a labor union or determine which of
two or more unions in an establishment to join, and to engage in concerted activities with co-workers for
purposes of collective bargaining through representatives of their own choosing, or for their mutual aid and
protection, i.e., the protection, promotion, or enhancement of their rights and interests. As members of the
governing board of MWEU, respondents are presumed to know, observe, and apply the union’s constitution

and by-laws. Thus, their repeated
violations thereof and their disregard of petitioner’s rights as a union member –
their inaction on his two appeals which resulted in his suspension, disqualification from running as MWEU
officer, and subsequent expulsion without being accorded the full benefits of due process – connote willfulness
and bad faith, a gross disregard of his rights thus causing untold suffering, oppression and, ultimately,
ostracism from MWEU. "Bad faith implies breach of faith and willful failure to respond to plain and well
understood obligation."
EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID, BONIFACIO MATUNDAN,
NORA MENDOZA, ET AL., Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION, SOLID MILLS,
INC., AND/OR PHILIP ANG, Respondents.
FACTS: Petitioners are Solid Mills, Inc.’s employees. They are represented by the National Federation of
Labor Unions (NAFLU), their collective bargaining agent. Petitioners and their families were allowed to occupy
SMI Village, a property owned by Solid Mills out of liberality and for the convenience of its employees . . . [and]
on the condition that the employees . . . would vacate the premises anytime the Company deems
fit.”Petitioners were informed that effective October 10, 2003, Solid Mills would cease its operations due to
serious business losses. NAFLU recognized Solid Mills’ closure due to serious business losses in the
memorandum of agreement. The
memorandum of agreement provided for Solid Mills’ grant of separation pay less accountabilities, accrued sick
leave benefits, vacation leave benefits, and 13th month pay to the employees. Later, Solid Mills, sent to
petitioners individual notices to vacate SMI Village. They were required to sign a memorandum of agreement
with release and quitclaim before their pay would be released. Petitioners refused
to sign the documents and demanded to be paid their benefits and separation pay.
Hence, petitioners filed complaints before the Labor Arbiter for alleged non-
payment. They argued that their accrued benefits and separation pay should not be
withheld because their payment is based on company policy and practice.
Moreover, the 13th month pay is based on law. Their possession of Solid Mills
property is not an accountability that is subject to clearance procedures. Petitioners
argue that respondent Solid Mills and NAFLU’s memorandum of agreement has no
provision stating that benefits shall be paid only upon return of the possession of
respondent Solid Mills’ property. It only provides that the benefits shall be “less
accountabilities,” which should not be interpreted to include such possession.
ISSUE: WON PAYMENT OF THE MONETARY CLAIMS OF PETITIONERS
SHOULD BE HELD IN ABEYANCE PENDING COMPLIANCE OF THEIR
ACCOUNTABILITIES TO RESPONDENT SOLID MILLS BY TURNING OVER THE
SUBJECT LOTS THEY RESPECTIVELY OCCUPY AT SMI VILLAGE, SUCAT,
MUNTINLUPA CITY.
HELD: YES. Requiring clearance before the release of last payments to the
employee is a standard procedure among employers, whether public or private.
Clearance procedures are instituted to ensure that the properties, real or personal,
belonging to the employer but are in the possession of the separated employee, are
returned to the employer before the employee’s departure. As a general rule,
employers are prohibited from withholding wages from employees. The Labor Code
provides: Art. 116. Withholding of wages and kickbacks prohibited. Art. 100.
Prohibition against elimination or diminution of benefits. Art. 113. Wage deduction.
No employer, in his own behalf or in behalf of any person, shall make any deduction
from the wages of his employees, except: 3. In cases where the employer is
authorized by law or regulations issued by the Secretary of Labor and Employment.
The Civil Code provides that the employer is authorized to withhold wages for debts
due: Article 1706. Withholding of the wages, except for a debt due, shall not be
made by the employer. “Debt” in this case refers to any obligation due from the
employee to the employer. It includes any accountability that the employee may
have to the employer. There is no reason to limit its scope to uniforms and
equipment, as petitioners would argue. “Accountability,” in its ordinary sense,
means obligation or debt. As long as the debt or obligation was incurred by virtue of
the employer-employee relationship, generally, it shall be included in the
employee’s accountabilities that are subject to clearance procedures. In this case,
respondent Solid Mills claims that its properties are in petitioners’ possession by
virtue of their status as its employees. Respondent Solid Mills allowed petitioners to
use its property as an act of liberality. Put in other words, it would not have allowed
petitioners to use its property had they not been its employees. It may be true that
not all employees enjoyed the privilege of staying in respondent Solid Mills’
property. However, this alone does not imply that this privilege when enjoyed was
not a result of the employer-employee relationship. Petitioners’ possession should,
therefore, be included in the term “accountability.” The return of the property’s possession became an
obligation or liability on the part of the employees when the employer-employee relationship ceased. Thus,
respondent Solid Mills has the right to withhold petitioners’ wages and benefits because of this existing debt or
liability. The law does not sanction a situation where employees who do not even assert any claim over the
employer’s property are allowed to take all the benefits out of their employment while they simultaneously
withhold possession of their employer’s property for no rightful reason. Withholding of payment by the
employer does not mean that the employer may renege on its obligation to pay employees their wages,
termination payments, and due benefits. The employees’ benefits are also not being reduced. It is only
subjected to the condition that the employees return properties properly belonging to the employer. This is
only consistent with the equitable principle that “no one shall be unjustly enriched or benefited at the expense
of another.
SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA J. BETIA,
Petitioners, v. MA. JOPETTE M. REBESENCIO, MONTASSAH B.SACAR-ADIONG, ROUEN RUTH A.
CRISTOBAL AND LORAINE S. SCHNEIDER-CRUZ, Respondents.
G.R. No. 198587, January 14, 2015
FACTS:
Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation established and existing under the laws of
Jeddah, Kingdom of Saudi Arabia. It has a Philippine office located at Puyat Avenue, Makati
City. Respondents (complainants before the Labor Arbiter) were recruited and hired by Saudia as Temporary
Flight Attendants with the accreditation and approval of the Philippine Overseas Employment Administration.
After undergoing seminars required by the Philippine Overseas Employment Administration for deployment
overseas, as well as training modules offered by Saudia (e.g., initial flight attendant/training course and
transition training), and after working as Temporary Flight Attendants, respondents became Permanent Flight
Attendants. They then entered into Cabin Attendant contracts with Saudia: Ma. Respondents continued their
employment with Saudia until they were separated from service on various dates in 2006.
Respondents contended that the termination of their employment was illegal. They alleged that the termination
was made solely because they were pregnant. As respondents alleged, they had informed Saudia of their
respective pregnancies and had gone through the necessary procedures to process their maternity leaves.
Initially, Saudia had given its approval but later on informed respondents that its management in
Jeddah, Saudi Arabia had disapproved their maternity leaves
. In addition, it required respondents to file their resignation letters. Respondents were told that if they did not
resign, Saudia would terminate them all the same. The threat of termination entailed the loss of benefits, such
as separation pay and ticket discount entitlements. Saudia anchored its disapproval of respondents' maternity
leaves and demand for their resignation on its "Unified Employment Contract for Female Cabin Attendants"
(Unified Contract). Under the Unified Contract, the employment of aFlight Attendant who becomes pregnant is
rendered void. It provides.Xxx if the Air Hostess becomes pregnant at any time during the term of this
contract, this shall render her employment contract as void and she will be terminated due to lack of
medical fitness.
Rather than comply and tender resignation letters, respondents filed separate appeal letters that were all
rejected. Despite these initial rejections, respondents each received calls on the morning of November 6, 2006
from Saudia's office secretary informing them that their maternity leaves had been approved. Saudia,
however, was quick to renege on its approval. On the evening of November 6, 2006, respondents again
received calls informing them that it had received notification from Jeddah, Saudi Arabia that their maternity
leaves had been disapproved. Faced with the dilemma of resigning or totally losing their benefits, respondents
executed handwritten resignation letters.In Montassah's and Rouen Ruth's cases, their resignations were
executed on Saudia's blank letterheads that Saudia had provided. These letterheads already had the word
"RESIGNATION" typed on the subject portions of their headings when these were handed to respondents. On
November 8, 2007, respondents filed a Complaint against Saudia and its officers, ( one of the officers
impleaded was petitioner Brenda) for illegal dismissal and for underpayment of salary, overtime pay, premium
pay for holiday, etc.
Saudia assailed the jurisdiction of the Labor Arbiter.29 It claimed that all the determining points of contact
referred to foreign law and insisted that the Complaint ought to be dismissed on the ground of forum non
conveniens.30 It added that respondents had no cause of action as they resigned voluntarily.31
On December 12, 2008, Executive Labor Arbiter Fatima Jambaro-Franco rendered the Decision32dismissing
respondents' Complaint.
Hence, this Appeal was filed.
The issues for resolution are the following:
First, whether the Labor Arbiter and the National Labor Relations Commission may exercise jurisdiction over
Saudi Arabian Airlines and apply Philippine law in adjudicating the present dispute;
Second, whether respondents' voluntarily resigned or were illegally terminated; and
Lastly, whether Brenda J. Betia may be held personally liable along with Saudi Arabian Airlines.
I Amecos in behalf of Lopez?
Summons were validly served on Saudia and jurisdiction over it validly acquired.
There is no doubt that the pleadings and summons were served on Saudia through its counsel.42 Saudia,
however, claims that the Labor Arbiter and the National Labor Relations Commission had no jurisdiction over it
because summons were never served on it but on "Saudia Manila."43 Referring to itself as "Saudia Jeddah," it
claims that "Saudia Jeddah" and not "Saudia Manila" was the employer of respondents because:
First, "Saudia Manila" was never a party to the Cabin Attendant contracts entered into by respondents;
Second, it was "Saudia Jeddah" that provided the funds to pay for respondents' salaries and benefits; and
Lastly, it was with "Saudia Jeddah" that respondents filed their resignations.44
Saudia posits that respondents' Complaint was brought against the wrong party because "Saudia Manila,"
upon which summons was served, was never the employer of respondents.45
Saudia is vainly splitting hairs in its effort to absolve itself of liability. Other than its bare allegation, there is no
basis for concluding that "Saudia Jeddah" is distinct from "Saudia Manila."
What is clear is Saudia's statement in its own Petition that what it has is a "Philippine Office . . . located at 4/F
Metro House Building, Sen. Gil J. Puyat Avenue, Makati City."46 Even in the position paper that Saudia
submitted to the Labor Arbiter,47 what Saudia now refers to as "Saudia Jeddah" was then only referred to as
"Saudia Head Office at Jeddah, KSA,"48 while what Saudia now refers to as "Saudia Manila" was then only
referred to as "Saudia's office in Manila."49
By its own admission, Saudia, while a foreign corporation, has a Philippine office.
Section 3(d) of Republic Act No.. 7042, otherwise known as the Foreign Investments Act of 1991, provides the
following:
The phrase "doing business" shall include . . . opening offices, whether called "liaison" offices or branches; . . .
and any other act or acts that imply a continuity of commercial dealings or arrangements and contemplate to
that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and
in progressive prosecution of commercial gain or of the purpose and object of the business organization.
(Emphasis supplied)
A plain application of Section 3(d) of the Foreign Investments Act leads to no other conclusion than that
Saudia is a foreign corporation doing business in the Philippines. As such, Saudia may be sued in the
Philippines and is subject to the jurisdiction of Philippine tribunals.
Moreover, since there is no real distinction between "Saudia Jeddah" and "Saudia Manila" — the latter being
nothing more than Saudia's local office — service of summons to Saudia's office in Manila sufficed to vest
jurisdiction over Saudia's person in Philippine tribunals.
AMECOS INNOVATIONS, INC. and ANTONIO F. MATEO v. ELIZA R. LOPEZ
G.R. No.178055 July 2, 2014
LA HAS JURISDICTION OVER CASES INVOLVING REIMBURSEMENT OF SSS CONTRIBUTION
FACTS:
Amecos is a corporation engaged in the business of selling assorted products. In 2003, a complaint was filed
by the SSS against Amecos for an alleged delinquency in the remittance of SSS contributions and penalty
liabilities in violation of Section 22(a) and 22(d) in relation to Section 28(e) of the SSS law, as amended.
By way of explanation, Amecos claimed that it hired Lopez as Marketing Assistant to promote its products;
that upon hiring, Lopez refused to provide Amecos with her SSS Number and to be deducted her
contributions; that on the basis of the foregoing, Amecos no longer enrolled Lopez with the SSS and did not
deduct her corresponding contributions up to the time of her termination in February 2002.
Amecos eventually settled its obligations with the SSS; consequently, SSS filed a Motion to Withdraw
Complaint, which was approved by the Office of the City Prosecutor.
Thereafter, Amecos sent a demand letter to Lopez for P27,791.65 representing her share in the SSS
contributions and expenses for processing, but to no avail. Thus, Amecos filed a complaint for sum of money
and damages against Lopez before the MeTC.
Lopez filed her Answer with Motion to Dismiss claiming, among others, that the regular courts do not have
jurisdiction over the instant case as it arose out of their employer-employee relationship.
MeTC RULING: DISMISSED for lack of jurisdiction
RTC RULING: AFFIRMED the MeTC
CA RULING: AFFIRMED the RTC
ISSUE: Does the LA have jurisdiction over cases involving the reimbursement of SSS contribution paid by the
SC RULING:
YES. The LA has original and exclusive jurisdiction over the matter, since the same necessarily flowed from
the employer-employee relationship between Amecos and Lopez. In this connection, it is noteworthy to state
that "the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws, but also damages
governed by the Civil Code."
At the same time, it cannot be assumed that since the dispute concerns the payment of SSS premiums,
Amecos’ claim should be referred to the Social Security Commission (SSC). As far as SSS is concerned,
there is no longer a dispute with respect to Amecos’ accountability to the System; Amecos already settled
their pecuniary obligations to it. Since there is no longer any dispute regarding coverage, benefits,
contributions and penalties to speak of, the SSC need not be unnecessarily dragged into the picture. Besides,
it cannot be made to act as a collecting agency for petitioners’ claims against the respondent; the Social
Security Law should not be so interpreted, lest the SSC be swamped with cases of this sort.
At any rate, the complaint shall be dismissed for lack of cause of action. Since Amecos did not remit the full
SSS contributions of Lopez, the latter was never covered by and protected under the System. If she was
never covered by the System, certainly there is no sense in making her answerable for the required
contributions during the period of her employment. And it follows as a matter of consequence that claims for
other damages founded on the foregoing non-existent cause of action should likewise fail.
CACHO v. BALAGTAS
[G.R. No.202974; February 7, 2018]
Petitioners: Norma D. Cacho and North Star International Travel, Inc.
Respondents: Virginia D. Balagtas
FACTS:
Respondent Virginia D. Balagtas filed a complaint of constructive dismissal against petitioners North Star
International Travel, Inc. (North Star) and its President Norma D. Cacho (Cacho) before the Labor Arbiter.
Balagtas after 14 years of service in the said corporation, was placed under 30 days preventive suspension
pursuant to a Board Resolution passed by the Board of Directors of the respondent Corporation due to her
alleged questionable transactions.
While under preventive suspension, she wrote a letter to Norma Cacho informing the latter that she was
assuming her position as Executive Vice-President/Chief Executive Officer effective on that date; however,
she was prevented from re-assuming her position. Consequently, she filed a complaint claiming that she was
constructively and illegally dismissed effective on April 12, 2004. In their defense, Cacho and North Star
averred that preventive suspension was meant to prevent Balagtas from influencing potential witnesses and to
protect the respondent corporation's property. Subsequently, the Board of Directors constituted an
investigation committee tasked with the duty to impartially assess the charges against petitioner. Cacho, et al.
alleged that Balagtas violated her suspension when, on several occasions, she went to the corporation's office
and insisted on working despite respondent Norma Cacho's protestation. They asserted that petitioner was not
illegally dismissed but was merely placed under preventive suspension.
The Labor Arbiter found that Balagtas was illegally dismissed from North Star but the latter appealed to the
NLRC for lack of jurisdiction. They contend that Balagtas was never dismissed and alleged that she was a
corporate officer, incorporator, and member of the North Star's Board of Directors. Thus, the NLRC cannot
take cognizance of her illegal dismissal case, the same being an intra-corporate controversy, which properly
falls within the original and exclusive jurisdiction of the ordinary courts.
The NLRC ruled in favor of the petitioners. The Decision of the Labor Arbiter is REVERSED and SET ASIDE
and the complaint is DISMISSED for lack of jurisdiction.
However, the CA affirmed the Labor Arbiter’s Decision and set aside the Decision of the NLRC.
ISSUE:
Whether or not the present case is an intra-corporate controversy within the jurisdiction of the regular courts or
an ordinary labor dispute that the Labor Arbiter may properly take cognizance of.
HELD:
1. Respondent Balagtas's dismissal is an intra-corporate controversy.
A two-tier test must be employed to determine whether an intra-corporate controversy exists in the present
case, viz.: (a) the relationship test, and (b) the nature of the controversy test.
A dispute is considered an intra-corporate controversy under the relationship test when the relationship
between or among the disagreeing parties is any one of the following: (a) between the corporation,
partnership, or association and the public; (b) between the corporation, partnership, or association and its
stockholders, partners, members, or officers; ( c) between the corporation, partnership, or association and the
State as far as its franchise, permit or license to operate is concerned; and ( d) among the stockholders,
partners, or associates themselves. We must now determine whether or not the Executive Vice President
position is a corporate office so as to establish the intra-corporate relationship between the parties.
One shall be considered a corporate officer only if two conditions are met, viz.: ( 1) the position occupied was
created by charter/by-laws, and (2) the officer was elected (or appointed) by the corporation's board of
directors to occupy said position.
The Executive Vice President position is one of the corporate offices provided in petitioner North Star's By-
laws. Section 25 of the Corporation Code32 explicitly provides for the election of the corporation's president,
treasurer, secretary, and such other officers as may be provided for in the by-laws. In interpreting this
provision, the Court has ruled that if the position is other than the corporate president, treasurer, or secretary,
it must be expressly mentioned in the bylaws in order to be considered as a corporate office.
North Star’s by-laws provides that there may be one or more vice president positions in petitioner North Star
and, by virtue of its by-laws, all such positions shall be corporate offices. The next question is whether or not
the phrase "one or more vice president" in the above-cited provision of the by-laws includes the Executive
Vice President position held by respondent Balagtas.
The use of the phrase "one or more" in relation to the establishment of vice president positions without
particular exception indicates an intention to give petitioner North Star's Board ample freedom to make several
vice president positions available as it may deem fit and in consonance with sound business practice. To
require that particular designation/variation of each vice-president (i.e., executive vice president) be specified
and enumerated is to invalidate the by-laws' true intention and to encroach upon petitioner North Star's
inherent right and authority to adopt its own set of rules and regulations to govern its internal affairs. By name,
the Executive Vice President position is embraced by the phrase "one or more vice president" in North Star's
by-laws.
2. Respondent Balagtas was appointed by the Board as petitioner North Star's Executive Vice
President
While a corporate office is created by an express provision either in the Corporation Code or the By-laws,
what makes one a corporate officer is his election or appointment thereto by the board of directors. Thus,
there must be documentary evidence to prove that the person alleged to be a corporate officer was appointed
by action or with approval of the board. Petitioners Cacho and North Star assert that respondent Balagtas was
elected as Executive Vice President by the Board as evidenced by the Secretary's Certificate dated April 22,
2003.
The above-cited Secretary's Certificate overcomes respondent Balagtas's contention that she was merely the
Executive Vice President by name and was never empowered to exercise the functions of a corporate officer.
Notably, she did not offer any proof to show that her duties, functions, and compensation were all determined
by petitioner Cacho as petitioner North Star's President.
Respondent Balagtas also denies her status as one of petitioner North Star's corporate officers because she
was not listed as such in petitioner North Star's 2003 General Information Sheet (GIS). But the GIS neither
governs nor establishes whether or not a position is an ordinary or corporate office. At best, if one is listed in
the GIS as an officer of a corporation, his/her position as indicated therein could only be deemed a regular
office, and not a corporate office as it is defined under the Corporation Code.
To be considered an intra-corporate controversy, the dismissal of a corporate officer must have something to
do with the duties and responsibilities attached to his/her corporate office or performed in his/her official
capacity.
The termination complained of is intimately and inevitably linked to respondent Balagtas's role as petitioner
North Star's Executive Vice President: first, the alleged misappropriations were committed by respondent
Balagtas in her capacity as vice president, one of the officers responsible for approving the disbursements and
signing the checks. And, second, these alleged misappropriations breached petitioners Cacho's and North
Star's trust and confidence specifically reposed m respondent Balagtas as vice president. That all these
incidents are adjuncts of her corporate office lead the Court to conclude that respondent Balagtas's dismissal
is an intra-corporate controversy, not a mere labor dispute.
All told, the issue in the present case is an intra-corporate controversy, a matter outside the Labor Arbiter's
jurisdiction.
PAL v. ALPAP
G.R. No. 143686 January 15, 2002 J. Ynares-Santiago
petitioners PHILIPPINE AIRLINES INC.
respondents AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES
summary Pilot retired by PAL pursuant to CBA. Secretary of Labor held that PAL should first consult w/ pilot
before retiring him. Court held that this would defeat the exercise of management of its option to retire
employees.
Facts of the case
PAL and ALPAP, the exclusive bargaining representative of all commercial airline pilots of PAL, stemmed from
petitioner's act of unilaterally retiring airline pilot Captain Albino Collantes under Section 2, Article VII, of the
1967 PAL-ALPAP Retirement Plan.
ALPAP claims illegal dismissal and union busting and filed a Notice of Strike with DOLE. Pursuant to Article
263 (g) of the Labor Code, the Secretary of the DOLE assumed jurisdiction over the labor dispute.
The Secretary issued the assailed order upholding PAL’s action of unilaterally retiring Capt. Collantes and
recognizing the same as a valid exercise of its option under the CBA. He further ordered that the basis of the
computation of Captain Collantes’ retirement benefits should be Article 287 of the Labor Code (as amended
by Republic Act No. 7641) and not Section 2, Article VII, of the PAL-ALPAP Retirement Plan and in the
exercise of its option to retire pilots, PAL should first consult the pilot concerned before implementing his
retirement.
CA: Denied appeal and motion for reconsideration.
Issue: Whether the CBA or LC 287 should be the basis for computation of retirement pay in this case. CBA.
WON PAL has to first consult w/ the pilot concerned before retiring him? NO.
Ratio: An employee’s retirement benefits under any collective bargaining and other agreement shall not be
less than those provided in the Labor Code.
PAL-ALPAP Retirement Plan (CBA):
SECTION 1. Normal Retirement. (a) Any member who completed twenty (20) years of service as a pilot for
PAL or has flown 20,000 hours for PAL shall be eligible for normal retirement. The normal retirement date is
the date on which he completes 20 years of service, or on which he logs his 20,000 hours as a pilot for PAL.
The member who retires on his normal retirement shall be entitled to either (a) a lump sum payment of
P100,000 or (b) to such termination pay benefits to which he may be entitled to under existing laws, whichever
is the greater amount.
SECTION 2. Late Retirement. Any member who remains in the service of the Company after his normal
retirement date may retire either at his option or at the option of the Company and when so retired he shall be
entitled either (a) to a lump sum payment of P5,000 for each completed year of service rendered as a pilot, or
(b) to such termination pay benefits to which he may be entitled under existing laws, whichever is the greater
amount.
Upon retirement, each pilot stands to receive the full amount of the contribution. In sum, therefore,
the pilot gets an amount equivalent to 240% of his gross monthly income for every year of service he rendered
to petitioner. This is in addition to the amount of not less than P100,000 that he shall receive under the 1967
Retirement Plan.
LC 287…That an employee’s retirement benefits under any collective bargaining and other agreements shall
not be less than those provided herein. In the absence of a retirement plan or agreement plan providing for
retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years
or more, but not beyond sixty-five (65) years which is hereby declared as the compulsory retirement age, who
has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months
being considered as one whole year. Unless the parties provide for broader inclusions, the term ‘one-half (1/2)
month salary’ shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service incentive leaves.
The retirement benefits that a pilot would get under the provisions of the above-quoted Article 287 of the Labor
Code are less than those that he would get under the applicable retirement plans of petitioner.
Retirement of an employee may be done upon initiative and option of the management.
Where there are cases of voluntary retirement, the same is effective only upon the approval of management.
The fact that there are some supervisory employees who have not yet been retired after 25 years with the
company or have reached the age of sixty merely confirms that it is the singular prerogative of management,
at its option, to retire supervisors or rank-and-file members when it deems fit. There should be no unfair labor
practice committed by management if the retirement of private respondents were made in accord with the
agreed option.
The requirement to consult the pilots prior to their retirement defeats the exercise by management of its option
to retire the said employees. It gives the pilot concerned an undue prerogative to assail the decision of
management. Due process only requires that notice be given to the pilot of petitioner’s decision to retire him.
Hence, the Secretary of Labor overstepped the boundaries of reason and fairness when he imposed on
petitioner the additional requirement of consulting each pilot prior to retiring him. Furthermore, when the
Secretary of Labor and Employment imposed the added requirement that petitioner should consult its pilots
prior to retirement, he resolved a question, which was outside of the issues raised, thereby depriving petitioner
an opportunity to be heard on this point.
LRTA V. ALVAREZ
Facts: LRTA is a government-owned and controlled corporation created by virtue of Executive Order No. 603,
for the purpose of the construction, operation, maintenance, and/or lease of light rail transit system in the
Philippines. Private respondents Bienvenido R. Alvarez, Carlos S. Velasco, et.al., are former employees of
Meralco Transit Organization, Inc. (METRO).
On June 8, 1984, METRO and LRTA entered into an agreement called "Agreement for the Management and
Operation of the Light Rail Transit System" (AMO-LRTS) for the operation and management of the light rail
transit system. LRTA shouldered and provided for all the operating expenses of METRO. Also, METRO signed
a Collective Bargaining Agreement (CBA) with its employees wherein provisions on wage increases and
benefits were approved by LRTA's Board of Directors.
[12]
However, on April 7, 1989, the Commission on Audit (COA) nullified and voided the AMO-LRTS. To resolve
the issue, LRTA decided to acquire METRO by purchasing all of its shares of stocks on June 8, 1989.
METRO, thus, became a wholly-owned subsidiary of LRTA. Since then, METRO has been renamed to Metro
Transit Organization, Inc. Also, by virtue of the acquisition, LRTA appointed the new set of officers, from
chairman to members of the board, and top management of METRO. LRTA and METRO declared and
continued the implementation of the AMO-LRTS and the non-interruption of employment relations of the
employees of METRO. They likewise continued the establishment and funding of the Metro, Inc. Employees
Retirement Plan which covers the past services of all METRO regular employees from the date of their
employment. They confirmed that all CBAs remained in force and effect. LRTA then sanctioned the CBA's of
the union of rank and file employees and the union of supervisory employees.
On November 17, 1997, the METRO general manager (who was appointed by LRTA) announced in a
memorandum that its board of directors approved the severance/resignation benefit of METRO employees at
one and a half (1 1/2) months salaries for every year of service.
On July 25, 2000, the union of rank and file employees of METRO declared a strike over a retirement fund
dispute. By virtue of its ownership of METRO, LRTA assumed the obligation to update the Metro, Inc.
Employees Retirement Fund with the Bureau of Treasury.
A few months later, or on September 30, 2000, LRTA stopped the operation of METRO. On April 5, 2001,
METRO's Board of Directors approved the release and payment of the first fifty percent (50%) of the
severance pay to the displaced METRO employees, including private respondents, who were issued
certifications of eligibility for severance pay along with the memoranda to receive the same.
Upon the request of the COA corporate auditor assigned at LRTA, COA issued an Advisory Opinion through
its Legal Department, and an Advise (sic) from Chairman Guillermo N. Carague, that LRTA is liable, as owner
of its wholly-owned subsidiary METRO, to pay the severance pay of the latter's employees.
LRTA earmarked an amount of P271,000,000.00 for the severance pay of METRO employees in its approved
corporate budget for the year 2002. However, METRO only paid the first fifty percent (50%) of the severance
pay of private respondents,
Private respondents repeatedly and formally asked LRTA, being the principal owner of METRO, to pay the
balance of their severance pay, but to no avail. Thus, they filed a complaint before the Arbitration Branch of
the NLRC, praying for the payment of 13th month pay, separation pay, and refund of salary deductions, against
LRTA and METRO.
Labor Arbiter (LA) Elias H. Salinas ruled in favor of private respondents.
LRTA argues that the LA and NLRC do not have jurisdiction over the case. LRTA cites Light Rail Transit
Authority v. Venus, Jr.(Venus) to support its claim.
Issue: Whether the LA and NLRC has jurisdiction over the case filed against LRTA?
Ruling: Yes. LRTA's reliance on Venus is misplaced. Venus involves the illegal dismissal of the complainants.
The proceedings a quo is not for an illegal dismissal case, but for the monetary claims of respondents against
METRO and LRTA. Thus, unlike in Venus, this case does not involve the issue of respondents' employment
with METRO or LRTA. In fact, in Mendoza, this Court held, "[a]s we see it, the jurisdictional issue should not
have been brought up in the first place because the respondents' claim does not involve their employment with
LRTA. There is no dispute on this aspect of the case. The respondents were hired by METRO and, were,
therefore its employees.
The only issue, therefore, as in Mendoza, is whether LRTA can be made liable by the labor tribunals for
private respondents' money claim despite the absence of an employer-employee relationship, and though
LRTA is a government-owned and controlled corporation.
We rule in the affirmative. In Mendoza, this Court upheld the jurisdiction of the labor tribunals over LRTA,
citing Philippine National Bank v. Pabalan:
x x x By engaging in a particular business thru the instrumentality of a corporation, the government divests
itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law
governing private corporations.[56]
This Court further ruled that LRTA must submit itself to the provisions governing private corporations, including
the Labor Code, for having conducted business through a private corporation, in this case, METRO.
In this case, the NLRC accordingly declared, "[LRTA's] contractual commitments with [METRO] and its
employees arose out of its business relations with [METRO] which is private in nature. Such private relation
was not changed notwithstanding the subsequent acquisition by [LRTA] of full ownership of [METRO] and
take-over of its business operations at LRT."
In view of the foregoing, we rule that the CA did not err when it upheld the jurisdiction of the labor tribunals
over private respondents' money claims against LRTA.