[ G.R. No.

52824, March 16, 1988 ]
REYNALDO BAUTISTA, PETITIONER, VS. HON. AMADO C. INCIONG, IN HIS CAPACITY AS DEPUTY MINISTER OF LABOR AND ASSOCIATED LABOR UNIONS (ALU), RESPONDENTS.
This is an illegal dismissal case. The respondent Deputy Minister dismissed the complaint of herein petitioner principally on the ground that no employer-employee relationship existed between the petitioner and respondent Associated Labor Unions (ALU). The facts as found by the National Capital Region Director of the then Ministry of Labor (MOL), Region IV are as follows: "Complainant (petitioner) was employed by ALU as 'Organizer' in 1972 with a starting salary of P250.00 a month. As such, he paid his monthly SSS contributions, with the respondent as his employer. On March 15, 1979, He was left in the office of ALU while his other-co-organizers were in Cainta, Rizal attending a certification election at Chrysler Philippines, as he was not the organizer assigned in said company. On March 16, 1979, he went on sick leave for ten (10) days. His SSS sickness benefit application form signed by ALU's physician was given to ALU for submission to the SSS. On March 16, 1979, complainant reported back for work upon expiration of his leave but was informed by ALU's Area Vice-President for Luzon of his termination effective March 15, 1979. Hence, this complaint filed on March 28, 1979. On April 18, 1979, however, ALU filed a clearance application to terminate complainant's services effective March 16, 1979 on the ground of abandonment of work." (p. 48, Rollo) Based on these findings, the Director ruled in favor of the petitioner and ordered the respondent Union to reinstate the petitioner to his former position with full backwages and to pay him emergency allowance, 13th month pay and to refund his Mutual Aid Fund Deposit in the amount of P370.00. Respondent ALU appealed to the Ministry of Labor. On October 23, 1979, the respondent Deputy Minister set aside the order of the Director and dismissed the petitioner's complaint for lack of merit. In his order, the Deputy Minister found that the petitioner was merely accommodated by the respondent union after he was dismissed by his former employer sometime in 1972 and that his membership coverage with the SSS which shows that respondent ALU is the one paying the employer's share in the premiums is not conclusive proof that respondent is the petitioner's employer because such payments were performed by the respondent as a favor for all those who were performing full time union activities with it to entitle them to SSS benefits. The Deputy Minister further ruled that the non-existence of an employer-employee relationship between the parties is bolstered by the fact that respondent ALU is not an entity for profit but a duly registered labor union whose sole purpose is the representation of its bona fide organization units where it is certified as such. In this petition, the petitioner contends that the respondent Deputy Minister committed grave abuse of discretion in holding that there was no employer-employee relationship between him and the respondent union so much so that he is not entitled to the benefits that he is praying for. We agree with the petitioner. There is nothing in the records which support the Deputy Minister's conclusion that the petitioner is not an employee of respondent ALU. The mere fact that the respondent is a labor union does not mean that it cannot be considered an employer of the persons who work for it. Much less should it be exempted from the very labor laws which it espouses as a labor organization. In the case of Brotherhood Labor Unity Movement in the Philippines v. Zamora, (147 SCRA 49, 54), we outlined the factors in ascertaining an employer-employee relationship:

"In determining the existence of an employer-employee relationship, the elements that are generally considered are the following: (a) the selection 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 respect to the means and methods by which the work is to be accomplished. It is the so-called 'control test' that is the most important element (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. Ople, 131 SCRA 72)." "In the case at bar, the Regional Director correctly found that the petitioner was an employee of the respondent union as reflected in the latter's individual payroll sheets and shown by the petitioner's membership with the Social Security System (SSS) and the respondent union's share of remittances in the petitioner's favor. Even more significant, is the respondent union's act of filing a clearance application with the MOL to terminate the petitioner's services. Bautista was selected and hired by the Union. He was paid wages by the Union. ALU had the power to dismiss him as indeed it dismissed him. And definitely, the Union tightly controlled the work of Bautista as one of its organizers. There is absolutely no factual or legal basis for Deputy Minister Inciong's decision. We are, thus, constrained to reverse the findings of the respondent Deputy Minister. However, the records show that antipathy and antagonism between the petitioner and the respondent union militate against the former's reinstatement. ALU would not want to have a union organizer whom it does not trust and who could sabotage its efforts to unionize commercial and industrial establishments. Severance pay, therefore, is more proper and in order. As we have ruled in the case of Asiaworld Publishing House, Inc. v. Hon. Blas Ople, et al., (G.R. No. 56398, July 23, 1987) quoting the case of Balaquezon EWTU v. Zamora, (97 SCRA 5, 8): "'It should be underscored that the backwages are being awarded on the basis of equity or in the nature of severance pay. This means that a monetary award is to be paid to the striking employees as an alternative to reinstatement which can no longer be effected in view of the long passage of time or because of the realities of the situation. (Underscoring supplied) WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Deputy Minister is ANNULLED and SET ASIDE. The Order of Regional Director Francisco L. Estrella is REINSTATED and ordered executed but instead of returning the petitioner to his former position, the private respondent is ordered to pay him an amount equal to his backwages for only three years and the separation pay to which he may be entitled as of the end of the three year period under the applicable law or collective bargaining agreement.

[ G.R. No. 87211, March 05, 1991 ]
JOVENCIO L. MAYOR, PETITIONER, VS. HON. CATALINO MACARAIG, HON. GUILLERMO CARAGUE, HON. RIZALINA CAJUCOM, HON. FRANKLIN DRILON, RESPONDENTS, LOURDES A. SALES AND RICARDO OLAIREZ, PETITIONERSINTERVENORS.
Five (5) special civil actions are hereby jointly decided because they involve one common, fundamental issue, the constitutionality of Republic Act No. 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 National Labor Relations Commission,‖ and operates to remove the incumbents upon the appointment and qualification of their successors. The law is entitled, ―AN ACT TO EXTEND PROTECTION TO LABOR, STRENGTHEN THE CONSTITUTIONAL RIGHTS OF WORKERS TO SELF-ORGANIZATION, COLLECTIVE BARGAINING AND PEACEFUL CONCERTED ACTIVITIES, FOSTER INDUSTRIAL PEACE AND HARMONY, PROMOTE THE PREFERENTIAL USE OF VOLUNTARY MODES OF SETTLING LABOR DISPUTES AND REORGANIZE THE NATIONAL LABOR RELATIONS COMMISSION, AMENDING PRESIDENTIAL DECREE NO. 441, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES.‖[1] The provision directly dealing with the reorganization of the National Labor Relations Commission is Section 35. It reads as follows:[2] ―SEC. 35. Equity of the Incumbent. Incumbent career officials and rank-and-file employees of the National Labor Relations Commission not otherwise affected by the Act shall continue to hold office without need of reappointment. However, consistent with the need to professionalize the higher levels of officialdom invested with adjudicatory powers and functions, and to upgrade their qualifications, ranks, and salaries or emoluments, all positions of the Commissioners, Executive Labor Arbiters and Labor Arbiters of the present National Labor Relations Commission are hereby declared vacant. However, subject officials shall continue to temporarily discharge their duties and functions until their successors shall have been duly appointed and qualified.‖ The first of these five consolidated cases was filed by Labor Arbiter Jovencio Ll. Mayor on March 8, 1989. In the year that followed, eight other officers of the Commission, as initiators of their own separate actions or as intervenors, 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 Ricardo Olairez Jovencio Ll. Mayor, a member of the Philippine Bar for fifteen (15) years, was appointed Labor Arbiter in 1986 after he had, according to him, met the prescribed qualifications and passed ―a rigid screening process.‖ Fearing that he would be removed from office on account of the expected reorganization, he filed in this Court the action now docketed as G.R. No. 87211. His fears proved groundless, however. He was in fact reappointed a Labor Arbiter on March 8, 1990. Hence, as he himself says, the case became moot as to him. Like Mayor, both intervenors Lourdes A. Sales and Ricardo N. Olairez were appointed Labor Arbiters in 1986, but unlike Mayor, were not among the one hundred fifty-one (151) Labor Arbiters reappointed by the President on March 8, 1990. G.R. No. 90044: Pascual Y. Reyes; and Intervenor Eugenio I. Sagmit, Jr. 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 in virtue of an appointment extended to him on May 30, 1975. As specified by Administrative Order No. 10 of the Secretary of Labor, dated July 14, 1975, the functions of his

that they be paid all salaries.A. on December 18. 1989 to the effect that the offices of Executive Director and Deputy Executive Director had been abolished by Section 35. according to them. Lucas. No. 1986.‖ Reyes moved for reconsideration on August 29. Lucas and Dulay new appointments as Commissioners of the NLRC despite the fact that. On November 18. 1989. G.R. Sagmit..‖ and ―is about to retire at sixty-five (65). assisted by a Deputy Executive Director. Later. declared that the ―Executive Director. the terms of Encarnacion and Lucas would expire on October 23. They all pray that their removal be pronounced unconstitutional and void and they be declared Commissioners lawfully in office.R. 1987. 1986 shall hold office for a term of six (6) years ** (but of those thus appointed) three shall hold office for four (4) years. Lucas was however offered the position of Assistant Regional Director by Secretary Drilon and then by Acting Secretary Dionisio de la Serna (by letter dated January 9. alternatively. but since Congress adjourned on December 22. believing it imported a demotion. 1989 without approving their appointments. Jr. 47 of President Aquino.A. and that of Dulay. 1992. 1989‖). 78951. were appointed National Labor Relations Commissioners on October 20. Their new appointments were submitted to Congress. amended. No. G. and three for two (2) years ** without prejudice to reappointment. aided by the Executive Clerk. Encarnacion and Daniel M.‖ in 1991.office were “to take charge of all administrative matters of the Commission and to have direct supervision over all units and personnel assigned to perform administrative tasks. Lucas Petitioners Rosario G. said appointments became functus officio. issued by the President on July 25. he instituted the action at bar. Article 215 of the Labor Code by providing that ―the Commissioners appointed under Executive Order No. shall exercise the administrative functions of the Commission.‖ Under Executive Order No. and ―their functions transferred to the Chairman. 91547: Ceferino Dulay. 1987 after twenty-five (25) years of government service. 252. appointed as such on October 27.” Reyes states that he has been ―a public servant for 42 years. 1990 which referred to his appointment as such Assistant Regional Director supposedly ―issued by the President on November 8. Jr.R.” and Article 213 of the Labor Code. or more precisely on November 19. 1989. 6715. 1988). 47 dated September 10. No other appointments were thereafter extended to Encarnacion and Dulay. as amended. Lucas declined the offer. and Commissioner Ceferino E. Dulay was appointed Presiding Commissioner of the Third Division. No. June 28. the President extended to Encarnacion. R. was Reyes‘ Deputy Executive Director. but when no action was allegedly taken thereon. 910 and the Resolution re Judge Mario Ortiz. after the Commission was reorganized pursuant to Executive Order No. The petitioner-in-intervention. Lucas was designated Presiding Commissioner of the Commission‘s Second Division. Eugenio I. Both Reyes and Sagmit were informed that they had been separated from employment upon the effectivity of R. benefits and emoluments accruing to them for the unexpired portions of their six-year terms and allowed to enjoy retirement benefits under applicable laws (pursuant to R. pursuant to a Memorandum-Order issued by then Secretary of Labor Franklin Drilon on August 17. Rosario G. and Daniel M. 1986. Executive Order No. 252. in relation to Section 5 of said Act.A. No. Sagmit was afterwards granted leave to intervene in the action. G. Encarnacion. they had not been served with notice of the termination of their services as incumbent commissioners. 6715 being then already in effect. 1992. and no vacancy existed in their positions. . or. 90044. No.

falls within .”[3] according to which the public respondents 1) considered as effectively separated from the service inter alia. issued by Labor Secretary Drilon. G. Diokno. No. Zapanta (Associate Commissioner. relating to the constitutionality of the provisions of Republic Act No. as the statute states. 1990. No. quondam Dean of the College of Law of the University of the Philippines. Gonzaga. Second Division). and salaries or emoluments. 91730: Conrado Maglaya Petitioner Conrado Maglaya alleges that he has been ―a member of the Philippine Bar for thirty-six (36) years of which 31 years ** (had been) devoted to public service. and as Labor Arbiter in the Department of Labor and Employment from October.‖ that he was appointed Labor Arbiter on May 30.‖ the Constitution declares. They may all be reduced to one basic question. Bernardo. or labor arbiter -. (2) Domingo H. Rayala. six (6) were reappointed. (3) Lourdes C. Javier (Presiding Commissioner. Jr. ―shall be removed or suspended except for cause provided by law. The right is secured to all employees in private as well as in public employment. Third Division [Luzon except NCR]). Buat (Presiding Commissioner. thereafter caused the appointment of other persons to the new positions specified in said statute: of Chairman. 1986.E. Romeo B. Appointed Chairman was Hon.commissioner. ―No officer or employee in the civil service.‖ As everyone knows. and his attempt to obtain a reconsideration of his exclusion therefrom and bring about his reinstatement as Labor Arbiter was unavailing. and Leon G. 6715. Putong. Batuhan. (4) Ernesto G. and 2) consequently. Deputy Executive Clerk. joined the Government service in 1974. Edna Bonto Perez (as Presiding Commissioner. and (6) Oscar N. Other members appointed to the reorganized Commission were Vicente S. 6715. Veloso III. Commissioners. Irenea E. Rustico L. administrative officer. Ceniza. The old positions were declared vacant because. Fifth Division). G. 94518: Rolando D. and Labor Arbiters of the reorganized National Labor Relations Commission. security of tenure is a protected right under the Constitution.‖[4] There can scarcely be any doubt that each of the petitioners -. Bartolome Carale. Ladrido III (Presiding Commissioner.Of the incumbent Commissioners as of the effectivity of R. (5) Musib M. Fifth Division [Mindanao]). Bernabe S. namely: (1) Hon. of ―the need to professionalize the higher levels of officialdom invested with adjudicatory powers and functions. Gambito Rolando Gambito passed the bar examinations in 1971. Rogelio I.R. serving for sixteen years in the Department of Health. the last 24 years in the field of labor relations law. Executive Clerk. 1989. ranks. 161 dated November 18. The Basic Issue A number of issues have been raised and ventilated by the petitioners in their separate pleadings. 6715 DECLARING VACANT “all positions of the Commissioners. and to upgrade their qualifications. Executive Labor Arbiters and Labor Arbiters of the present National Labor Relations Commission. Second Division [NCR]). Abella (Associate Commissioner. Fourth Division [Visayas]). 1975 and ―was retained in such position despite the reorganization under the Freedom Constitution of 1986 ** (and) later promoted to and appointed by the President as Commissioner of the ** (NLRC) First Division on October 23. He was not included in the list of newly appointed Labor Arbiters released on March 8.A. 1986. all holders of said positions at the time of the effectivity of said Republic Act No. Ireneo B.‖ He complains that he was effectively removed from his position as a result of the designation of the full complement of Commissioners in and to all Five Divisions of the NLRC by Administrative Order No. including the positions of Executive Director and Deputy Executive Director of the Commission.R.

instrumentalities. Article 213 of the Labor Code envisaged the NLRC as being an integral part of the Department of Labor and Employment.‖ 2. justification must be sought. and the Labor Arbiters under the prior legislation. Such an act would constitute.. Now. and will have to be struck down on that account. under the circumstances. So.‖ RA 6715 would appear to have made the Commission somewhat more autonomous. Amendments as Regards the NLRC and the Commissioners First. ranks.e. It is immediately apparent that there is no express abolition in RA 6715 of the petitioners‘ positions. Prior to its amendment by RA 6715. it can not be conceded the power to simply pronounce those offices vacant and thereby effectively remove the occupants or holders thereof from the civil service. expressly or impliedly.[6] Abolition of an office is obviously not the same as the declaration that that office is vacant. 1. an infringement of the constitutional guarantee of security of tenure. unless sooner removed ―for cause provided by law. as . the Executive Director. composition. the petitioners‘ removal from their positions may be defended and sustained. ―be a National Labor Relations Commission in the Department of Labor and Employment **. The inquiry therefore should be whether or not RA 6715 has worked such an abolition of the petitioners‘ offices.‖ So. duties and functions of the petitioners‘ offices under the old rules and those corresponding thereto under the new law. with a view to discovering the changes thereby effected on the nature.the concept of an ―officer or employee in the civil service‖ since the civil service ―embraces all branches. An examination of the relevant provisions of RA 6715. and the Labor Arbiters had the right to retain their positions until the age of compulsory retirement. fails to disclose such essential inconsistencies. the Deputy Executive Director. a recognized cause for removal or termination of employment of a Government officer or employee is the abolition by law of his office as a result of reorganization carried out by reason of economy or to remove redundancy of functions. It can not be justified by the professed ―need to professionalize the higher levels of officialdom invested with adjudicatory powers and functions. and salaries or emoluments. ―There shall.‖ it said. This is the only mode by which. and agencies of the Government. Nature and Composition of the Commission. in an implied abolition thereof. i. unless sooner removed ―for cause provided by law. subdivisions. A. and to upgrade their qualifications. Article 213 now declares that.‖ None of them could be deemed to be serving at the pleasure of the President. Generally 1. ―There shall be a National Labor Relations commission which shall be attached to the Department of Labor and employment for program coordination only **. ordain the abolition of the petitioners‘ positions or their removal from their offices. including government-owned or controlled corporations with original charters. powers. as regards the National Labor Relations Commissioners. and there is no claim that the petitioners‘ separation from the service is due to a cause other than RA 6715. Tripartite representation was to a certain extent restored in the Commission. duties and functions of the Commission and the Commissioners. too. if at all.‖ The Constitution does not. While it is undoubtedly a prerogative of the legislature to abolish certain offices. the Executive Director and Deputy Executive Director.‖[5] The Commissioners thus had the right to remain in office until the expiration of the terms for which they had been appointed. The same Section 213. that resulting from an irreconcilable inconsistency between the nature. or clear and explicit constitutional mandate for such termination of employment. on its face. of course.

appointed for a term of six (6) years -. provides that 1) the Commission ―shall sit en banc only for purposes of promulgating rules and regulations governing the hearing and disposition of cases before any of its divisions and regional branches and formulating policies affecting its administration and operations.said Commission. as well as adjudicatory and other powers. the Commission was vested with rule-making and administrative authority.‖ but 2) it ―shall exercise its adjudicatory and all other powers. once they assume office. 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 the ex officio Chairman (the Secretary of Labor) -. and Appellate Jurisdiction over Fixed Territory Other changes related to the official station of the Commission and its divisions. on the other hand. on the one hand.” D. and exercise jurisdiction over cases ―from the Visayas and Mindanao. and the appellate authority of the divisions is exclusive “within their respective territorial jurisdiction. on the other. Prescribed by the old law as qualifications for commissioners -. then exercised both administrative and adjudicatory powers -.‖ However. Allocation of Powers Between NLRC En Banc and its Divisions Another amendment was made in respect of the allocation of powers and functions between the Commission en banc. respectively. But whereas under the old law. now provides that the Chairman and fourteen (14) members composing the NLRC shall be chosen from the workers‘.amended.‖ and the Fourth and Fifth Divisions have their main offices in Cebu and Cagayan de Oro City. and the territory over which the divisions could exercise exclusive appellate jurisdiction.‖ respectively. ―the members nominated by the workers and employers organizations shall divest themselves of any affiliation with or interest in the federation or association to which they belong. and (b) have at least five years‘ experience in handling labormanagement relations. employers‘ and the public sectors. as amended by RA 6715.were that they (a) be members of the Philippine bar. and could sit en banc or in divisions of three (3) members each. functions and duties through its divisions. Both under the old and the amended law. the First and Second Divisions have their official station in Metropolitan Manila and ―handle cases coming from the National Capital Region. 2. (b) engagement in the practice of law for at . with the latter to be chosen from among the recommendees of the Secretary of Labor and Employment.‖ C.‖ B. and its divisions. the Commission en banc and its divisions had their main office in Metropolitan Manila. The Chairman and the four (4) remaining members shall come from the public sector.‖ the Third Division has its main office also in Metropolitan Manila but would have appellate jurisdiction over ―cases from other parts of Luzon. Qualifications and Tenure of Commissioners Revisions were also made by RA 6715 with respect to the qualifications and tenure of the National Labor Relations Commissioners. as follows: ―Five (5) members each shall be chosen from among the nominees of the workers and employers organizations. Under the law now.[7] RA 6715. requires (a) membership in the bar. in other words. and appeals could be taken to them from decisions of Labor Arbiters regardless of the regional office whence the case originated. functions and duties. Official Stations. 1.the law now. Under the old law.

medicare and maternity benefits. hours of work and other terms and conditions of employment. . (c) at least five years‘ experience or exposure in the field of labor-management relations.‖ On the other hand. The exclusive. RA 6715 does not specify any fixed number of labor arbiters.‖ but in addition ―must have been in the practice of law in the Philippines for at least seven (7) years. including questions involving the legality of strikes and lockouts.‖ however. hours of work and other terms and conditions of employment. (2) Termination disputes. whether agricultural or non-agricultural: (1) Unfair labor practice cases. and were ―subject to the Civil Service Law. rules and regulations. (3) If accompanied with a claim for reinstatement. with at least three (3) years experience or exposure in the field of labor-management relations. residence in the region where the commissioner is to hold office. and are subject to the Civil Service Law. whether agricultural or non-agricultural: (1) Unfair labor practice cases. social security. RA 6715 requires that the ―Executive Labor Arbiters and Labor Arbiters shall likewise be members of the Philippine Bar.‖ For ―purposes of reappointment. (2) Those that workers may file involving wages. overtime compensation. and (d) preferably. Qualifications The old law provided for one hundred fifty (150) labor arbiters assigned to the different regional offices or branches of the Department of Labor and Employment (including sub-regional branches or provincial extension units). unless they are sooner removed for cause as provided by law or become incapacitated to discharge the duties of their office. Some changes were introduced by RA 6715. The old law declared that Executive Labor Arbiters and Labor Arbiters should be members of the Bar. B. They were appointed by the President upon recommendation of the Chairman. rules and regulations. including those based on non-payment or underpayment of wages. but simply provides that there shall be as many labor arbiters as may be necessary for the effective and efficient operation of the Commission. 2. The commissioners appointed shall hold office during good behavior until they reach the age of sixty-five (65) years.‖ They are appointed by the President. on recommendation of the Secretary of Labor and Employment. (3) All money claims of workers. those cases that workers may file involving wages. and (5) Cases arising from any violation of Article 265 of this Code. ―incumbent Executive Labor Arbiters and Labor Arbiters who have been engaged in the practice of law for at least five (5) years may be considered as already qualified. except claims for employees‘ compensation. the exclusive original jurisdiction of labor arbiters comprehended the following cases involving all workers. Exclusive Original Jurisdiction Before the effectivity of RA 6715.least 15 years. each regional branch being headed by an Executive Labor Arbiter. (4) Cases involving household services. original jurisdiction of Labor Arbiters now embraces the following cases involving all workers. indicated by italics in the enumeration which shortly follows. separation pay and other benefits provided by law or appropriate agreement. rates of pay. with at least two (2) years experience in the field of labor management relations. Amendments Regarding Executive Labor Arbiters and Labor Arbiters A.

The provisions conferring a somewhat greater measure of autonomy. 6715 did not abolish the NLRC. whether it performs administrative or rule-making functions or exercises appellate jurisdiction to review decisions and final orders of the Labor Arbiters. without extension. RA 6715 provides that ―Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. third. the Secretary of Labor is no longer ex officio Chairman of the Commission. (6) Except claims for employees compensation. as under the former law. Now. the Executive Director and the Deputy Executive Director were obviously themselves subject to the supervision and control of the head of office.000. who ―shall have the administrative supervision over the Commission and its regional branches and all its personnel. requiring that its membership be drawn from tripartite sectors (workers. as earlier stated. or change its essential character as a supervisory and adjudicatory body. the ex officio Chairman of the National Labor Relations Commission (the Secretary of Labor). including those of persons in domestic or household service. changing the official stations of the Commission‘s divisions.‖ In this function. including the Executive Labor Arbiters and Labor Arbiters. should operate only prospectively. The office of Executive Director is nowhere mentioned in RA 6715. his chief functions were “to take charge of all administrative matters of the Commission and to have direct supervision over all units and personnel assigned to perform administrative tasks.(4) Claims for actual. employees and the public sector). exemplary and other forms of damages arising from the employer-employee relations. medicare and maternity benefits.‖ The positions of Deputy Executive Clerks have also been created whose main role is to assist the other divisions of the Commission (the second. Said Executive Clerk is given the additional responsibility of assisting the Commission en banc and the First Division. Under said Act. except that the present statute stresses that ―even in the absence of stenographic notes. not to . there was.‖ The Executive Clerk appears to be the officer who used to be known under the old law as the Executive Director. assisted by a Deputy Executive Director. fourth and fifth) ―in the performance of such similar or equivalent functions and duties as are discharged by the ** Deputy Clerk(s) of the Court of Appeals. and even those prescribing higher or other qualifications for the positions of Commissioner which. in the performance of their functions.‖[9] More particularly. the Labor Arbiters are given thirty (30) calendar days after the submission of the case by the parties to decide the case. all other claims arising from employer-employee relations. involving an amount exceeding five thousand pesos (P5. Amendments as Regards the Executive Director and Deputy Executive Director Prior to RA 6715. moral. the NLRC continues to act collegially. who was charged with the ―exercise (of) the administrative functions of the Commission.‖ the period to decide is still thirty days.‖ Summing up 1. an Executive Director. There has been created the office of Chairman. in performing ―such similar or equivalent functions and duties as are discharged by the Clerk of Court ** of the Court of Appeals. if at all. including questions involving the legality of strikes and lockouts. Furthermore. as before. the law says. Republic Act No.‖ 3. whether or not accompanied with a claim for reinstatement. Under RA 6715.[8] (5) Cases arising from any violation of Article 264 of this Code. without extension. social security.”[10] Although not so stated in the law.00). he shall be ―aided by the Executive Clerk of the Commission. or the Commission itself.

91547. There is no reason to suppose that these could be higher than those for Executive Director and Deputy Executive Director. of certain classes of labor disputes. unless they opt for retirement. emoluments and benefits from the dates of their removal up to the time they are reinstated. Neither does the Act specify the qualifications for Executive Clerk and Deputy Executive Clerks. No. Daniel M. GRANTED. There is no essential change from the prescribed and basically administrative duties of these positions and. . 6715 and the old law.R. or that anything inheres in these positions that would preclude their incumbents from being named Executive Clerk and Deputy Executive Clerks. In G. Sagmit. it is ORDERED that said petitioners be paid all salaries. 79857. petitioners-intervenors Lourdes A.R. In G. in either case with full back salaries. and there is. and 94518. Their original and exclusive jurisdiction remains substantially the same under both the old law and the new. 90044. pursuant to RA No. benefits and emoluments accruing to them for the unexpired portions of their six-year terms and allowed to enjoy retirement benefits under applicable laws. 910 and this Court‘s Resolution in Ortiz vs. respectively. Gambito. who replaced the Secretary of Labor as ex officio Chairman of the NLRC pursuant to RA 6715. No. Dulay. The position titles of ―Executive Clerk‖ and ―Deputy Executive Clerk(s)‖ provided for in RA 6715 are obviously not those of newly-created offices. and they are ordered reinstated as Executive Clerk and Deputy Executive Clerk. from which the logical conclusion is that what was intended was merely a change in nomenclature. powers and duties of the NLRC as to justify a conclusion that the Act in truth did not merely declare vacant but actually abolished the offices of commissioners and created others in their place. Jr. G. No. No. Commission on Elections. respectively. and conformably to the alternative prayer of the petitioners themselves. none of the petitioners having been affected or in any manner prejudiced by his appointment and incumbency as such. In G. their incumbents‘ constitutionally guaranteed security of tenure cannot be defeated by the provision for higher or other qualifications than were prescribed under the old law. and 3. WHEREFORE. there being no essential inconsistency on that score between Republic Act No. at the same time. having also been illegally removed as Labor Arbiters.R. are ordered reinstated to said positions with full back salaries. to avoid displacement of any of the incumbent Commissioners now serving.R. is likewise declared unconstitutional and void. but new appellations or designations given to the existing positions of Executive Director and Deputy Executive Director. Ceferino E. the removal of petitioners Rosario G.mention the fact that the petitioners (in G. Sales and Ricardo Olairez and petitioner Rolando D.none of these can be said to work so essential or radical a revision of the nature. not an express or implied abolition. Again. Bartolome Carale. besides. as they must be. it not appearing that any of them is unfit or has given cause for removal. 87211. emoluments and benefits from the date of their removal to that of their reinstatement.R. 91730. as NLRC Executive Director and Deputy Executive Director. and Conrado Maglaya as Commissioners of the NLRC is ruled unconstitutional and void. the petitions are. Jr. and G. Lucas. 3. no mention in the Act of the former titles. the removal of petitioner Pascual Y. 91547) have asserted without dispute that they possess the new qualifications -. and the following specific dispositions are hereby RENDERED: 1. said provision can only operate prospectively and as to new appointees to positions regularly vacated. in the first instance.R.. No. The Labor Arbiters continue to exercise the same basic power and function: the adjudication. 2. This disposition does not involve or apply to respondent Hon. Similar considerations yield the same conclusion as far as the positions of Labor Arbiters are concerned. 2. also no showing that the petitioning Arbiters do not qualify under the new law. however. 161 SCRA 812. Reyes and petitioner-in-intervention Eugenio L. Nos. Encarnacion.

This notwithstanding. VS.R. (private respondent) filed a Notice of Strike at the Department of Labor raising the issues of CBA deadlock and unfair labor practice. asserted their authority to represent the regular rank-and-file employees of Nestle. On September 21. The private respondent however. No. standing and capacity to act as such or represent the union in any manner whatsoever. PETITIONER. the resolution denying the motion for reconsideration (dated August 8. while the Cebu/Davao was represented by TUPAS. It is . and all the members of the negotiating panel for instigating and knowingly participating in a strike staged at the Makati. This special civil action of certiorari assails the resolution (dated June 5.[ G. Prior to the expiration of the CBAs for Makati and Alabang/Cabuyao. 1989). private respondent sought guidelines from the Department of Labor on how it should treat letters from several splinter groups claiming to have possessed authority to negotiate in behalf of the UFE.. 1987. Makati. UFE was certified as the sole and exclusive bargaining representative of Cagayan de Oro and Cebu/Davao units. 1987. The National Conciliation and Mediation Board (NCMB) invited the parties for a conference on February 4. 0522. On September 14. RESPONDENTS. or on June 30. being the duly elected officers of the union. The decision was later on affirmed by the respondent NLRC en banc. in a decision dated January 12. 1989) of the National Labor Relations Commission (NLRC) relative to Certified Case No. 1987 and July 28. 91025. expressed its readiness to negotiate a new CBA for Makati and Alabang/Cabuyao units but reserved the negotiation for Cagayan de Oro and Cebu/Davao considering that the issue of representation for the latter units was not yet settled. Cagayan de Oro and Cebu/Davao work locations had all expired. The records show that before the filing of said notice of strike. in Alabang/Cabuyao. 1988. Cabuyao and Cagayan de Oro on September 11. the sole and exclusive bargaining agent of all rank-and-file employees of Nestle Philippines. Philippines. On June 10. headed by its president. 1987. 1988. 1988. Mr. the respective CBAs in the four (4) units of Nestle. Under the said CBAs. Alabang. INC. The antecedents are: On June 22. The Labor Arbiter. Alabang/Cabuyao and Makati units were represented by the UFE. upheld the validity of the dismissal of said union officers. the petitioner Union of Filipro Employees. the Cagayan de Oro unit was represented by WATU. In the meantime. the Company terminated from employment all UFE Union officers. The company on the other hand. respectively. the NCMB proceeded to invite the parties to attend the conciliation meetings and to which private respondent failed to attend contending that it will deal only with a negotiating panel duly constituted and mandated in accordance with the UFE Constitution and By-laws. THE HONORABLE NLRC AND NESTLE PHILIPPINES. December 19. 1988 for the purpose of settling the dispute. Respondent company contends that. assailed the legal personality of the proponents of the said notice of strike to represent the Nestle employees. the union filed a complaint for illegal dismissal. Manuel Sarmiento. on the other hand. ―with the dismissal of UFE officers including all the members of the union negotiating panel as later on confirmed by the NLRC en banc. 1990 ] UNION OF FILIPRO EMPLOYEES. said union negotiating panel thus ceased to exist and its former members divested of any legal personality. 1987. UFE submitted to the company a list of CBA proposals.‖ The union officers. 1987 without any notice of strike filed and a strike vote obtained for the purpose. on November 2.

Alabang and Cabuyao units to the National Labor Relations Commission for compulsory arbitration.‖ (Rollo. it must be noted. ―The NLRC is further directed to call all the parties immediately and resolve the CBA deadlock within twenty (20) days from submission of the case for resolution. 1988 and August 5. belong to just one (1) union. 1989. The dispositive portion states as follows: ―WHEREFORE. Thus. above premises considered. Petitioner originally raised 13 errors committed by the public respondent. at this stage. the UFE. 180) Petitioner finds said resolution to be inadequate and accordingly. 225) On June 5. three (3) other groups in the Nestle plant in Cabuyao and two groups in the Makati office have expressed a desire to bargain with management professing alleged authorization from and by the general membership. p. would be most unwise. petitioner filed a motion asking the Secretary of Labor to assume jurisdiction over the dispute of deadlock in collective bargaining between the parties. However. . the relevant portion of which reads as follows: ―WHEREFORE. this office hereby certificates the sole issue of deadlock in CBA negotiations affecting the Makati. the parties are hereby ordered to execute and implement through their duly authorized representatives a collective bargaining agreement for a duration of five (5) years from promulgation of this Resolution. 1990. Assailing the validity of these agreements. however. the union filed a case of ULP against the company with the NLRCNCR Arbitration Branch on November 16. in its Urgent Manifestation and Motion dated September 24. These groups however.―SO ORDERED.‖ On March 20. On October 28. this petition for certiorari. Philippines. the Second Division of the NLRC promulgated a resolution granting wage increase and other benefits to Nestle‘s employees. 1988. which was. 1988. In a letter dated August 20. as well as absolving the private respondent of the Unfair Labor Practice charge. The workers thereat likewise conducted separate elections of their officers. Labor Secretary Franklin Drilon certified to the NLRC the said dispute between the UFE and Nestle. as aforestated. THE SAME BEING RENDERED ONLY BY A DIVISION OF THE PUBLIC RESPONDENT AND NOT BY EN BANC. 1988. only the following shall be dealt with in this resolution: 1. does not agree therewith. It may only fan the fire.noteworthy that aside from the names of the negotiating panel submitted by one UFE officials. ruling on non-economic issues.‖ (Rollo. WHETHER OR NOT THE SECOND DIVISION OF THE NLRC ACTED WITHOUT JURISDICTION IN RENDERING THE ASSAILED RESOLUTION. On October 18. Efforts to resolve the dispute amicably were taken by the NCMB but yielded negative result because of the irreconcilable conflicts of the parties on the matter of who should represent and negotiate for the workers. BLR Director Pura Ferrer-Calleja advised: ―Any attempt on the part of management to directly deal with any of the factions claiming to have the imprimatur of the majority of the employees. the company concluded separate CBAs with the general membership of the union at Cebu/Davao and Cagayan de Oro units. 1989. p. or to recognize any act by a particular group to adopt the deadlock counter proposal of the management. denied on August 8. 1988. respectively. 1988.Hence. lt filed a motion for reconsideration. petitioner limited the issues to be resolved into six (6).

1990).There shall be a National Labor Relations Commission which shall be attached to the Department of Labor and Employment for program and policy coordination only. 6715 took effect during pendency of this case. the Court Resolved to DISPENSE with the filing of the same. 213. 6. Upon assumption into office. Five (5) members each shall be chosen from among the nominees of the workers and employers organizations. respectively. (p. WHETHER OR NOT THE RESPONDENT NLRC HAD ACTED WITH GRAVE ABUSE OF DISCRETION AND COMMITTED SERIOUS ERRORS IN FACT AND IN LAW WHEN IT RULED THAT THE CBA IS EFFECTIVE ONLY UPON THE PROMULGATION OF THE ASSAILED RESOLUTION. the first and second divisions shall handle cases coming from the National Capital Region and the third. 5. 1988 when existing rules prescribed that. Section 5 of RA 6715 provides as follows: ―Section 5. it is incumbent upon the Commission en banc to decide or resolve a certified dispute. 4. However. Of the five (5) divisions. WHETHER OR NOT PUBLIC RESPONDENT HAD SERIOUSLY ERRED IN DENYING PETITIONER‘S DEMAND FOR A CONTRACT SIGNING BONUS AND IN TOTALLY DISREGARDING THE LONG PRACTICE AND TRADITION IN COMPANY WHICH AMOUNT TO DIMINUTION OF EMPLOYEES BENEFITS. composed of (a) Chairman and fourteen (14) Members. functions and duties through its divisions. This case was certified on October 28. R. . fourth and fifth divisions. The Commission shall exercise its adjudicatory and all other powers. the members nominated by the workers and employers organizations shall divest themselves of any affiliation with or interest in the federation or association to which they belong. 9. Article 213 of the Labor Code of the Philippines.2. is further amended to read as follows: Art. National Labor Relations Commission. WHETHER OR NOT PUBLIC RESPONDENT ERRED IN ENTIRELY ABSOLVING THE COMPANY FROM THE UNFAIR LABOR PRACTICE CHARGE AND IN DISREGARDING THE SUBSTANTIAL INCRIMINATORY EVIDENCE RELATIVE THERETO. with the latter to be chosen from among the recommendees of the Secretary of Labor and Employment. The Commission shall sit en banc only for purposes of promulgating rules and regulations governing the hearing and disposition of cases before any of its divisions and regional branches and formulating policies affecting its administration and operations. The Chairman and the four (4) remaining members shall come from the public sector. WHETHER OR NOT PUBLIC RESPONDENT SERIOUSLY ERRED IN NOT GRANTING THE UNIONS DEMAND FOR A ―MODIFIED UNION SHOP‖ SECURITY CLAUSE IN THE CBA AS ITS RULING CLEARLY COLLIDES WITH SETTLED JURISPRUDENCE ON THE MATTER. 3. ALABANG AND CABUYAO.A. Aside from vesting upon each division the power to adjudicate cases filed before the Commission. WHETHER OR NOT THE RESPONDENT NLRC SERIOUSLY ERRED IN HOLDING THAT THE CBA TO BE SIGNED BY THE PARTIES SHALL COVER SOLELY THE BARGAINING UNIT CONSISTING OF ALL REGULAR RANK-AND-FILE EMPLOYEES OF THE RESPONDENT COMPANY AT MAKATI. Counsel for the private respondent company filed a motion for leave of court to oppose the aforesaid urgent manifestation and motion. The Commission may sit en banc or in five (5) divisions. cases from other parts of . Petitioner‘s Urgent Manifestation and Motion dated September 24. We affirm the public respondent‘s findings and rule as regards the issue of jurisdiction. each composed of three (3) members. as amended. It appearing that the allowance of said opposition would necessarily delay the early disposition of this case. said Act further provides that the divisions of the Commission shall have exclusive appellate jurisdiction over cases within their respective territorial jurisdiction.

Third. many cases have already been decided by the five (5) divisions of the NLRC. the Commission shall cease holding en banc sessions for purposes of adjudicating cases and shall discharge their adjudicatory functions and powers through their respective Divisions. It shall be mandatory for the division to meet for purposes of the consultation ordained therein. shall have administrative supervision over the Commission and its regional branches and all its personnel. third. In case of the effective absence or incapacity of the Chairman.‖ Contrary to the claim of the petitioner. and the four (4) other members from the public sector shall be the Presiding Commissioners of the second.‖ Moreover. in the performance of such similar or equivalent functions and duties as are discharged by the Clerk of Court and Deputy Clerks of Court of the Court of Appeals. Section 36 of R. Rule-Making Authority. and a copy thereof attached to the record of the case and served upon the parties.Luzon. The Chairman shall be the Presiding Commissioner of the first division. aided by the Executive Clerk of the Commission. the Chairman shall designate such number of additional Commissioners from the other divisions as may be necessary. . the above-cited Administrative Order is valid. having been issued in accordance with existing legislation as the Secretary of Labor is clothed with the power to promulgate rules for the implementation of the said amendatory law. fourth and fifth divisions. 6715. This is supported by the fact that on March 21.The Secretary of Labor and Employment is hereby authorized to promulgate such rules and regulations as may be necessary to implement the provisions of this Act. and Fifth Divisions. by said Executive Clerk for its First Division and four (4) other Deputy Executive Clerks for the Second. the aforementioned rules requiring the Commission en banc to decide or resolve a certified dispute have accordingly been repealed. respectively. The conclusions of a division on any case submitted to it for decision shall be reached in consultation before the case is assigned to a member for the writing of the opinion. The divisions of the Commission shall have exclusive appellate jurisdiction over cases within their respective territorial jurisdiction. The Commission when sitting en banc.‖ (Underscoring supplied) In view of the enactment of Republic Act 6715. . Fourth. and. from the Visayas and Mindanao. the Secretary of Labor. the date of the effectivity of Republic Act 6715. A certification to this effect signed by the Presiding Commissioner of the division shall be issued. issued Administrative Order No. Effective March 21. We find no legal justification in entertaining petitioner‘s claim considering that the clear intent of the amendatory provision is to expedite the disposition of labor cases filed before the Commission. which reads: ―2. shall be assisted by the same Executive Clerk. it is to be emphasized and it is a matter of judicial notice that since the effectivity of R. respectively. 36 (Series of 1989). 1989. the Presiding Commissioner of the second division shall be the Acting Chairman. including the Executive Labor Arbiters and Labor Arbiters. The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a judgment or resolution. 6715 provides: ―Section 36. 1989. The Chairman. respectively.A.A. when acting thru its Divisions. Whenever the required membership in a division is not complete and the concurrence of two (2) commissioners to arrive at a judgment or resolution cannot be obtained. To rule otherwise would not be congruous to the proper administration of justice.

pp. would give premium to the alleged unlawful act of the Company in entering into separate ‗Collective Bargaining Agreements‘ directly with the workers thereat. the NLRC was thereby charged with the task of implementing the certification order for compulsory arbitration. National Labor Relations Commission. the union manifested its intention to file a complaint for ULP against the company and its officers responsible for such act. As the implementing body. In its assailed resolution.e. the issue as to whether such acts constitute ULP is best heard and decided separately from the certified case. Corollarily. the consolidation of the issue with the instant case poses complicated questions regarding venue and joinder of parties. No. It cannot be denied that the private respondent is engaged in an undertaking affected with public interest being one of the largest manufacturers of food products.. G. Their non-inclusion in the certification order. Under this situation. the Union filed an Urgent Manifestation seeking the modification of the certification order to include the Cebu/Davao and Cagayan de Oro divisions. as it has in fact filed a case which is now pending with our Arbitration Branch. but also because of the delay that may ensue in the resolution of the present conflict. 174-176) We agree.‖ (Rollo. its authority did not include the power to amend the Secretary‘s order (University of Santo Tomas v.R. the need to implement some measures to suppress any act which will hinder the company‘s essential productions is indispensable for the promotion of the common good. The compelling consideration of the Secretary‘s assumption of jurisdiction is the fact that a prolonged strike or lockout is inimical to the national economy and thus. We feel that each of the issues propounded by the parties shall be better dealt with separately according to its own merits. Public respondent‘s resolution is proper and in full compliance with the order of the Secretary of Labor. the Secretary‘s certification order for compulsory arbitration which was intended for the immediate formulation of an already delayed CBA was proper. which it eventually did. ―In the same vein. The assumption of jurisdiction by the Secretary of Labor over labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest is in the nature of a police power measure. October 18. Alabang and Cabuyao only. i. 89920. public respondent stated: ―A perusal of the records and proceedings of this case reveals that after the issuance by the Secretary of Labor of his Order dated 28 October 1988 certifying the dispute to Us. We rule to resolve the sole issue in dispute certified to this Commission. the Court is convinced that the public respondent committed no grave abuse of discretion in resolving only the sole issue certified to by the Secretary and formulating a CBA which covers the bargaining units consisting of all regular rank-and-file employees of the respondent company at Makati. ―Considering that the Union had reserved the right to prosecute the Company and its officers responsible for the alleged unlawful execution of the CBA directly with the union members in Cagayan de Oro and Cebu/Davao units. 1990). The concomittant delay that will result in resolving petitioner‘s motion for the modification of the certification order to determine whether to include Cebu/Davao and Cagayan de Oro Divisions or not will defeat the very purpose of the Secretary of Labor‘s assumption of jurisdiction and his subsequent certification order for compulsory arbitration. . the employees/workers therein being all bonafide members of the Union which is the sole and exclusive bargaining representative of all the regular rank-and-file workers of the company nationwide. the Union argues. not only because of the evidentiary need to resolve the issue. ―Thus. the deadlock in the collective bargaining negotiations in Cabuyao/Alabang and Makati units.As to the second issue. ―Furthermore. UST Faculty Union.

‖ When sitting in a compulsory arbitration certified to by the Secretary of Labor. In labor cases. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. this Court stated: ―When the consent of one of the parties is enforced by statutory provisions. but would also have favorable implications to the community and to the economy as a whole. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. 253-A. Moreover. the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. 263 paragraph (g) of the Labor Code. thus: ―Art. 89). it being beyond the scope of the certification order. In said case. Petitioner argues that because of the public respondent‘s actuation in this regard. Terms of a collective bargaining agreement. this Court finds the provisions of Article 253 and Article 253-A of the Labor Code as amended by R. there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest. We cannot subscribe to this argument. this Court had occasion to define what a compulsory arbitration is. 253. as amended by Section 27 of R. Inc.R. the proceeding is referred to as compulsory arbitration. As regards the third issue raised by petitioner.A. When there is a collective bargaining agreement. the NLRC is not sitting as a judicial court but as an administrative body charged with the duty to implement the order of the Secretary. 55159. it committed grave abuse of discretion as it allowed multiplicity of suits and splitting causes of action which are barred by procedural rule.A. Its function only is to formulate the terms and conditions of the CBA and cannot go beyond the scope of the order. (Underscoring supplied) In view of the avowed but limited purpose of respondent‘s assumption of jurisdiction over this compulsory arbitration case. We rule that the prayer to declare the respondent company guilty of acts of unfair labor practice when it allegedly resorted to practices designed to delay the collective bargaining negotiations cannot be subsumed in this petition. 6715 as the applicable laws. If one has already taken place at the time of assumption or certification. ―Art. either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. the Commission is further tasked to act within the earliest time possible and with the end in view that its action would not only serve the interests of the parties alone. Duty to bargain collectively when there exists a collective bargaining agreement. which provides: (g) When.For the same reason. 6715. the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. all striking or lockout employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. This is the clear intention of the legislative body in enacting Art. in his opinion. National Labor Relations Commission. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no . (G.Any Collective Bargaining Agreement that the parties may enter into shall. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. insofar as the representation aspect is concerned. . v. However. compulsory arbitration is the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties. it cannot be faulted in not taking cognizance of other matters that would defeat this purpose. be for a term of five (5) years. 22 Dec. In the recent case of the Philippine Airlines.

To do so would be to create a gap during which no agreement would govern.certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. x x x ― In the aforecited case.‖ (Underscoring supplied) In the light of the foregoing. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Hence. Petitioner claims that because of the prospective effect of the CBA. the parties shall agree on the duration of retroactivity thereof. provides the reason why the new CBA can only be given a prospective effect. outside the 6 month period from June 30. the expiry date of the past CBA. union members were deprived of substantial amount of monetary benefits which they could have enjoyed had the CBA be given retroactive effect. What was emphasized by this Court is that in no case should there be a period in which no agreement would govern at all. Articles 253 an 253-A mandate the parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing during the 60-day period prior to the expiration of the old CBA and/or until a now agreement is reached by the parties.PAFLU in the Resolution of February 14. In assailing the public respondent‘s actuation. But nowhere in the said pronouncement did We rule that every CBA contracted after the expiry date of the previous CBA must retroact to the day following such date. Inciong (121 SCRA 444) where this Court ruled: ―x x x. But since no agreement to that effect was made. the Court only pointed out that it is not right for union members to argue that they cannot be covered by the past and the new CBAs both containing the same closed-shop agreement for acts committed during the interregnum. 1987. 1989. the immediate effects of the mandated wage increase on the fringe benefits such as . shall retroact to the day immediately following such date. there being no new agreement reached. While petitioners were charged for alleged commission of acts of disloyalty inimical to the interests of the Amigo Employees Union . the parties may exercise their rights under this Code. public respondent did not abuse its discretion in giving the said CBA a prospective effect. It is clear and explicit from Article 253-A that any agreement on such other provisions of the CBA shall be given retroactive effect only when it is entered into within six (6) months from its expiry date. it is proper to rule that in the case at bar. In case of a deadlock in the renegotiation of the collective bargaining agreement. 1977. its retroactivity should be agreed upon by the parties. then the parties shall agree on the duration of the retroactivity thereof. and hence. this Court upholds the pronouncement of the NLRC holding the CBA to be signed by the parties effective upon the promulgation of the assailed resolution. The assailed resolution which incorporated the CBA to be signed by the parties was promulgated June 5. Based on the provision of Section 253-A. the Union cites the case of Villar v. the clear and unmistakable terms of Articles 253 and 253-A must be deemed controlling. PAFLU and the company entered into and concluded a new collective bargaining agreement. If the agreement was entered into outside the six (6) month period. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in the Collective Bargaining Agreement. from the time the old contract expired to the time a new agreement shall have been entered into with the union. the automatic renewal clause provided for by the law which is deemed incorporated in all CBAs. 1977 of the Amigo-Employees UnionPAFLU and on February 15. The action of the public respondent is within the ambit of its authority vested by existing laws. petitioners may not escape the effects of the security clause under either the old CBA or the new CBA by claiming that the old CBA had expired and that the new CBA cannot be given retroactive enforcement. If any such agreement is entered into beyond six months. This would include backwages. Consequently.

the NLRC is in the best position to formulate a CBA which is equitable to all concerned. 111 Phil. MLQSEA Faculty Assn. is one of the highest. the assailed resolutions are after all responsive to the call of compassionate justice observed in labor law and the dictates of reason which is considered supreme in every adjudication. University of Pangasinan Faculty Union v. National Labor Relations Commission. Nevertheless. No. [Pambusco Employees Union Inc. 75763. are conclusive and will not be disturbed. 26 SCRA 272.R. Petitioner did not succeed in overcoming the presumption of regularity in the performance of the public respondent‘s functions. public respondent considered only the position of the private respondent and totally disregarded that of the petitioner. In the absence of a clear showing of grave abuse of the discretion. 323 (1961). According to petitioner. the terms and conditions thereof are inadequate. PREMISES CONSIDERED. 1989 are AFFIRMED. National Labor Union. 127 SCRA 6911. In the case of Palencia v. leaves. 617 (1940). dated June 5. 153 SCRA 247.R. G. University of Pangasinan and NLRC. Court of Industrial Relations. We are convinced that the CBA formulated by public respondent is fair. except insofar as the ruling absolving the private respondent of unfair labor practice which is declared SET ASIDE. overtime premium. 1984. the findings of the respondent NLRC on the terms of the CBA should not be disturbed. Thus: ―Following a long line of decisions this Court has consistently declined to disturb the findings of fact of the then Court of Industrial Relations whose functions the NLRC now performs. [Philippine Educational Institution v. v. Petitioner made so many claims and statements which were adopted and asserted without good ground. . if not the highest in the industry. Because of its expertise in settling labor disputes. February 20. It further avers that the awards are bereft of any factual and legal basis. the petitioner failed to establish that public respondent committed grave abuse of discretion in not giving the CBA a retrospective effect. 591 (1939). 68 Phil. in the opinion of this Court. 26 SCRA 272. The Resolutions of the NLRC. is not unmindful of these. The fourth and fifth assignment of errors should be resolved jointly considering that they are the terms and conditions of the CBA. 1 SCRA 734. Taken as a whole. incompetitive and thus. 276] and there being no indication that the findings are unsubstantiated by evidence [University of Pangasinan Faculty Union v. 63122. reasonable and just. Even if prospective in effect. 1989 and August 8. 1987. This Court. Petitioner contends that in issuing the assailed resolutions. prejudicial to the workers. G. It further decries public respondent‘s alleged taking side with the private respondent.the 13th and 14th month pay.. in not granting its demands for the inclusion in the CBA of a ―Contract Signing Bonus‖ and a ―Modified Union Shop Agreement. G. Philippine Educational Institution v. Court of Industrial Relations. said CBA still entities the Nestle workers and employees reasonable compensation and benefits which. v. v. 1984. etc. MLQSEA Faculty Association. it is imbued with competence to appraise and evaluate the evidence and positions presented by the parties. 704].‖ the assailed resolutions were erroneous and were drawn up arbitrarily and whimsically. the petition is DISMISSED. 135 Phil. No. We ruled that the findings of fact of the then Court of Industrial Relations (now NLRC). University of Pangasinan and NLRC. 282 (1968). 70 Phil. No. ACCORDINGLY. San Carlos Milling Co. February 20. The findings of fact are conclusive and will not be disturbed in the absence of a showing that there has been grave abuse of discretion.R. Manila Electric Co.‖ Moreover. unreasonable. Even if the resolution fell short of meeting the numerous demands of the union. 127 SCRA 694. 63122. It fails to substantiate why. and right to differential pay. August 21.

1400 Level underground. Prior to the apprehension. they were ordered to get out. They worked under the supervision of Engr. RAB-I-0045-81 upholding the dismissal of petitioners. They denied the allegations of the apprehending security guards and charged them to be more interested in the reward of P100. and when the lookout miner noticed their presence and warned his companions: "Adda tao!" in Ilocano. On their way. Itogon-Suyoc Mines. No. "In support of the foregoing allegations. Arthur Altatis and Ricardo Wangit in the first case. but the complainants threatened him not to report them otherwise something would happen to him.m. at about 11:00 p.. 0045-81. ANTHONY FARNICAN.. but the guards refused the offer. Inc. became afraid. 1981. 97251-52. and Jovencio Mina and Peter Atuban in the second case. "The complainants. hammers and iron tubes being used in breaking the ores. although he was then armed with a shotgun. This is a petition for certiorari to set aside the decision of the Third Division of the National Labor Relations Commission (NLRC) in NLRC Case No.R. SG Bragado. 1981 and subsequently dismissed on December 3. No. placed on preventive suspension on November 23. the respondent submitted the sworn statements of Freddie Bragado.00 each to settle the manner (sic).m. the patrols met the respondent's mine engineer. leadman of the complainants. PETITIONERS. they saw the complainants breaking and pulverizing highgrade ores in the presence of the posted security guard. "One of the complainants allegedly bribed the apprehending officers (sic) P1. allegedly warned the complainants to stop their illegal activity. the patrols went down the manway and when they reached the apprehension site. 1995 ] JOVENCIO MINA. 23 Position. According to the respondent's version. The records do not show what was their respective pay when the complainants were all discharged on December 3.. "On November 20. Because of the threat. RESPONDENTS. information and resolution of the fiscal and Order of the Municipal Court all showing prima facie case exists against complainants. the security guard (SG) on post. Melchor Estonilo and security guards. I The facts as narrated by the Labor Arbiter are as follows: "These cases of illegal dismissal were filed on December 11. RICARDO WANGIT. 1981. on the other hand. essay report that the recovered effects are highgrade. and 11:45 p. 0044-81. herein complainants were allegedly caught in the act of highgrading. 1981 by Anthony Farnican. SG Freddie Bragado.00 per apprehension plus 30% percent of the value of the allegedly recovered . They have been consolidated since the complainants have the same causes of action against the same respondent. VS. meaning "the guards are here!" — the mine patrols apprehended the complainants and recovered from the hands of the complainants were a plastic containing the highgrade ores. 1981. At about 11:00 p. July 14. INC. joint affidavit of the apprehending security guards. Complainants were investigated.. SG Bragado just let the complainants commit highgrading until the mine patrols arrived to apprehend the highgraders. escorted by two security guards carrying two sacks of highgrade ore. NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ITOGONSUYOC MINES. RAB-I-0044-81 and NLRC Case No. five mine patrols proceeded to 14 Vein. Nos. the guard on post and star witness of the respondent. between 11:00 p. PETER ATUBAN AND ARTHUR ALTATIS. and Engr.[ G.m. have another version.m. Estonilo padlocked their working place so they proceeded to take a crow's bath at the place where they were apprehended.000. With headlights off. They observed the highgraders in (sic) five (5) minutes.

On April 28. We do not agree. Administrative Order No. the Third Division of NLRC affirmed the Labor Arbiter's decision but limited the award of back wages to three years. 1989. plus full back wages to be counted after the 10th day from receipt of this decision up to the time of their actual reinstatement. That they were discharged illegally. respectively. this petition. The new commissioners. the guard on post told the patrols why they were effecting the arrest when complainants had not done anything illegal. Hence. Rayala assumed his office on November 15. That when they were apprehended. 6715. in the light of the foregoing considerations. p. 1989 of the Secretary of Labor and Employment reorganized the NLRC and specified the place of assignment of the newly appointed commissioners. The dispositive portion of the decision reads: "WHEREFORE. 161 dated November 18. In the motion for reconsideration filed by private respondent. Hence. they submitted sworn statements including that of SG Bragado" (Rollo. 1990 and declaring the dismissal from employment of complainants as valid. Between the rendition of the decision of the Third Division and the resolution denying the motion for reconsideration. as newly constituted. Presiding Commissioner Lourdes C. Private respondent appealed the decision of the Labor Arbiter to NLRC. the Third Division. Respondent is also ordered to pay complainants ten (10%) percent attorney's fees of the total amounts (sic) awarded. 1989 while Commissioner Rogelio I. Javier and Commissioner Ireneo B. a change in the membership of the division took place.highgrade. the First and Second Divisions shall handle cases coming from the National Capital Region and the Third. II Petitioners claim that their motion for reconsideration should have been resolved by the same members of the Third Division who rendered the appealed decision. pp. provides as follows: "b) Divisions. Bernardo who were assigned to the Third Division. On October 18. 1989. functions and duties through its five (5) Divisions. rendered its Decision dated November 29. Section 2(b). from the Visayas and Mindanao. "xxx Of the five (5) divisions [of the NLRC]. The divisions of the Commission shall have exclusive appellate jurisdiction over cases with their respective territorial jurisdiction" (Italics supplied). without any just and valid cause. 15-17). the respondent is hereby ordered to reinstate the five (5) complainants to their former respective position without loss of seniority rights with full back wages including ECOLA and 13th month pay for one year and four months. Fourth and Fifth Divisions. No. 1990 setting aside the Resolution dated October 18.A. — Unless otherwise provided by law. 19). the Commission shall exercise its adjudicatory and all other powers. Rule VII of the New Rules of Procedure of NLRC. Under Article 213 of the Labor Code of the Philippines as amended by R. cases from other parts of Luzon. the Labor Arbiter rendered his decision finding that the complainants were illegally dismissed. assumed their posts on November 20. 1986. Each Division shall consist of one member from the public sector who shall act as Presiding Commissioner and one member each from the workers and . In support of the foregoing allegations. "Respondent is finally ordered to present proof of compliance with this Order within ten (10) days from receipt of this decision" (Rollo. these complaints.

including those from the Mindanao Autonomous Region)" (Italics supplied). By analogy. respondent company is justified in terminating their services. But. Fourth Division.D. and. the Supreme Court stated that: "xxx In ordinary parlance judges are spoken of as the courts and the courts are referred to. There may be a judge without a court. although generally described as menial. the First and Second Divisions shall have exclusive territorial jurisdiction over appeals of cases coming from the National Capital Region and the POEA. we find and so hold that substantial evidence exists to warrant the finding that petitioners were engaged in highgrading.employers sectors. 221 SCRA 469 [1993]). and the person who occupies the position of judge. the motion for reconsideration filed by petitioners must also be resolved by said Third Division. 29 Phil. The judge may become disqualified. WHEREFORE. as miners. Since petitioners are from Baguio City. 222 SCRA 604 [1993]. lawyers. VII. Capitol Industrial Construction Groups v. there is an important distinction between them which should be kept in mind. Llorente and Dayrit. 346-347). are entitled not only to great respect but even to finality (Baguio Colleges Foundation v. nevertheless. XI and XII. and judges. It is therefore of no significance as to who of the commissioners is functioning in the division at any given time. The only matter of concern is that the Commissioners voting on the motion for reconsideration were duly assigned to the division. appealed cases from Luzon (Regions I. Since there is reasonable ground to believe that petitioners committed the crime of highgrading. IV except Metro Manila and V). the Third Division of NLRC correctly took cognizance of the appealed case. It simply means that there is no judge to act in the court. It is not imperative that all the elements of highgrading or theft of gold as defined by Section 1 of P. As may be gleaned from the above-cited rules of NLRC. The courts of the Philippine Islands were created and the judges were appointed thereto later. III. Baguio City is included in the Cordillera Administrative Region. A person may be appointed a judge and be assigned to a particular district or court subsequently. in the case of Pamintuan v. National Labor Relations Commission. The job of petitioners. Courts may exist without a present judge. but such fact does not destroy the court. notwithstanding that fact. The Decision of NLRC dated November 29. Consequently. not in the individual commissioners assigned to each division. 341 (1915). The law is clear that the jurisdiction to decide cases appealed to NLRC is vested in the different divisions thereof. of such nature as to require a substantial amount of trust and confidence on the part of respondent company. X. It is common for persons. the petition is DISMISSED. In a few instances. No. as well as the law. It is well-established that factual findings of labor administrative officials. including the Cordillera Administrative Region. as an entity. which is assigned to the NLRC Third Division. is. the judges were appointed before the courts were established. . II. National Labor Relations Commission. "Of the five (5) Divisions. when the person speaking means the judge simply. the Fifth Division. and VIII). respectively. if supported by substantial evidence." (at pp. appealed cases from Mindanao (Regions IX. 1990 is AFFIRMED. appealed cases from Visayas (Regions VI. to use these terms interchangeably. the Third Division. Going now to the claim that petitioners were illegally dismissed. So it appears that there is an important distinction between the court. 581 exist to justify respondent company's loss of trust and confidence in petitioners.

Evelyn F. to wit: (1) Amores. Mercedita Perez.[3] that the respondent company officials are also the officers and incorporators of these satellite companies as shown in their articles of incorporation and the general information sheet. Leonisa (20) Bactat. Maximina Faustino. Josefina (3)Aragon. that these respondent corporate officers should not be considered as mere agents of the company but the wrongdoers. respondent company shall pay separation pay of one month salary for every year of service.[ G. their backwages shall be computed from the time petitioners were terminated until the finality of this decision. April 20. Zenaida (29) Rosario. Adeliza T. Lita Buquid. Anliza (13) Almario. Should reinstatement be not feasible. Javelosa and Renato C. Amorlita Rotairo. Myrna Palaca. Mercedita (28) Rempis. (25) Hilario. In their subsequent motion filed on the same day. [1] the dispositive portion of which reads:[2] "WHEREFORE. the respondent company. RAMOS. Elizabeth (7) Anonuevo. began removing its machineries and equipment from its plant located at Merville Park. GREENFIELD (MSMGUWP) VS. arbitrary and unlawful dismissal of petitioners from work. Bonifacio G. Rebecca Poceran. Josefina (9) Advincula. Marilou (15) Almonte. Amelia (23) Glifonia..R. the respondent company is hereby ordered to pay full backwages to petitioner-employees while the Federation is also ordered to pay full backwages to petitioner-union officers who were dismissed upon its instigation. Imelda (2) Andres. Ciervo." Petitioners allege that this Court committed patent and palpable error in holding that "the respondent company officials cannot be held personally liable for damages on account of employees' dismissal because the employer corporation has a personality separate and distinct from its officers who merely acted as its agents" whereas the records clearly established that respondent company officers Saul Tawil. Carlos T. they are responsible for acts of unfair labor practice. that as top officials of the respondent company who handed down the decision dismissing the petitioners. Since the dismissal of petitioners was without cause. (37) Villanueva. Marilou Dejocos. Felicidad (4) Arias. Violeta C. (B) correction of their own typographical errors of the names of employees appearing in the caption. No. (22) Cruz. They added that during their ocular inspection of the plant site of the respondent company. National Labor Relations Commission and Isetann Department Store. Paranaque and began diverting jobs intended for the regular employees to its sub-contractor/satellite branches. Margie deL (30) Salvador. Petitioners further claim that the respondent company no longer operates its plant site as M. (39) Villon. Azucena G. Edna (18) Ampo. they found that the same is being used by other unnamed business entities also engaged in the manufacture of garments. Petitioners further contend that while the case was pending before the public respondents. HON. Milagros (38) Villapondo. Celia (21) Carpio. Costs against the respondent company. in the early part of February 1990. Norma (31) Sambayanan. and the respondent company is hereby ordered to immediately reinstate the petitioners to their respective positions. Belen Barquio. Maria (34) Trono. the petition is GRANTED. Angelita (14) Almazan. 2001 ] MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. Elisa M. Eva C. Olivia (32) Tiaga. Salvacion (6) Arceo. SO ORDERED. Greenfield thus it will be very difficult for them to fully enforce and implement the court's decision. NCR-00-09-04199-89 is REVERSED and SET ASIDE. Since petitioners were terminated without the requisite written notice at least 30 days prior to their termination. . following the recent ruling in the case of Ruben Serrano vs. Eugenia (24) Escurel. which should be as follows: Manuela Avelin. 113907. Nenevina (35) Varona. Monica (8) Abellada. Rosario (11) Alilay. Aida (33) Torbela. Marilyn (12) Almario. Harmelina (10) Ajayo. Anacorita (19) Aquino. 2000. backwages shall be computed from the time the herein petitioner employees and union officers were dismissed until their actual reinstatement. petitioners also pray for the (A) inclusion of the names of employees listed in Annex "D" of the petition which they inadvertently omitted in the caption of the case. Asuncion (36) Vasquez. Rosalina (16) Alvaran. Puangco have caused the hasty. Adoracion (27) Perez. the decision of the National Labor Relations Commission in Case No. Should reinstatement be not feasible. NATIONAL LABOR RELATIONS COMMISSION Before us is petitioners' motion for partial reconsideration of our decision dated February 28. Primitiva Gomez. (26) Payuan. Genevive (5) Arroyo. Marites (17) Alvarez.

(17) Emily Inocencio. Maria Fe Berezo. its stockholders or members. Gregoria Arguelles. and other persons. Tessie Balbis. Amalia Eugenio. they should have presented the pertinent evidence with the public respondents. Jose Irlanda. Maria Enicame. private respondent company officials Carlos Javelosa and Remedios Caoleng. Matilde de Blas. in the following cases:[14] 1. the officers of a corporation (a) Vote for or assent to patently unlawful acts of the corporation. Edeltrudes Romero. solidary liabilities may at times be incurred but only when exceptional circumstances warrant such as. Celsa Doropan. Aurora Bravo. (15) Erlinda Dalut. (4) Nelita F. did not forthwith file with the corporate secretary his written objection thereto. Josephine Lasco. having knowledge thereof. are its sole liabilities. trustee or officer has contractually agreed or stipulated to hold himself personally and solidarily liable with the Corporation. A corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and. (20) Mercedes Pabadora. officers and employees. Salvacion Wilson. in appropriate cases. (18) Esperanza Jalocon. in general from the people comprising it.Emma Saludario. the Solicitor General interposes no objection to petitioners' prayer for the inclusion of omitted and similarly situated employees and the correction of employees' names in the caption of the case. (21) Venerado Pastoral. Shirley Melegrito. On the other hand. Julita Maniba.[11] Petitioners' contention that respondent company officials should be made personally liable for damages on account of petitioners' dismissal is not impressed with merit.[9] (10) Josefina Andres. (3) Vicky Francia. (12) Alice Artikulo.[10] In their Comment. Diana Adovas. (14) Eliza Cabiting. Leonila Rodil. Rufina Bugnot. Ricardo Paloga.[7] (8) Blandina Simbahan. state that considering that petitioners admitted having knowledge of the fact that private respondent officers are also holding key positions in the alleged satellite companies.[6] (C) inclusion of other employees similarly situated whose names were not included in Annex "D" or in the caption of the case. by specific provision of law. Teresita Nierves. (5) Erlinda San Juan. When directors and trustees or. Roselyn Rivero. generally. Juanita Osuyos.[16] (3) When a director. (c) are guilty of conflict of interest to the prejudice of the corporation. Milagros Fonseca. Respondent officials interpose no objection to the inclusion of employees inadvertently excluded in the caption of the case but object to the inclusion of employees who were allegedly similarly situated for the reason that these employees had not been parties to the case. trustee or officer is made. hence should not be granted any relief from the court. acting through its directors. (22) Cristina Perlas. (19) Imelda Jarabe. Juana Overencio.[5] Susan Abogona. in their Comment. thus it is too late for petitioners to require this Court to admit and evaluate evidence not presented during the trial. Noemi Menguillo. (16) Edna Fernandez. Rodelia Royandoyon. Narcisa Songuad. Cristina Rapinan. Rodrigo Buella. (7) Jenette Patungan. Josie Sumarsar. Tita Senis. Paulina Valdez. Rowena Jarabejo. (2) Alicia Aragon. Florenia Ragos. Josie Marcos.[13] True.[8] (9) Asuncion Varona. Carmen Rosimo Basco. (13) Esther Cometa. Elena Tebis. Betty Borja. Evangeline Tayco.[18] . Jovita Cera. (b) act in bad faith or with gross negligence in directing the corporate affairs. (6) Erlinda Baby Patungan Manalo.[4] Anita Ahillon. Respondent company failed to file its comment. Azucena Postigo.[17] (4) When a director. Macaria Barrion. Fausta Segundo. personally liable for his corporate action.[12] The rule is that obligations incurred by the corporation. Teodora Sulit. (11) Teresita Arales. that the supposed proof of satellite companies hardly constitute newly discovered evidence. Gelongos. Emma Saludario. (23) Margie del Rosario. to wit: (1) Dionisa Aban. Precila Carta. Regina Lapidario.[15] (2) When a director or officer has consented to the issuance of watered stocks or who.

his being the owner of one half (1/2) interest of said corporation. Kaisahan ng Manggagawa sa La Campana (KKM)." Petitioners' claim that the jobs intended for the respondent company's regular employees were diverted to its satellite companies where the respondent company officers are holding key positions is not substantiated and was raised for the first time in this motion for reconsideration. NLRC.. all the assets of the steel and nail plant were . particularly. 1957 by the Claparols Steel Corporation. it imports a dishonest purpose or some moral obliquity and conscious doing of wrong. They had one office. the workers in one factory worked also in the other factory.[24] In such a case. Inc.[19] Bad faith or negligence is a question of fact and is evidentiary. therefore. The documents attached to petitioners' motion for reconsideration show that these satellite companies[23] were established prior to the filing of petitioners' complaint against private respondents with the Department of Labor and Employment on September 6. the Court has held corporate directors and officers solidarily liable with the corporation for the termination of employment of corporate employees done with malice or in bad faith. it means breach of a known duty thru some motive or interest or ill will. vs. and his alleged arbitrary dismissal of private respondents. such circumstance does not in itself amount to fraud. The laborers of the gaugau factory and the coffee factory were also interchangeable. Even assuming that the respondent company officials are also officers and incorporators of the satellite companies. Respondents. Moreover. July 1. Inc. one management. The Assistant Regional Director's Decision failed to disclose the reason why he was made personally liable. and La Campana Gaugau Packing were substantially owned by the same person. however.[26] La Campana Coffee Factory. In La Campana Coffee Factory. respondent company's corporate personality remains inviolable. Sunio. Both corporations were substantially owned and controlled by the same person and there was no break or cessation in operations. In Claparols vs. it partakes of the nature of fraud.e. Petitioner Sunio was impleaded in the Complaint in his capacity as General Manager of petitioner corporation.In labor cases. Court of Industrial Relations. alleged as grounds thereof. Substantial identity of incorporators between respondent company and these satellite companies does not necessarily imply fraud. This is reversible error. It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related. 1989 and that these corporations have different sets of incorporators aside from the respondent officers and are holding their principal offices at different locations. and a single payroll for both businesses. Petitioner Sunio. There appears to be no evidence on record that he acted maliciously or in bad faith in terminating the services of private respondents.[21] In the instant case. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality. was within the scope of his authority and was a corporate act. therefore. 1957 and was succeeded on the next day. should nor have been made personally answerable for the payment of private respondents' back salaries. As held in Sunio vs.[20] It has been held that bad faith does not connote bad judgement or negligence.[25] Although there were earlier decisions of this Court in labor cases where corporate officers were held to be personally liable for the payment of wages and other money claims to its employees. who was made jointly and severally responsible with petitioner company and CIPI for the payment of the backwages of private respondents. ceased operations on June 30. we find those rulings inapplicable to this case. His act.[27] the Claparol Steel and Nail Plant which was ordered to pay its workers backwages. there is nothing substantial on record to show that respondent officers acted in patent bad faith or were guilty of gross negligence in terminating the services of petitioners so as to warrant personal liability. i.[22] "We now come to the personal liability of petitioner.

it would appear that RANSOM.[30] Petitioners failed to explain why these employees allegedly similarly situated were not included in the submitted list filed before us.transferred to the new corporation. Petitioners' prayer for the inclusion of employees listed in Annex "D" whose names were admittedly inadvertently excluded in the caption of the case and for the correction of typographical errors of the employees' names appearing in the caption.[29] It is elementary that strangers to a case are not bound by the judgment rendered by the court and such judgment is not available as an adjudication either against or in favor of such other person. where the alleged satellite companies were established even prior to the filing of petitioners' complaint with the Department of Labor.[28] the Court ruled that under the Minimum Wage Law. Notably. However. the situation in AC Ransom does not obtain in this case. petitioners' motion for reconsideration is partially granted so as to include the names of employees listed in Annex "D" which petitioners inadvertently omitted in the caption of this case. NLRC. petitioners' prayer for the inclusion of other employees allegedly similarly situated but whose names were not included either in Annex "D" or in the caption of the case must be denied. the corporation employer would have devious ways for evading of back wages. a situation which is not obtaining in the instant case. A judgment cannot bind persons who are not parties to the action.[31] WHEREFORE. owned by the same family. organized ROSARIO to replace RANSOM. after the December 19. in the above-mentioned cases. RANSOM actually ceased operations on May 1. a new corporation was created. . in 1969. 1973." Clearly. In AC Ransom Labor Union-CCLU vs. is well taken and is hereby granted. with the latter to be eventually phased out if the 22 strikers win their case. foreseeing the possibility or probability of payment of backwages to the 22 strikers. engaged in the same business and operating in the same compound. 1972 Decision of the Court of Industrial Relations was promulgated against RANSOM." This Court said: "In the instant case. the responsible officer of an employer corporation can be held personally liable for non-payment of backwages for "if the policy of the law were otherwise. Such inclusion would be tantamount to a substantial amendment which cannot be allowed at this late stage of the proceedings as it will definitely work to the prejudice and disadvantage of the private respondents.

the Civil Aeronautics Administration issued him a license as Commercial Pilot and PAL then extended him a temporary appointment for six (6) months as Limited First Officer. 116. To enable him to complete the requirement. During this third extension of his appointment. The issue of termination and damages was referred to the Executive Labor Arbiter for compulsory arbitration [Rollo. p. 1989 ] PHILIPPINE AIRLINES." On 31 October 1975.] Petitioner appealed the order lifting Dolina's suspension to the Secretary of Labor. IV lifted the preventive suspension. Pending his physical examination by the chief Flight Surgeon. pp. his performance and the result of his medical examination as submitted by the Medical Sub-Department. pending the resolution of petitioner's appeal. when his appointment was again due to expire. Dolina not qualified for regular employment in the Company. his employment was extended for another six months which appointment was described as "permanent. Armando Dolina . However. 34] for Dolina's termination. RESPONDENTS. the parties signed an agreement before the Undersecretary of Labor. The pertinent facts are as follows: Private respondent Dolina was admitted to the Philippine Airlines (PAL) aviation School for training as a pilot beginning 16 January 1973. his appointment was again extended to 31 October 1976. and ordered petitioner to reinstate Dolina to his former position with full backwages from 1 October 1976 up to actual reinstatement. which examination revealed the following: b. 8. and undertook an equipment qualification course up to 4 October 1974. p. complainant was again subjected to an examination and interview by the Pilot Acceptance Qualifications Board as part of the regularization process. [NLRC Decision. VS. 25-26. 3-4. On 9 October 1974. In the meantime Dolina was placed under preventive suspension effective 1 October 1976. 55159. Dolina countered with a complaint for illegal dismissal on 6 October 1976 [Rollo. On 25 January 1974. NATIONAL LABOR RELATIONS COMMISSION AND ARMANDO DOLINA. On 17 August 1976.] On 23 September 1976. pp. No. Dolina had only logged eighty four (84) hours and fifty five (55) minutes flying time. December 22. he was still short of the minimum flying time requirement such that his appointment was again extended up to 30 April 1976.R. the terms of which are as follows: .[ G. The training agreement bound PAL to provide regular and permanent employment to Dolina upon completion of the training course. p.After thorough evaluation of the candidate‘s past records. and to pay his salaries from 1 April 1979 "until this case is finally resolved" [Rollo. 71. Rollo. on 2 March 1977. When his appointment was due to expire on 30 April 1975. INC. 35. Petitioner impugns in this petition for certiorari that part of the public respondent National Labor Relations Commission's (NLRC) decision in NLRC Case No.] Petitioner contends that public respondent NLRC gravely abused its discretion considering that in the same decision public respondent affirmed the decision of the Labor Arbiter in toto granting respondent's application for clearance to dismiss the private respondent. Dolina completed the course.] Conformably. p. short of the minimum 500 flying hours required for regularization as First Officer. the Board finds Mr. and thus on 31 March 1976 he applied for regularization as First Officer. Dolina completed the 500 flying hours requirement. p. the Board recommended the termination of the complainant pursuant to which PAL filed a clearance application [Rollo.. p. PETITIONER. RB-IV-9319-77 which ordered petitioner to restore private respondent Dolina to its payroll. Dolina took a psychological examination wherein his "Adaptability Rating" was found to be "unacceptable" [Annex "L" to the Petition. Rollo. 33. A.] On 26 January 1977 the Officer-in-Charge of the Department of Labor Regional Office No.

the oppositor's TERMINATION IS IN ORDER. WHEREFORE. PAL opposed the motion claiming that it was no longer obliged to return Dolina to its payroll since the decision of the Labor Arbiter dated 23 March 1979 in its favor was a final resolution of the case by arbitration [Annex "N" to the Petition. The Court issued a temporary restraining order on 10 October 1980. pp. Consequently. Private respondent Dolina failed to file his comment and the Solicitor General submitted his own Comment supporting the stand of petitioner. this petition. the Decision appealed from should be as it is hereby affirmed in toto. 10-11. the dispositive portion of which reads as follows: IN VIEW OF ALL THE FOREGOING. with a prayer for a temporary restraining order. Rollo. public respondent NLRC rendered its decision containing the assailed portion to wit: In fine it is our considered view that the respondent's application for clearance to dismiss the complainant has sufficiently surmounted the test of validity. Be that as it may. The parties shall consider this arrangement pending final resolution of the case by arbitration. contending that the Labor Arbiter's decision was not yet final because of his timely appeal. However the respondent is ordered to restore the complainant to its payroll and to pay his salaries from 1 April 1979 until this case is finally resolved. 85. 97. Besides pursuant to P. p.] Hence. The complainant. Rollo. Rollo. 137. p. therefore. public respondent NLRC submitted its own Comment. The order of Regional Director Vicente Leogardo for the reinstatement with backwages of Mr. SO ORDERED. he shall be considered in the payroll effective 1 October 1976.D. must be restored to the payroll and paid for his salaries from 1 April 1979. the date he was dropped from the respondent's payroll. Dolina then appealed the Labor Arbiter's decision to the public respondent NLRC on 29 April 1979 and there filed a motion praying that PAL be ordered to return him to PAL's payroll. As things stand. Rollo. Since the termination is upheld. No. p. Dolina is hereby rendered moot and academic. 1. [Decision of Labor Arbiter. Armando Dolina against the Philippine Airlines. the main issue is still being litigated. 12. 3. p. [NLRC Decision.] By virtue of the above decision. 1978. SO ORDERED. the Labor Arbiter rendered its decision. . it is our considered opinion that there is merit on the application for clearance. on 30 May 1977.AGREEMENT The undersigned parties hereby agree to the following: 1. 2. While pending final resolution of the complaint of Mr. Subsequently. and therefore. we are not in accord with the discontinuation of the payment of complainant's salaries. the Acting Secretary of Labor issued an order finding that the propriety of the suspension had been rendered moot and academic by the above agreement and referred the case for compulsory arbitration to the Executive Labor Arbiter [Annex "J" to the Petition. pp. p.] On 23 March 1979. 1367 dated May 1. the same should be as it is hereby GRANTED. Due to the adverse stand of the Solicitor General. Underscoring supplied. The agreement of the parties stipulated in no uncertain terms that the complainant [Dolina] is to be carried in respondent's payroll until this case is finally resolved. 32-33.] On 8 February 1980. perforce the claim for moral damages is denied. PAL removed Dolina from its payroll effective 1 April 1979. this office is devoid of jurisdiction to entertain said claim.

it is an act of grave abuse of discretion amounting to lack of jurisdiction on its part to order petitioner to pay private respondent's salaries from 1 April 1979 until the case is finally terminated. it is the Labor Arbiter who is clothed with the authority to conduct compulsory arbitration on cases involving termination disputes [Article 217. chosen by the parties or appointed by statutory authority to hear and decide the case in controversy [Chan Linte v. effective from the time he was preventively suspended until final resolution of the case by arbitration. G. the case was not yet finally terminated by arbitration and Dolina is entitled to be placed in petitioner's payroll until the complaint is finally resolved. This is clearly an absurdity which could not have been contemplated by the parties. private respondent was included in petitioner's payroll. Any appeal raised by an aggrieved party from the Labor . Wisconsin Employees' Relations Board. 340 U.The issue before the Court is whether or not the NLRC committed grave abuse of discretion in holding that private respondent Dolina was entitled to his salaries from 1 April 1979 "until this case is finally resolved. L-40258. Pres. 381 (1951). the stipulation in the 2 March 1977 agreement that Dolina shall be included in the payroll of PAL until final resolution of the case by arbitration was intended to supersede the order of the Regional Director which. compulsory arbitration is deemed terminated because by then the hearing and determination of the controversy has ended. Rule 130.] When the consent of one of the parties is enforced by statutory provisions. For if it were so. including the situation of the subject thereof and the parties to it.S. including appeal. 1. Lim v. 99 SCRA 668. In entering into the agreement. 1980. The above contentions call for the proper interpretation of the agreement between the parties. as amended. Law Union and Rock. 383-410. In lieu of reinstatement and the payment of his backwages. 95 L.] In the instant case. 23 Wash. the proceeding is referred to as compulsory arbitration. PAL argues that the arbitration of the case is limited to and comprises merely the proceedings before the Labor Arbiter such that when the latter renders a decision. No.. was rendered moot and academic. for as long as one of the parties appeal to the NLRC and until the case is finally resolved by this Court. 442. specifically the third stipulation containing the clause "pending final resolution of the case by arbitration. Civil Code of the Philippines. Since the Labor Arbiter's decision in favor of petitioner did not finally resolve the case in view of the timely appeal by private respondent from said decision. compulsory arbitration is the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties [See Wood v." PAL contends that inasmuch as the respondent Commission acting en banc had affirmed in toto the decision of the Labor Arbiter granting petitioner the clearance for the dismissal of private respondent Dolina. September 11. 1371. by stipulation of the parties. 548 (1921). Amalgamated Association v. In labor cases. 52 LRA 369 (1920). without having to perform any work for the petitioner. Seattle. In its broad sense. 42 Phil. Public respondent NLRC on the other hand contends that arbitration is a continuing process from the time the case is referred by the Secretary of Labor to the Arbitration Branch until the final judgment is had on appeal. may be considered so that the intention of the contracting parties may be judged correctly [Art. 62 P 135.R. Neither can proceedings on appeal before the NLRC en banc be considered as part of the arbitration proceeding." It is a basic rule in interpretation of contracts that the circumstances under which an instrument was made. Rules of Court. arbitration of the dispute is terminated.] When the Labor Arbiter renders his decision. PAL contends that said stipulation refers only to the resolution of the case by arbitration and said arbitration of the case was terminated when the Labor Arbiter rendered its decision dated 23 March 1979. Co. arbitration is the reference of a dispute to an impartial third person. Section 11.] Under the Labor Code. Decree No. the parties could not have intended to include in the clause "final resolution of the case by arbitration" the whole adjudicatory process. Ed. Ins. even proceedings on certiorari before this Court would be embraced by the term "arbitration" and private respondent will continue to receive monthly salary without rendering any service to the petitioner regardless of the outcome of the proceedings before the Labor Arbiter. Court of Appeals.

the NLRC en banc merely reviews the Labor Arbiter's decision for errors of fact or law and no longer duplicates the proceedings before the Labor Arbiter. 76746. * * * In fine. September 21. This Court has reiterated time and again that the law. We can only say that for exercising extraordinary diligence in the selection of its pilots. National Labor Relations Commission. We cannot disturb them. the NLRC held that: With respect to the issue of whether or not the complainant's [Dolina] dismissal was sufficiently grounded. G. in ordering the continued payment of Dolina's salaries from 1 April 1979 until the case is finally resolved. October 30. This is understandable for it concerns the safety of its properties. it is Our considered view that the respondent's application for clearance to dismiss the complainant has sufficiently surmounted the test of validity. we are not persuaded that the respondent [herein petitioner PAL] is under obligation to employ him as regular employee simply because he was certified physically fit and technically proficient by the CAA. 76721. We join the public in commending it. which we do not find here. the dismissal was for a just cause. as in this case. authorizes neither oppression nor self-destruction of the employer [Colgate . supra. 1987. The order of the NLRC for the continued payment of Dolina's salaries would allow the latter to unjustly enrich himself at the expense of the petitioner. backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal [New Manila Candy Workers Union (NACONWA-PAFLU) v.Arbiter's decision is already beyond the scope of arbitration since in the appeal stage. Durabilt Recapping Plant & Co. it would neither be fair nor just to allow the employee to recover something he has not earned and could not have earned [Santos v. supra. suspended or dismissed. L-29728. In view of the above finding of valid dismissal. and above all. This is clearly untenable. National Labor Relations Commission. April 26. however. 1987.] Moreover. v. Where the employee's dismissal was for a just cause.] So that. Thus. willing and ready to work but was prevented by management or was illegally locked out. Santos v. 81471. which by law it is committed to transport safely. if there is no work performed by the employee there can be no wage or pay unless the laborer was able.R. the NLRC in effect ordered the payment of backwages to Dolina notwithstanding its finding of a valid dismissal. In the first place. the NLRC had no authority to order the continued payment of Dolina's salaries from 1 April 1979 until the case is finally resolved. 152 SCRA 328. 86 SCRA 37. National Labor Relations Commission. National Labor Relations Commission.R.R. 1989. More important.R. This is contrary to the age-old rule of "a fair day's wage for a fair day's labor" which continues to govern the relation between labor and capital and remains a basic factor in determining employees' wages [Durabilt Recapping Plant & Co. No. 154 SCRA 166. In the absence. such that when the latter rendered his decision. the safety of the lives and properties of its passengers. of any showing that its standards are unreasonable and discriminatory. in protecting the rights of the laborer. July 27. No. Chong Guan Trading v. there is no factual or legal basis for ordering the payment of backwages. the case was finally resolved by arbitration. therefore. No. G.] Where. 1978. The NLRC's order would result in compensating Dolina for services no longer rendered and when he is no longer in PAL's employ. National Labor Relations Commission. In affirming the Labor Arbiter's decision granting the termination clearance. is the fact that the NLRC's order for the continued payment of Dolina's salaries is inconsistent with its affirmance of the Labor Arbiter's decision upholding the validity of Dolina's dismissal. G. the clause "pending final resolution of the case by arbitration" should be understood to be limited only to the proceedings before the Labor Arbiter. No. Court of Industrial Relations. v. G.

Drilon. Court of Industrial Relations.R. Ople. April 30. v.Palmolive Philippines.] In this case. 64809. v. G. 1988. No. L-23357.. NLRC's order for continued payment of Dolina's salary from 1 April 1979 up to the final resolution of the case would place Dolina in a better position than those workers who were found to have been illegally dismissed by their employer. Madrigal & Co. 82895. L-48237. Philippine Airlines.R.R.R. No. v. v.. 1987] while Dolina. 56 SCRA 694. v. In the recent case of Llora Motors. G. Inc. Zamora." WHEREFORE. G. Minister of Labor. No. whose dismissal was found to be valid. the backwages that can be recovered by the worker is limited to three years [Mercury Drug Co. No. 126 SCRA 223. . No. 1983. RB-IV-9319-77 requiring petitioner to restore private respondent to its payroll and ordering the payment of his salaries from 1 April 1979 until the case is finally resolved is hereby declared NULL and VOID and SET ASIDE. Similarly. G. June 30. No. Considering the foregoing. Madrigal & Co.R. National Labor Relations Commission. 1974. 163 SCRA 323. that part of the dispositive portion of the decision of the National Labor Relations Commission in NLRC CASE NO. November 29. Inc. the Court holds that respondent NLRC's order for the continued payment of Dolina's salaries from "1 April 1979 until the case is finally resolved" is contrary to law and established jurisprudence and the NLRC acted in excess of its jurisdiction in issuing the assailed order. November 7. for being without basis either in law or contract. the NLRC chose not to adhere with fidelity to this doctrine. can recover approximately ten years backwages. G. Inc..R. The temporary Restraining Order issued by the Court on 10 October 1980 is made PERMANENT. Inc. 73681. Inc. June 30. which corresponds to the period from 1 April 1979 until "final resolution" of the instant case. Inc. which required the employer to pay to its employee an amount equivalent to a half month's pay for every year of service as retirement benefits. v. there is in this case an excess of jurisdiction on the part of the NLRC in ordering the continued payment of Dolina's salaries "from 1 April 1979 until the case is finally resolved. Secondly. G. L-49023. For in the latter case. 1989 the Court held as an act without or in excess of jurisdiction the portion of the Labor Arbiter's award.

000 BPSD petroleum refinery. These data are to be used in securing the services of a Basic Design Engineering Company as well as part of Project Accomplishment of Infinite Loop Technology Corp.R. No.200. Review the progress of work being done by the Basic Design Engineering Company and coordinate with the company management team for an efficient and effective project implementation. As well as the Philippine Clean Air Act provisions applicable to the proposed 1. Implement new process technologies that can meet the requirements of Japanese. 1999 to petitioner.[ G. Review and revise/improve as necessary the existing conceptual process block diagram or Process Flow Scheme of the proposed petroleum refinery. . furnished the details of the employment of her services as follows: Subject: Acceptance of Professional Services Refinery – Senior Process Design Engineer Dear Ms. 2. As indicated in the above-quoted portion of Rabino's letter. Prepare the Process Design Terms of Reference or Basis of Design and other data required for the proposed 1. revisions and improvement of process design on a regular basis as required by company management team. Participate in discussions during the solicitation of proposals from Basic Design Engineering Companies. January 31. 162401. 8. RESPONDENTS. Make reports and recommendations to the company management team regarding work progress. VS INFINITE LOOP TECHNOLOGY CORPORATION.000 BPSD Petroleum Refinery. 3.000 BPSD total capacity. Various capacity combinations are to be considered to develop process design modules of 1. Rabino (Rabino) who. EDWIN R. the terms and conditions attendant to the acceptance of petitioner's "Professional Services"[2] were attached to it reading: Scope of Professional Services The Senior Process Design Engineer shall work together with the Process Design Consultant in performing the scope of services below which includes but are not limited to the following: 1. by letter[1] dated September 30. Perform other related works that are necessary in completing the Engineering Procurement and Construction (EPC) bid documents and progress reports relevant to schedules of deliveries to the Project Proponent as required by the company. 5. RABINO AND COURT OF APPEALS. 6.200. PETITIONER. 4. Corazon Almirez (petitioner) was hired as a Refinery Senior Process Design Engineer for a specific project by respondent Infinite Loop Technology Corporation (Infinite Loop) through its General Manager/President-co-respondent Edwin R. 2006 ] CORAZON ALMIREZ. We thank you for considering our company as a valued partner in the advancement of Petroleum Processing Technology in our country. Australian and US petroleum product standard by the year 2004. 1999 up to the completion of the scope of services and continuation thereof with a guaranty of 12 continuous months as outlined in the attachment or until a mutually agreed date. Your services will commence effective October 18. 7. Almirez This is to confirm acceptance of your services as per attached Terms and Conditions. Petroleum Product Standards required shall be researched and be part of the Basis of Design or Term of Reference. Represent the Company in technical meetings to be held locally or abroad.200.

2000 Salary for Jan.9.000. 2000 Amount P20.US$ 300. 15-30 salary Salary for Dec. Others: Infinite Loop Technology Corporation to provide the ff: . .00 12.00 12.) .00 .Out of town travel expenses Other Benefits: . 1999 Salary for Nov.000.00 per month as transportation allowance (Engineer to use her personal car in the performance of work) to be paid in equivalent pesos every end of the month. or until a mutually agreed date. For her services.Communication Expenses (Cellular phone.000. fax.000.Printer/ Scanner .00 per month (net of tax) To be paid 50/50 split in US Dollars or equivalent Peso every 15th and 30th of the month Length of Service: Guaranteed minimum of 12 continuous months or up to completion of services.Laptop Computer (Pentium III or best available model with modems etc.00 2. Reimbursable Expenses: Work related expenses which include but not limited to the following: .500. petitioner received the following amounts on the dates indicated:[3] Voucher date 11/23/99 12/02/99 12/15/99 Salary for Nov. Terms of Payments Professional Fee: US$ 2. bore the signature of petitioner and Rabino.000. 15-30. 10. underscoring supplied) The letter. 1-15.Representation Expenses . Continue related works when the construction stage of this Proposed Refinery will push through. 1999 1/17/00 1/16/00 Salary for Jan.00 10. Serve as technical consultant to Infinite Loop Technology Corp. tels) .00 8.000. 1999 Full payment for Nov. 1-15. as well as the attached documents. 1-15. 16-31.Process Simulation Softwares to be identified later (Emphasis in the original. on other relevant works or projects when required.Project Bonus at the end of the contract to be mutually agreed upon by both parties.

1999 up to the completion of the scope of the services and continuation thereof with a guaranty of 12 continuous months as outlined in the attachment or until a mutually agreed date". 2000. which is way below than the agreed professional fee of US $2. our client suffered sleepless nights. 2000 12. On account of your blatant violation of the terms and conditions of the contract. Moreover. However. formal demand is hereby made on you to compensate our client the total amount of her contract or the amount of US DOLLARS: twenty thousand ($ 20.229." and that since "the financial side for the engineering design for the proposed [project] is not yet available x x x it would be prudent to SUSPEND her professional services as Senior Process Design Engineer effective February 7. you have paid her only a total amount of SEVENTY FOUR THOUSAND TWO HUNDRED TWENTY NINE & 17/100 PESOS (P74. my understanding is that. this amount is already net of tax x x x.000. . be constrained to file the necessary action in court.000. 1999. MORE OR LESS.00 salary I am supposed to be receiving. petitioner.[5] Rabino stated that petitioner's letter "was totally different [from] what [they] verbally agreed [upon]" in her house.000. through counsel. wrote Rabino "to compensate [her with] the total amount of her contract. 2000. you stated that our client's services "will commence effective October 18. In the said contract.1/20/00 Salary for Jan.000. I would like to render my service at Infinite Loop based on the contract that I signed and I am willing to serve as technical consultant to Infinite Loop on other relevant works or projects while we are waiting for the Masbate refinery project. CORAZON S. The same is a clear violation of the terms and conditions of the contract." thus: Our client MS.00). 1-15. [the Proposed 1. Currently I am paying my SSS contributions voluntarily so there is no need for the company to pay my monthly contributions.000) and even less because [of] SSS and tax deductions x x x I understand that tax should be deducted from my salary for your Accounting records but I would like to ask you not to deduct it from the P30. However. you suspended her professional services effective February 7. when I received my salary for the month of January which is only partial. In view thereof.. 2000.17). By letter[6] dated August 9. despite your guarantee of at least 12 continuous months of service. failing which we shall. Inc. ALMIREZ has referred to us for appropriate legal action concerning her contract with your company as a refinery process design engineer. petitioner conveyed to Infinite Loop through Rabino her disappointment with the "salary" she was receiving in this wise: x x x When I agreed with a salary of P30. She was constrained to resign from her job as an engineer at the Technoserve International Co. within five (5) days from your receipt hereof.00 --------------Total P77.00 By letter[4] dated February 2.000 BPSD Petroleum Refinery] can be deferred like its present status. which was accepted by our said client on September 30. much to our regret.200.000..00 a month net of tax. in view of her contract with your company. 2000. that "like any other proposed project. Responding." Rabino assured petitioner that her professional services would be resumed once they are provided with the initial payment requested from the project proponent. anxiety and besmirched reputation.00 monthly. (P25.500.

the Labor Arbiter. We all hope that you would bear with us.00 as and for exemplary damages.[9] Infinite Loop and Rabino (hereafter respondents) appealed to the NLRC.000. economic and political crisis we are encountering now. however.00 plus 5% thereof by way of attorney's fees. 6 of the Scope of Professional Services of petitioner showed that "the company's management team exercises control over the means and methods in the performance of [petitioner's] duties as Refinery Process Design Engineer. finding that paragraph No. there being no employee-employer relationship between them as the contract they entered into was one of services and not of employment. 2000. Before the Court of Appeals to which respondents elevated the case. By Resolution[10] dated September 19.Rabino later wrote petitioner. petitioner filed a complaint against Infinite Loop and Rabino before the National Labor Relations Commission (NLRC) for "breach of contract of employment.. but unfortunately the Project Proponent.E. We all hope that this project will push thru after our country would overcome all the peace and order. is still in contact with us. (3) P100.[7] as follows: Thank you for reminding us about our agreement about this possible landmark project. the NLRC. have encountered re-organization and have not yet paid us for this project. The Labor Arbiter thus ordered Infinite Loop and Rabino to jointly and severally pay petitioner the sum of US$ 24.x x x COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION AND COMMITTED REVERSIBLE ERROR IN NOT FINDING THAT [PETITIONER] IS NOT AN EMPLOYEE OF [INFINITE LOOP]. the former Chairman of Arrox Resources Corp. At the moment.00 or its peso equivalent representing salaries and wages. It dismissed petitioner's claim for damages. . they argued that the NLRC: I.000." held that there existed an employeremployee relationship between the parties. is the lead company in this undertaking in association with other companies forming a consortium to cope up with the huge financial and technical requirement of this project. dismissed respondents' appeal." praying that judgment be rendered in her favor ordering Infinite Loop to pay: (1) $22. 2001. NON PAYMENT OF PROFESSIONAL FEE AND BREACH OF CONTRACT. You all know that Infinite Loop Tech. Arrox Resources Corp.000. 2000. We would inform you soonest once any development from the project proponent would be relayed to us. (2) P300.000. and (4) 10% of the total claim as and for attorney's fees.000. 2002. We all have invested a lot of group resources for this. by letter of November 15. finding that employer-employee relation between the parties indeed existed. By Resolution of November 14. Corp. II. On December 12.00 as and for moral damages.. Infinite Loop moved to dismiss[8] petitioner's complaint on the ground that the NLRC has no jurisdiction over the parties and the subject matter. I.00 in its peso equivalent at the date of payment less advances in the amount of P77.x x x ABUSED ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION AND ERRED IN NOT FINDING THAT THE LABOR ARBITER HAS NO JURISDICTION OVER THE CAUSES OF ACTION PLEADED IN THE COMPLAINT.

revisions and improvement of process design on a regular basis as required by company management team" does not "show that the company's management team exercises control over the means and methods in the performance of her duties as Refinery Process Design Engineer. 2003 that no employer-employee relationship existed between the parties. It accordingly reversed the NLRC decision and dismissed petitioner's complaint. to wit: (1) the manner of selection and engagement.[11] (Underscoring supplied) The appellate court. Philhealth. as affirmed by the NLRC. In bolstering her contention that there was an employer-employee relationship. an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved. the so called "control test" is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship.x x x SERIOUSLY ERRED IN NOT FINDING THE ENVISIONED ENGAGEMENT OF [PETITIONER] AS A REFINERY PROCESS ENGINEER IS CO-TERMINOUS WITH THE PROJECT. and withholding tax. and (4) the presence or absence of the power of control. B.[15] From the earlier-quoted scope of petitioner's professional services." Having hired petitioner's professional services on account of her "expertise and qualifications" as petitioner herself proffers in her Position Paper. on the project for which she was specifically hired. x x x INCONSISTENTLY RULED THAT THERE WAS NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES BUT AT THE SAME TIME IT CITED THAT [PETITIONER] IS A PROJECT EMPLOYEE. x x x RULED THAT THE SEPARATION FROM SERVICE OF [PETITIONER] BECAUSE OF THE PROJECT'S DISCONTINUANCE DID NOT RESULT TO ILLEGAL DISMISSAL. Of these four. but also the manner and means to be used in reaching that end. hence. WHICH PROJECT DID NOT MATERIALIZE. jurisprudence has invariably applied the four-fold test. the last one. the NLRC and the Labor Arbiter have no jurisdiction over the complaint. there is no showing of a power of control over petitioner. Philhealth contributions and . MOREOVER.' held by Decision[12] dated October 20." The deduction from petitioner's remuneration of amounts representing SSS premiums. Contrary to the finding of the Labor Arbiter. (3) the presence or absence of the power of dismissal. x x x FAILED TO CONSIDER THE RELIEF MENTIONED IN [PETITIONER'S] COMPLAINT FOR PAYMENT OF SALARY x x x C.[16] the company naturally expected to be updated regularly of her "work progress.[13] To ascertain the existence of an employer-employee relationship. the present petition. above-quoted paragraph No.III. finding that "[petitioner] was hired to render professional services for a specific project' and her "primary cause of action is for a sum of money on account of [Infinite Loop's] alleged breach of contractual obligation to pay her agreed professional fee. and to the designation of the payments to her as "salaries.[14] Under the control test. 6 of the "Scope of [petitioner's] Professional Services' requiring her to "[m]ake reports and recommendations to the company management team regarding work progress." if any. The services to be performed by her specified what she needed to achieve but not on how she was to go about it. petitioner draws attention to the pay slips and Infinite Loop's deduction of her SSS. Hence. (2) the payment of wages. petitioner contending that the appellate court erred when it: A. THE ASSAILED JUDGMENT IS BASED ON MISAPPRECIATION OF FACTS.

withholding tax. as the employers in these two cases did not only regularly make similar deductions from the therein complainants" remuneration but also registered and declared the complainants with the SSS and Medicare (Philhealth) as their employees. 1999. which is the law between the parties. as reflected earlier. v."[20] which. that for the period of January 16-31. 2000. Such payslip cannot prove the existence of an employer-employee relationship between the parties.[17] the other amounts of remuneration having been documented by cash vouchers. The cases of Equitable Banking Corp. NLRC[19] should be differentiated from the present case. NLRC[18] and Nagusara v. Even petitioner concedes rendering service "based on the contract. "Salary" is a general term defined as "a remuneration for services given. . WHEREFORE. is bereft of a showing of power of control." It is the above-quoted contract of engagement of services-letter dated September 30. the most crucial and determinative indicator of the presence of an employer-employee relationship. was made in the only payslip issued to petitioner. the petition is DENIED for lack of merit. together with its attachments. As for the designation of the payments to petitioner as "salaries." it is not determinative of the existence of an employer-employee relationship.

Wage Orders increasing the minimum wage in 1983 were complied with by the defendant. 6 and Sec. subject to the provisions of Sec. Before us is a Petition for Review on Certiorari of the decision[1] of the Court of Appeals[2] in CA-G. It held: "However. the contract for security services had earlier been terminated without the corresponding amendment. 5 and 6. The contract called for the payment to a guard of P754. Both Wage Orders contain the following provision: "In the case of contract for construction projects and for security. (Eagle Security Agency. By the time of the filing of plaintiff‘s Complaint. INCORPORATED vs. the Wage Orders made specific provisions to amend existing contracts for security services by allowing the adjustment of the consideration paid by the principal to the security agency concerned. Plaintiff provided security guards in defendant‘s banana plantation. RESPONDENTS. 6 which further increased said minimum wage by P3. adjustments must be paid by the principal to the security agency concerned. On June 16. respectively). Wage Order No. 5 was promulgated directing an increase of P3. vs. janitorial and similar services. The trial court decided in favor of the plaintiff. Defendant refused. NLRC. 11th Judicial Region. Branch 9. The pertinent facts as found by the Court of Appeals are as follows: "The evidence shows that in June 1986. 33893 entitled COMMANDO SECURITY SERVICE AGENCY. in order for the security agency to pay the security guards. vs.R. et al. Inc. PETITIONER. Before the plaintiff could pay the minimum wage as mandated by law. 19203-88.72 for a four hour overtime while the shift-in-charge was to be paid P811. INC.25. THE HONORABLE COURT OF APPEALS (FORMER EIGHTH DIVISION) AND COMMANDO SECURITY SERVICE AGENCY. Defendant opposed the Complaint by raising the following defenses: (1) the rate adjustment is the obligation of the plaintiff as employer of the security guards. the rate adjustment payable by defendant amounted to P462. Phil. and defendant Lapanday Agricultural Development Corporation entered into a Guard Service Contract. VS. January 31. Inc. Wage Orders No.60 for the 4-hour overtime." Plaintiff demanded that its Guard Service Contract with defendant be upgraded in compliance with Wage Order Nos.[ G. 112139. The Wage Orders require the amendment of the contract as to the consideration to cover the service contractor‘s payment of the increases mandated. 1986 without the rate adjustment called for Wage Order Nos. Davao City in Civil Case No.. .R. LAPANDAY AGRICULTURAL DEVELOPMENT CORPORATION which affirmed the decision[3] of the Regional Trial Court. Inc...40 on a daily 8-hour basis and P808. 1989). May 18. 1984 by Wage Order No. the increase in the minimum wage and allowances rates of the workers shall be borne by the principal or client of the construction/service contractor and the contracts shall be deemed amended accordingly. 1984. 2000 ] LAPANDAY AGRICULTURAL DEVELOPMENT CORPORATION.28 on a daily 8-hour basis and an additional P565. and (3) the Wage Orders violate the impairment clause of the Constitution. (2) assuming its liability.00 on the ECOLA. 9. in the case at bar. 5 and 6 being implemented.346.00 increase on the ECOLA. Their Contract expired on June 6. plaintiff Commando Security Service Agency. Tuberculosis Society. However. NLRC. Plaintiff now demands adjustment in the contract price as the same was deemed amended by Wage Order Nos. No. 5 and 6. This was followed on November 1. 5 and 6. CV No. the sum it should pay is less in amount. 3 (b) of this order" (Sec.00 per day on the minimum wage of workers in the private sector and a P5.

petitioner submits that it is the National Labor Relations Commission (NLRC) and not the civil courts that has jurisdiction to resolve the issue involved in this case for it refers to the enforcement of wage adjustment and other benefits due to private respondent‘s security guards mandated under Wage Order Nos.31 or 25% of the total adjustment claim of P462. the increases/adjustments in wages and ECOLA are due to private respondent and not to the security guards who are not parties to the said contract. But if its Eagle that pays them. 5 and 6 constitute impairments of contracts in violation of constitutional guarantees. vs. amounts that they claim were never paid by private respondent and therefore not collectible by the latter from the petitioner. Inc." [5] 3." Petitioner‘s motion for reconsideration was denied. A SECURITY AGENCY WHO DID NOT PAY WAGE INCREASE TO ITS GUARDS IT HAD ALREADY TERMINATED AND WITHOUT THEIR AUTHORIZATION CANNOT INSTITUTE AN ACTION TO RECOVER SAID WAGE INCREASE FOR ITS BENEFIT. et al. 2. NLRC. It is therefore immaterial whether or not private respondent paid its security guards their wages as adjusted by said Wage Orders and that since the forty-two (42) security guards are not parties to the Guard Service Contract.341. Tuberculosis Society. 5 and 6 intended for the security guards without the authorization of the security guards concerned. private respondent‘s complaint partakes of the nature of an action for recovery of what was supposedly due the guards under said Wage Orders. NLRC. considering that the contract had expired and had not been renewed. its decision is without force and effect.25 for lack of basis and for being unconscionable. 4.[4] hence this petition where petitioner cites the following grounds to support the instant petition for review: "1. Petitioner also assails the award of attorney‘s fees in the amount of P115. petitioner asserts that private respondent has no factual and legal basis to collect the benefits under subject Wage Order Nos. Inc.. compulsory coverage of private sector employees in the Social Security System. NLRC and Phil. which is deemed amended by Section 6 of Wage Order No. that pursuant to their amended Guard Service Contract.585. 6. May 18. Reiterating its position below. Moreover.[6] On the other hand. .. and the abolition of share tenancy enacted pursuant to the police power of the state (Eagle Security Agency. et al. vs. the High Court ruled" The Supreme Court has rejected the impairment of contract argument in sustaining the validity and constitutionality of labor and social legislation like the Blue Sunday Law. Inc. the latter can claim reimbursement from PTS in lieu of an adjustment. there is no need for them to authorize the filing of. it cannot claim reimbursements from Eagle. if PTS pays the security guards. Inasmuch as the services of the forty-two (42) security guards were already terminated at the time the complaint was filed on August 15. THE SAME MAY NOT BE AWARDED. 5 AND 6. 18 May 1989). IN THE ABSENCE OF BAD FAITH AND WITHOUT THE TRIAL COURT CORRECTLY ESTABLISHING THE BASIS FOR ATTORNEY’S FEES. Tuberculosis Society. (Eagle Security Agency vs. "As to the issue that Wage Orders Nos. THE NATIONAL LABOR RELATIONS (SIC) IS THE PROPER FORUM THAT HAS THE JURISDICTION TO RESOLVE THE ISSUE OF WHETHER OR NOT THE PETITIONER IS LIABLE TO PAY THE PRIVATE RESPONDENT THE WAGE AND ALLOWANCE INCREASES MANDATED UNDER WAGE ORDER NOS. or be joined in. vs. 1988."Given these circumstances. THE WAGE INCREASES PROVIDED FOR IN THE WAGE ORDERS WERE DUE TO THE GUARDS AND NOT THE SECURITY AGENCY. private respondent contends that the basis of its action against petitioner-appellant is the enforcement of the Guard Service Contract entered into by them. National Labor Relation Commission and Phil. 5 and Section 9 of Wage Order No. 5 and 6. Considering that the RTC has no jurisdiction. 1989).

In all these cases.31 granted by the trial court which is 25% of the total claim is not unconscionable. jurisdiction lies with the regular courts.583. considering that the adamant attitude of the petitioner (in implementing the questioned Wage Orders) compelled the herein private respondent.[9] While the resolution of the issue involves the application of labor laws. Private respondent further contends that petitioner is estopped or barred from raising the question of jurisdiction for the first time before the Supreme Court after having voluntarily submitted to the jurisdiction of the regular courts below and having lost its case therein. As regards the award to private respondent of the amount of P115. Claims for actual. f accompanied with a claim for reinstatement. We agree with the respondent that the RTC has jurisdiction over the subject matter of the present case.[8] In its complaint.585. the core issue involved in the present petition is whether or not petitioner is liable to the private respondent for the wage adjustments provided under Wage Order Nos. We resolve first the issue of jurisdiction.[10] and there is none in this case. Furthermore. the amount of P115. and 6. Social Security. hours of work and other terms and conditions of employment. On the merits. private respondent alleges that the suit filed before the trial court is for the purpose of securing the upgrading of the Guard Service Contract entered into by herein petitioner and private respondent in June 1983. private respondent maintains that there is enough evidence and/or basis for the grant thereof. rates of pay.00) regardless of whether accompanied with a claim for reinstatement. those cases that workers may file involving wages. Cases arising from any violation of Article 264 of this Code. Unfair labor practices. As regards the jurisdiction of the RTC. It is well settled in law and jurisprudence that where no employer-employee relationship exists between the parties and no issue is involved which may be resolved by reference to the Labor Code. Medicare and maternity benefits. 5 and 6 and for attorney‘s fees. arising from employer-employee relations. 2. private respondent is not seeking any relief under the Labor Code but seeks payment of a sum of money and damages on account of petitioner‘s alleged breach of its obligation under their Guard Service Contract. other labor statutes or any collective bargaining agreement. 5. including those of persons in domestic or household service. . Except claims for Employees Compensation. reference to the labor code was only for the determination of the solidary liability of the petitioner to the respondent where no employer-employee relation exists. it is the Regional Trial Court that has jurisdiction. Article 217 of the Labor Code as amended vests upon the labor arbiters exclusive original jurisdiction only over the following: 1. The action is within the realm of civil law hence jurisdiction over the case belongs to the regular courts.[7] We resolve to grant the petition. 4. an employer-employee relationship is an indispensable jurisdictional requisite. to litigate in court.31 as attorney‘s fees. including questions involving legality of strikes and lockouts. 3. since the legal fee payable by private respondent to its counsel is essentially on contingent basis.this suit. all other claims. The enforcement of this written contract does not fall under the jurisdiction of the NLRC because the money claims involved therein did not arise from employer-employee relations between the parties and is intrinsically a civil dispute.000. Thus. Termination disputes. moral exemplary and other forms of damages arising from employer-employee relations. involving an amount exceeding five thousand pesos (P5.

5 and 6. job or project. – The provisions of the immediately preceding Article shall likewise apply to any person. the law itself establishes one between the principal and the employees of the agency for a limited purpose i. the security guards‘ immediate recourse for the payment of the increases is with their direct employer.[15] Even in the absence of an employer-employee relationship. partnership. As an employer. Contractor or subcontractor. the security agency collects from its client payment for its security services. Indirect employer. shall be paid in accordance with the provisions of this Code. The security guards‘ contractual relationship is with their immediate employer. the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract. What the Wage Orders require. 1988. EAGLE. the guards bonds. is made the indirect employer of the contractor‘s employees to secure payment of their wages should the contractor be unable to pay them. G. and that the principal is ultimately liable for the said increases. NLRC[14] that the joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance with the provisions therein including the minimum wage. NLRC[13] and Spartan Security and Detective Agency.[16] In ruling that under the Wage Orders. in the same manner and extent that he is liable to employees directly employed by him. in order for the security agency to comply with the new wage and allowance rates it has to pay the security guards. EAGLE. therefore. the solidary liability of the principal and contractor was held to apply to the aforementioned Wage Order Nos. 158 SCRA 665]. materials and supplies necessary for the maintenance of a security force. 106." It will be seen from the above provisions that the principal (petitioner) and the contractor (respondent) are jointly and severally liable to the employees for their wages. This Court held in Eagle Security. In the above-mentioned cases. the Wage Orders made specific provision to amend existing contracts for security services by allowing the adjustment of the consideration paid by the principal to the security agency concerned. EAGLE is tasked. with the payment of their wages [See Article VII Sec. PTSI in this case. contracts with an independent contractor for the performance of any work. R. if any. uniforms and other equipments. The contractor is made liable by virtue of his status as direct employer. Premises considered. ‗To be borne‘. in order to ensure that the employees are paid the wages due them. Inc. association or corporation which. existing security guard services contracts are amended to allow adjustment of the consideration in order to cover payment of mandated increases. – Whenever an employer enters into a contract with another person for the performance of the former‘s work. 3 of the Contract for Security Services. The private respondent is an independent/job contractor[11] who assigned security guards at the petitioner‘s premises for a stipulated amount per guard per month. among others. firearms with ammunitions. The principal. The Contract of Security Services expressly stipulated that the security guards are employees of the Agency and not of the petitioner. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code. supra and Bautista vs. there existed a contractual agreement between PTSI and EAGLE wherein the former availed of the security services provided by the latter. would directly pay the security guards the wage and allowance increases because there is no privity of contract between them. however. Inciong. March 16.e. tools. this Court stated: "The Wage Orders are explicit that payment of the increases are ‗to be borne‘ by the principal or client. is the amendment of the contracts as to . does not mean that the principal. vs. Inc. the employees of the contractor and of the latter‘s subcontractor. ART. task. accessories. 52824. on the other hand. 107. However. This payment covers the wages for the security guards and also expenses for their supervision and training.[12] Articles 106 and 107 of the Labor Code provides the rule governing the payment of wages of employees in the event that the contractor fails to pay such wages as follows: "Art. On the other hand. vs.Private respondent admits that there is no employer-employee relationship between it and the petitioner. not being an employer. In return. No.

the consideration to cover the service contractors‘ payment of the increases mandated. In the end, therefore, ultimate liability for the payment of the increases rests with the principal. In view of the foregoing, the security guards should claim the amount of the increases from EAGLE. Under the Labor Code, in case the agency fails to pay them the amounts claimed, PTSI should be held solidarily liable with EAGLE [Articles 106, 107 and 109]. Should EAGLE pay, it can claim an adjustment from PTSI for an increase in consideration to cover the increases payable to the security guards."[17] It is clear also from the foregoing that it is only when contractor pays the increases mandated that it can claim an adjustment from the principal to cover the increases payable to the security guards. The conclusion that the right of the contractor (as principal debtor) to recover from the principal as solidary co-debtor) arises only if he has paid the amounts for which both of them are jointly and severally liable is in line with Article 1217 of the Civil Code which provides: "Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept. He who made payment may claim from his codebtors only the share which corresponds to each, with interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded. xxx" Pursuant to the above provision, the right of reimbursement from a co-debtor is recognized in favor of the one who paid. It will be seen that the liability of the petitioner to reimburse the respondent only arises if and when respondent actually pays its employees the increases granted by Wage Order Nos. 5 and 6. Payment, which means not only the delivery of money but also the performance, in any other manner, of the obligation,[18] is the operative fact which will entitle either of the solidary debtors to seek reimbursement for the share which corresponds to each of the debtors. The records show that judgment was rendered by Labor Arbiter Newton R. Sancho holding both petitioner and private respondent jointly and solidarily liable to the security guards in a Decision[19] dated October 17, 1986 (NLRC Case No. 2849-MC-XI-86).[20] However, it is not disputed that the private respondent has not actually paid the security guards the wage increases granted under the Wage Orders in question. Neither is it alleged that there is an extant claim for such wage adjustments from the security guards concerned, whose services have already been terminated by the contractor. Accordingly, private respondent has no cause of action against petitioner to recover the wage increases. Needless to stress, the increases in wages are intended for the benefit of the laborers and the contractor may not assert a claim against the principal for salary wage adjustments that it has not actually paid. Otherwise, as correctly put by the respondent, the contractor would be unduly enriching itself by recovering wage increases, for its own benefit. Finally, considering that the private respondent has no cause of action against the petitioner, private respondent is not entitled to attorney‘s fees. WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated May 24, 1993 is REVERSED and SET ASIDE. The complaint of private respondent COMMANDO SECURITY SERVICE AGENCY, INC. is hereby DISMISSED.

[ G.R. No. 124100, April 01, 1998 ]
PHILTRANCO SERVICE ENTERPRISES, INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND MR. ROBERTO NIEVA, RESPONDENTS.
Petitioner seeks, in this petition for certiorari under Rule 65, the reversal of the resolution of the National Labor Relations Commission dated November 29, 1995, ordering petitioner to pay private respondent Roberto Nieva back wages and separation pay. The facts of the case are as follows:
Roberto Nieva who was employed as a driver by petitioner Philtranco Services Enterprises, Inc. (hereafter Philtranco) on April 13, 1977, was assigned to the Legaspi City-Pasay City route. On May 15, 1989, Nieva sideswiped an owner-type jeep, damaging the latter’s park light. Unfortunately, the vehicle’s owner turned out to be a PC colonel who arrested Nieva and brought him to Camp Crame where the corresponding criminal complaint was filed against him. Nieva obtained his release from detention by virtue of a bail bond secured by Philtranco. He was suspended by the latter for thirty days effective June 8, 1989. Nieva reported back to work after serving his suspension. A few days after resuming his driving duties, however, he was re-arrested on the ground that his bail bond was fake. Nieva reported the incident to the management of Philtranco. On October 15, 1989, Nieva was advised by Philtranco’s administrative officer, Epifanio Llado, that to avoid re-arrest, he would have to refrain from driving until a settlement could be reached with the jeep owner. From then on, Nieva would report for work only to be told to wait until his case was settled. The case was finally settled on July 20, 1991, with Philtranco paying for the damages to the jeep. Three days thereafter, Nieva reported for work, but he was requested to file a new application as he was no longer considered an employee of Philtranco, allegedly for being absent without leave from October 19 to November 20, 1989.

Aggrieved by this turn of events, Nieva filed a complaint for illegal dismissal and 13th month pay with the NLRC‘s National Capital Region Arbitration Branch in Manila, which docketed the same as NLRC NCR Case No. 03-01891-92. The case was subsequently assigned to Labor Arbiter Cornelio L. Linsangan. Philtranco did not appear at the first four conferences scheduled by the arbiter, prompting the latter to warn Philtranco that it would be declared in default if it failed to appear at the next hearing. Threatened with such an eventuality, Philtranco‘s representative finally appeared. On August 28, 1992, it filed a position paper with motion to dismiss, stating, among other things, that the complaint should have been lodged with the NLRC‘s Regional Arbitration Branch in Legaspi City, not only because Nieva was a resident thereof, but also because the latter was hired, assigned, and based in Legaspi City.[1] The motion to dismiss was denied by the labor arbiter in an order dated January 26, 1993. Nieva then presented his evidence. On August 30, 1993, Philtranco filed a second motion to dismiss, which was likewise denied by the arbiter on the ground that the same did not raise any new arguments. Thereafter, Philtranco presented its evidence to prove that Nieva had abandoned his work, having been absent without leave from October 19 to November 20, 1989. After considering the evidence of the parties, the labor arbiter gave more credence to Nieva‘s version of facts, finding that the latter‘s absences were incurred with Philtranco‘s permission, since he was instructed not to drive until his case was settled. The arbiter dismissed Philtranco‘s allegation that Nieva had abandoned his work, stating that:

“Persistence in pursuing his claim before the Labor Arbiter negates allegation of abandonment (Antonio Evangelista vs. NLRC and Arturo Mendoza, 195 SCRA 603). In the instant case, even before complainant filed his present complaint he had already shown his determination (and) persistence to return to his work as he untiringly kept on reporting for duty. In fact, as ordered by his supervisor in Legaspi City, he even went to respondent’s main office in Pasay City to talk to the operations manager regarding his return to work. There could be no better manifestation of one’s interest to his work than what complainant had done. Definitely, therefore, complainant did not abandon his job.”[2]

Thus, on June 14, 1994, the labor arbiter rendered a decision awarding back wages and separation pay to Nieva. Said decision was seasonably appealed to the NLRC by Philtranco. In a resolution issued on September 15, 1995, the NLRC affirmed the decision of the labor arbiter, granting back wages and separation benefits as follows:
“PREMISES CONSIDERED, WHEREFORE, respondent is directed to pay individual complainant Roberto Nieva both his backwages in the amount of P67,392.00 PESOS and separation benefits in the amount of P33,696.00 PESOS. SO ORDERED.”[3]

Philtranco‘s motion for reconsideration of said resolution having been likewise denied by the NLRC in its resolution of November 29, 1995, Philtranco elevated its case to this Court, raising the following issues: 1. The NLRC committed grave abuse of discretion amounting to lack of jurisdiction when it denied the motion of Philtranco to dismiss complaint based on improper venue; 2. The Commission gravely abused its discretion amounting to lack or in excess of jurisdiction in ruling that Philtranco should be imposed backwages and separation pay; 3. Respondent Commission acted with grave abuse of discretion amounting to lack of jurisdiction as to its findings of facts and when it confirmed the labor arbiter‘s decision that there was no abandonment of work by the private respondent and that the latter showed his persistence to return to work. The petition lacks merit. As regards the first issue, this Court has previously declared that the question of venue essentially pertains to the trial and relates more to the convenience of the parties rather than upon the substance and merits of the case.[4] Provisions on venue are intended to assure convenience for the plaintiff and his witnesses and to promote the ends of justice. In fact, Section 1(a), Rule IV of the New Rules of Procedure of the NLRC, cited by Philtranco in support of its contention that venue of the illegal dismissal case filed by Nieva is improperly laid, speaks of the complainant/petitioner‘s workplace, evidently showing that the rule is intended for the exclusive benefit of the worker. This being the case, the worker may waive said benefit.[5] Furthermore, the aforesaid Section has been declared by this Court to be merely permissive. In Dayag vs. NLRC,[6] this Court held that:
“This provision is obviously permissive, for the said section uses the word ‘may,’ allowing a different venue when the interests of substantial justice demand a different one. In any case, as stated earlier, the Constitutional protection accorded to labor is a paramount and compelling factor, provided the venue chosen is not altogether oppressive to the employer.”

Moreover, Nieva, as a driver of Philtranco, was assigned to the Legaspi City-Pasay City route. Sulpicio Lines, Inc. vs. NLRC[7] is exactly in point. In said case, we held that:

finding no grave abuse of discretion committed by public respondent NLRC. the labor arbiter. Philtranco contends that the NLRC committed grave abuse of discretion when it affirmed the labor arbiter‘s finding of non-abandonment by Nieva of his work. we have held that the immediate filing of a complaint for illegal dismissal by an employee. the respondent cannot conveniently contend that the absence of complainant was without permission. for his failure to report for work as directed. Costs against petitioner. It harps on the alleged paucity of Nieva‘s evidence. not to drive his vehicle until the case filed by the PC Colonel arising from the vehicular accident is settled.” From the foregoing. we hold that the NLRC did not commit abuse of discretion. It is not for this Court to re-examine conflicting evidence. It should be noted that a petition for certiorari under Rule 65 of the Rules of Court will prosper only if there is a showing of grave abuse of discretion or an act without or in excess of jurisdiction on the part of the National Labor Relations Commission. 1995 is AFFIRMED and this petition is hereby DISMISSED for lack of merit.[10] Likewise. and a termination letter from Philtranco‘s company lawyer to Nieva. Such being the case. Amansec was correct in concluding that Manila could be considered part of the complainant’s territorial workplace. This assertion repeatedly made by complainant was never refuted by respondent. As regards the second and third issues. Manila being considered as part of Nieva‘s workplace by reason of his plying the Legaspi City-Pasay City route.”[9] Considering that the findings of fact of the Labor Arbiter and the NLRC are supported by evidence on record. Rule IV of the 1990 NLRC Rules additionally provides that. it is obvious that the filing of the complaint with the National Capital Region Arbitration Branch was proper. as in this case. we are of the opinion that Labor Arbiter Arthur L. Philtranco cites. ‘for purposes of venue.“Section 1.[8] Parenthetically. is inconsistent with abandonment. the same must be accorded due respect and finality. in finding that Nieva did not abandon his job. Suffice it to say that these issues raised by Philtranco relate to the veracity of the findings of fact of the NLRC and the labor arbiter. . respondent company’s administrative officer. a letter from Philtranco‘s assistant manager to Nieva requiring the latter to report within five days from receipt thereof. while citing the numerous exhibits marshaled on its behalf. the assailed Resolution of November 29. We agree. WHEREFORE. on pain of being dropped from the roll. Time and again. It does not include an inquiry as to the correctness of the evaluation of evidence which was the basis of the labor official or officer in determining his conclusion. much less grave abuse.’ Since the private respondent’s regular place of assignment is the vessel MV Cotabato Princess which plies the Manila-EstanciaIloilo-Zamboanga-Cotabato route. nor substitute the findings of fact of an administrative tribunal which has gained expertise in its special field. 1989. two irregularity reports to the effect that Nieva was absent without leave from October 19-31 and November 1-20. the labor arbiter considered Nieva‘s absence from work as not equivalent to abandonment. re-evaluate the credibility of witnesses. as proof of Nieva‘s abandonment of his work. workplace shall be understood as the place or locality where the employee is regularly assigned when the cause of action arose.[11] From the foregoing. when it denied Philtranco‘s motion to dismiss Nieva‘s complaint on the ground of improper venue and affirmed the labor arbiter‘s award of back wages and separation pay to the latter. held that: “Complainant categorically stated in his position paper and Sinumpaang Salaysay that on 15 October 1989 he was instructed by Epifanio Llado.

The NLRC denied FCC's motion for reconsideration (p. 22. 1983. effective immediately. NLRC (FIRST DIVISION) AND ANTONIO M. 1975 (p. a complaint for illegal dismissal against FCC (NLRC-NCR Case No. On October 14. Section 5 of Presidential Decree No. 1991 ] FORTUNE CEMENT CORPORATION. January 24. Rollo). VS. FCC moved to dismiss Lagdameo's complaint on the ground that his dismissal as a corporate officer is a purely intra-corporate controversy over which the Securities and Exchange Commission (SEC) has original and exclusive jurisdiction. at the FCC Board of Directors' regular monthly meeting. 1-228-85) against petitioner Fortune Cement Corporation (FCC for brevity) for lack of jurisdiction. LAGDAMEO. Rollo). The Labor Arbiter granted the motion to dismiss (p. resulting from a board resolution dismissing him as such officer. No. 1983. would be "deemed" retained in their respective positions without necessity of yearly reappointments. FCC filed this petition for certiorari. This is a petition for certiorari with prayer to annul the resolution dated May 29. On June 21. 4. Dissatisfied. Lagdameo's (Lagdameo for brevity) complaint for Illegal Dismissal (NLRC NCR Case No. Rollo). however. PETITIONER. Rollo). Lagdameo filed with the National Labor Relations Commission (NLRC). unless they resigned or were terminated by the Board (p. 3. 79762. 1987).R. for loss of trust and confidence (p. without due process (p. National Capital Region. 1985. Lagdameo is a registered stockholder of FCC. 5. or on February 10. the FCC Board resolved that all of its incumbent corporate officers. the NLRC set aside the Labor Arbiter's order and remanded the case to the Arbitration Branch "for appropriate proceedings" (NLRC Resolution dated April 30. At subsequent regular meetings held on June 14 and 21. We find merit in the petition. including Lagdameo. On appeal. Some eight (8) years later. he was elected Executive Vice-President of FCC effective November 1. 4. therefore. Rollo). 1-228-85) alleging that his dismissal was done without a formal hearing and investigation and. On August 5. 1975. 1987 of respondent National Labor Relations Commission (NLRC) reversing the order dated December 3. The sole issue to be resolved is whether or not the NLRC has jurisdiction over a complaint filed by a corporate executive vice-president for illegal dismissal. 902-A vests in the SEC original and exclusive jurisdiction over this controversy: . 1983. 63.[ G. Rollo). 1985 of the Labor Arbiter which dismissed private respondent Antonio M. during a regular meeting. RESPONDENTS. the FCC Board approved and adopted a resolution dismissing Lagdameo as Executive Vice-President of the company.

appointment and/or removal of an executive vice-president is a prerogative vested upon a corporate board. 1-228-85 be dismissed by respondent NLRC for lack of jurisdiction . Underscoring supplied. partnership or association of which they are stockholders. members or associates. A labor dispute as defined in the Labor Code includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating. it shall have original and exclusive jurisdiction to hear and decide cases involving: "a) Devices and schemes employed by or any acts. “c) Controversies in the election or appointments of directors. but more so. Rollo. and between such corporation. although he also lost the same as a consequence of the latter's resolution. partnership or associations. its officers or partners. or associates. within the original and exclusive jurisdiction of the SEC. between any or all of them and the corporation.) In reversing the decision of Labor Arbiter Porfirio E. hence. fixing. respectively. partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees. 902-A. changing or arranging the terms and conditions of employment regardless of whether or not the disputants stand in the proximate relations of employers and employees. He himself acquired that position through election by the corporation's Board of Directors."Section 5." (pp. 65. "Indeed the election.) The Solicitor General pointed out that "a corporate officer's dismissal is always a corporate act and/or an intra-corporate controversy and that nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action." aptly observed: "The position of 'Executive Vice-President. hence." (Section 5. is an elective corporate office. being then the Executive Vice-President. amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or stockholders.) The Solicitor General. Predicated on the above facts. “b) Controversies arising out of intra-corporate or partnership relations. it is clear to Us that a labor dispute had arisen between the appellant and the respondent corporation. The Solicitor General recommended that the petition be granted and NLRC-NCR Case No. partners.D. maintaining. Rollo. It is not disputed that complainant Lagdameo was an employee of respondent Fortune Cement Corporation. not only because it is a practice observed in petitioner Fortune Cement Corporation. declining to defend public respondent in its pleading entitled "Manifestation in Lieu of Comment. complainant questioned his dismissal on such ground and the manner in which he was dismissed. a dispute which falls within the original and exclusive jurisdiction of the NLRC. of the board of directors. 902-A. par. business associates. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations. "And it must be.' from which private respondent Lagdameo claims to have been illegally dismissed. (c) of Presidential Decree No. members. For having been dismissed for alleged loss of trust and confidence. members of associations or organization registered with the Commission." (p. because of an express mandate of law. P. partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity. respondent NLRC held: "x x x. claiming that no investigation was conducted. there was and is denial of due process. trustees." The dispute between petitioner and Lagdameo is of the class described in Section 5. 16-17. officers or managers of such corporations. between and among stockholders. Villanueva.

ruled that the SEC. No costs. 97. is hereby reversed and set aside. Leaño (supra) cited by the Labor Arbiter finds no application to his case because it is not a matter of corporate office having been declared vacant but one where a corporate officer was dismissed without legal and factual basis and without due process.underpayment of salary and non-payment of living allowance . The issue of the SEC's power or jurisdiction is decisive and renders unnecessary a consideration of the other questions raised by Lagdameo. and arbitrary. 95. that even a corporate officer enjoys security of tenure regardless of his rank (p. hence. Leaño (127 SCRA 778). because the "irregularities" charged against him were not investigated (p. The matter of whom to elect is a prerogative that belongs to the Board.shows that they are actually part of the perquisites of his elective position. involving as it does.(p. that the case of PSBA vs. because a closer look at these . not the NLRC. . intimately linked with his relations with the corporation. Rollo). confronted with a similar controversy. Lagdameo's seeking recourse in the appropriate forum. this Court." (Underlining ours. 1985 dismissing NLRC-NCR Case No. Thus did this Court rule in the case of Dy vs. Generally speaking. Rollo). The decision of the Labor Arbiter dated December 3. a person who is not a mere employee but a stockholder and officer. and of Tan's not having been elected thereafter. National Labor Relations Commission (145 SCRA 211) which involved a similar situation: "It is of no moment that Vailoces. In PSBA vs. an integral part it might be said. 106. in his amended complaint. without prejudice to private respondent Antonio M.) WHEREFORE. whether as officer or as agent or employee is not determined by the nature of the services performed. has jurisdiction: "This is not a case of dismissal. having been rendered without jurisdiction. but by the incidents of the relationship as they actually exist. that the power of dismissal should not be confused with the manner of exercising the same. and is in fact a corporate controversy in contemplation of the Corporation Code. of the corporation." Lagdameo claims that his dismissal was wrongful. Rollo). the questioned Resolution of the NLRC reversing the decision of the Labor Arbiter. the relationship of a person to a corporation. illegal. Rollo). The question of remuneration. seeks other reliefs which would seemingly fall under the jurisdiction of the Labor Arbiter. 1-228-85 is affirmed. and involves the exercise of deliberate choice and the faculty of discriminative selection. The situation is that of a corporate office having been declared vacant. is not a simple labor problem but a matter that comes within the area of corporate affairs and management. and that the SEC is without power to grant the reliefs prayed for in his complaint (p. 85.

" "Kasbah/La Primavera. failure to observe and/or implement administrative and executive policies. mismanagement. as a consequence. PETITIONER. labelled as "Goldair. VS." "Robelle. for 30 years. RESPONDENTS. January 05. 1995 ] LESLIE W. Senior Vice President for Corporate Services and Logistics Group. No. 1990. was successively promoted [1] until he became.[ G. Aquino to investigate the administrative charges filed against him and other senior officers for their purported involvement in four cases. HON. Article III in relation to Section 1." Except for the conflict of interest charges in the "Robelle" case. 1960 as a Traffic and Sales Trainee and. Article IV of the Amended ByLaws of PAL.R. . dereliction of duty. NATIONAL LABOR RELATIONS COMMISSION AND PHILIPPINE AIR LINES. David. by virtue of an election in March 1988 conducted by the Board of Directors. caused prejudice to the best interest of PAL and the Government." "Robelle." "Kasbah/Primavera" and "Middle East. for their purported involvement in four cases. Petitioner started his employment with PAL on February 25. 109642-43. The undisputed facts are as follows: Petitioner Leslie W. inefficiency. The controversy generated in the instant case once again calls for the resolution of the issue of whether or not the National Labor Relations Commission (NLRC) has jurisdiction over a complaint filed by a corporate Executive Vice President-Chief Operating Officer for illegal dismissal resulting from the termination of his services as such officer by virtue of four (4) separate resolutions of the Board of Directors of Philippine Air Lines (PAL). 1989. Sometime on July 2. denominated "Goldair. and related acts or omissions resulting in the concealment or coverup and prevention of the seasonable discovery of anomalous transactions which. mismanagement. Espino was the Executive Vice President-Chief Operating Officer of private respondent Philippine Airlines (PAL) when his services were terminated sometime in December 1990 by the Board of Directors of PAL as a result of the findings of the panels created by then President Corazon C. The last time he was elected as such was on October 20. negligence." and "Middle East" which allegedly prejudiced the interests of both PAL and the Philippine Government. pursuant to Section 7. petitioner and several other senior officers of PAL were uniformly charged in the three (3) other aforementioned cases of gross incompetence. ESPINO. Executive Vice President and Chief Operating Officer for a term of one (1) year and who holds said office until his successor is elected and qualified. petitioner and several other senior officers of PAL were administratively charged by Romeo S.

. . Ramos rendered a decision [2] finding that petitioner Espino was dismissed without just and valid cause and accordingly ordered his reinstatement to his former position as Executive Vice-President-Chief Operating Officer without loss of seniority rights plus full backwages and other benefits appurtenant thereto. . without qualification or deduction from the time of his illegal dismissal up to the date of his actual reinstatement. . .000. . . were deferred by the Board of Directors. 2) Ordering respondent PAL to pay complainant Leslie Espino the following sums: a) Backwages as of February 1992 . 1990. . PAL argued that since the Board resolutions on the aforesaid cases cannot be reviewed by the NLRC.00 (P195. the election or appointment of some senior officers of the company who. 00-05-03210-91. Labor Arbiter Cresencio J. . for reinstatement with backwages. . . . . among others. . P10 Million as exemplary damages and attorney's fees. 1992.000.925. P 2.000. . 1991 in the "Goldair. . like petitioner. . . it became. . by way of an appeal. . As a result of his termination. to the Office of the President of the Republic of the Philippines. Feliciano Belmonte was elected Chairman of the Board while Dante Santos was elected as President and Chief Executive Officer. Arbitration Branch. . On October 19. The case was docketed as NLRC Case No. The dispositive portion reads: "WHEREFORE. judgment is hereby rendered: 1) Ordering complainant's immediate reinstatement to his former position as Executive Vice President-Chief Operating Officer without loss of seniority rights plus full backwages and other benefits appurtenant thereto. petitioner Espino filed a complaint for illegal dismissal against PAL with the National Labor Relations Commission." cases and another dated August 9. . 1991 in the "Middle East" case wherein petitioner was considered resigned from the service effective immediately for loss of confidence and for acts inimical to the interests of the company. . during the organizational meeting of the PAL Board of Directors. . . During the said organizational meeting. praying. . . NCR. . from the time of his illegal dismissal up to the time of his actual reinstatement. because the investigating panels were created by President Corazon C. . the recourse of petitioner Espino should have been addressed.Pending investigation by the panels created by then President Corazon C. PAL justified the legality of petitioner Espino's dismissal from the service before the Labor Arbiter but questioned the jurisdiction of the NLRC contending that. had been charged administratively with various offenses and accordingly suspended.00 x 15 months." and Kasbah/La Primavera. . ." "Robelle. Aquino. petitioner and other senior officers of PAL were placed under suspension by the Board of Directors. . . As such. His backwages as of February 29. On the basis of the findings submitted by the presidential investigating panels. 1992 as computed are in the total sum of P2. a "parallel arbitration unit" which substituted the NLRC. premises considered. .925. without qualification or deduction. On February 20. the Board issued separate resolutions dated January 19. together with the PAL Board of Directors.00 . . . . Aquino. recovery of P50 Million as moral damages. . including the one month suspension). . .

. . . . . . his spouse.00 3) Awarding moral damages to complainant in the sum of P20 million plus exemplary damages of P2. .507. filed a motion to quash the writ of execution reiterating its argument that the Securities and Exchange Commission (SEC) and not the NLRC has original and exclusive jurisdiction over the subject matter involving the dismissal or removal of corporate officers. . .000. .000. . . or more specifically. . and 1 for domestic) for complainant. . . . . . which has original and exclusive jurisdiction over cases involving dismissal or removal of corporate officers. . . the Labor Arbiter issued a writ of execution. . . . . . . . .192. . . . a total of . . 22. On February 28. . 1 for regional. .000. . . . . . . 1. . . . .50/dollar . . . . .700. . and not the NLRC. . .b) Cash equivalent of Annual trip passes on first class.00" From the said decision. .00 TOTAL P26. . . . . .00 4) Granting attorney's feesof 10% of the total monetary award. . . .650.000. . for its part. . . . . . . PAL filed on March 5. . . . . . . as amended. . .00 GRAND TOTAL P28. . . . . . . . . . . . . on February 25. . . . . . . . PAL argued that the Labor Arbiter's decision is null and void for lack of jurisdiction over the subject matter as it is the Securities and Exchange Commission. . .000. .0 million. . . . . . . . 1992. .700. . . . . . . . . 2. . . . .00 c) Midyear and Christmas bonuses equivalent to two (2) months pay . . . . . . 1992 a supplemental memorandum on appeal. . . . . 1992 an appeal with the NLRC and submitted on March 13. .00 at current rate of exchange P26. . . . . . . . (1 for international. . . .157. 390. . 1992. . PAL. petitioner Espino filed a motion for issuance of writ of execution on the ground that the decision of the Labor Arbiter ordering reinstatement is immediately executory even pending appeal pursuant to Article 223 of the Labor Code. . .000. . . . . qualified dependent and parents worth approximately US $45. Earlier. .

[5] and consequently reiterated in three (3) other cases [6] that it is the Securities and Exchange Commission (SEC) and not the NLRC which has original and exclusive jurisdiction over cases involving the removal from employment of corporate officers. Petitioner Espino filed a motion for reconsideration but the same was denied on January 8. 1993. or associates. Petitioner Espino. 1992. between any or all of them and the corporation. 1992. later amended to implead the Labor Arbiter. not only his removal from office. Labor Arbiter Cresencio Ramos and Sheriff Anam Timbayan were permanently enjoined from enforcing the said alias writ of execution. On July 31. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations. [4] Dissatisfied. members. an alias writ of execution was issued. amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders.On March 31. their agents and all persons acting under them. the NLRC issued a temporary restraining order enjoining petitioner Espino. Thereafter. partners.00 surety bond. 1992 with the NLRC a petition for injunction. members. to hear the illegal dismissal case he filed against PAL as it involves the termination of a regular and permanent employee and the issues in the dispute involved. the NLRC promulgated a resolution [3] dismissing the complaint for illegal dismissal for lack of jurisdiction and declaring the nullity of the alias writ of execution. respectively. Leano. praying for the issuance of a temporary restraining order to enjoin the enforcement of said alias writ of execution. partnership or association of which they are stockholders. . but also his claim for backwages and other benefits and damages. petitioner filed the instant petition for certiorari contending mainly that it is the NLRC which has jurisdiction under Article 217. or on April 2. partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity. it shall have original and exclusive jurisdiction to hear and decide cases involving: (a) Devices or schemes employed by or any acts of the board of directors. 1992. 5 of Presidential Decree No. between and among stockholders. 902-A. as follows: "SECTION 5. par. 1992. Sec. laid down the rule in the case of Philippine School of Business Administration v. from implementing the alias writ of execution issued on April 2. 1992 upon PAL's posting of P400.000. partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees. citing Presidential Decree No. (2) of the Labor Code. 902-A regarding the jurisdiction of the Securities and Exchange Commission provides. On April 27. Labor Arbiter Ramos denied PAL's motion to quash the writ of execution. and between such corporation. that PAL is estopped from questioning the jurisdiction of the NLRC. members of associations or organizations registered with the Commission. The Court. or associates. PAL then filed on April 23. its officers or partners. PAL posted the P400. Sheriff Anam Timbayan. (b) Controversies arising out of intracorporate or partnership relations.00 cash or surety bond. We rule that the petition lacks merit. as amended. On May 5. business associates. after an exchange of pleadings.000. 1992.

were resolved by the PAL Board of Directors against him and other senior officers. the position of Executive Vice President-Chief Operating Officer from which petitioner Espino claims to have been illegally dismissed. He was later considered by the Board as resigned from the service. partnerships or associations." Indisputably.(c) Controversies in the election or appointments of directors. officers or managers of such corporations. partnerships or associations. trustees. his involvement in the alleged irregularities in the aforementioned cases which. The situation is that of a corporate office having been declared vacant. officers or managers of such corporations. the relationship of a person to a corporation. 5. and that of TAN's not having been elected thereafter. and the said position was later abolished. Leano. is an elective corporate office under Section 7. for reasons earlier stated. or is closely connected with. but is under the management of a Rehabilitation Receiver or Management Committee created pursuant to this Decree. together with other senior officers who were similarly charged administratively.D. The matter of whom to elect is a prerogative that belongs to the Board. Generally speaking." In intra-corporate matters concerning the election or appointment of officers of a corporation. is not determined by the nature of the services performed. PD 902-A specifically provides: "SEC. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations. trustees. 1990. partnership or association has no sufficient assets to cover its liabilities. He lost that position when his appointment or election as Executive Vice President-Chief Operating Officer. The matter of petitioner's not being elected to the office of Executive Vice President-Chief Operating Officer thus falls squarely within the purview of Section 5 par. (c) of P. Section 5. Article IV of the Amended by-Laws of PAL. The said corporate office has a fixed term of one (1) year and the one elected shall hold office until a successor shall have been elected and qualified. (d) Petitions of corporations. this intra-corporate ruling places the instant case under the specialized . supra. whether as officer or as agent or employee. Evidently. partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees. partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation. 902-A. but by the incidents of the relationship as they actually exist." A corporate officer's dismissal is always a corporate act and/or an intra-corporate controversy and that nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action. it shall have original and exclusive jurisdiction to hear and decide cases involving: (c) Controversies in the election or appointments of directors. partnerships or associations to be declared in the state of suspension of payments in cases where the corporation. and involves the exercise of deliberate choice and the faculty of discriminative selection. upon investigation and recommendation. it must be noted that the reason behind the non-election of petitioner to the position of Executive Vice President-Chief Operating Officer arose from. 1981 by the PSBA's newly elected Board of Directors. In the case of PSBA v. Article III in relation to Section 1. [7] Furthermore. were deferred by the Board of Directors in its organizational meeting on October 19. the Court emphatically stated: "This is not a case of dismissal. which involved an Executive Vice President who was not re-elected to the said position during the election of officers on September 5.

. v. that appeal from the resolution of the Board of Directors of PAL as regards termination of his services. as well as moral and exemplary damages and attorney's fees in his complaint for illegal dismissal will not operate to prevent the SEC from exercising its jurisdiction under PD 902-A. the controversy must pertain to any of the following relationships: (a) between the corporation. hence. thus: "The question of remuneration. for. involving as it does. is not a simple labor problem but a matter that comes within the area of corporate affairs and management. members. the issue of consequential damages may just as well be resolved and adjudicated by the SEC. confronted with the same issue ruled. SEC. partnership or association and the public. while it may be predicated on a different ground. a person who is not a mere employee but a stockholder and officer. its directors. supervision. of the corporation. permit or license to operate is concerned. in order that the SEC can take cognizance of a case.. who are grantees of primary franchise and/or license or permit issued by the government to operate in the Philippines x x x. The jurisdiction of the SEC has likewise been clarified by this Court in the case of Union Glass and Container Corporation. partnership or association and its stockholders. mislead one into placing the case under the jurisdiction of the Labor Arbiter. under the circumstances. an integral part. partnerships and associations with the end in view that investment in these entities may be encouraged and protected. Petitioner's reliance on the principle of estoppel to justify the exercise of jurisdiction by the NLRC over the instant complaint is misplaced. partners. trustees. partnerships and associations and those dealing with the internal affairs of such corporations. It is in aid of this office that the adjudicative power of the SEC must be exercised. partnerships or associations. it is still within the competence and expertise of the SEC to resolve all matters arising from or closely connected with all intra-corporate disputes. An error of this nature. other benefits. i. Section 3 of PD No. NLRC. PAL did in fact question the jurisdiction of the Labor Arbiter. could not justify . It is not accurate for petitioner to conclude that PAL did not raise the issue of jurisdiction at the initial stages of the case.' The principal function of the SEC is the supervision and control over corporations. [9] the Court. intimately linked with his relations with the corporation. officers and shareholders.. between the corporation. and (d) among the stockholders. In Dy v. or officers.competence and expertise of the SEC. Otherwise stated. at first glance. partners or associates themselves. and their activities pursued for the promotion of economic development. partnerships or associations. a closer examination reveals that they are actually part of the perquisites of his elective position.e." The Court has likewise ruled in the case of Andaya v. is to the Office of the President. partnership or association and the state in so far as its franchise. (c) between the corporation. and control over all corporations. et al." The fact that petitioner sought payment of his backwages. et al. While the affirmative reliefs and monetary claims sought by petitioner in his complaint may. Thus the law explicitly specified and delimited its jurisdiction to matters intrinsically connected with the regulation of corporations. it might be said. Abadia [10] that in intra-corporate matters. Undoubtedly. 902-A confers upon the latter ‘absolute jurisdiction. [8] thus: "This grant of jurisdiction must be viewed in the light of the nature and function of the SEC under the law. et al. such as those affecting the corporation. and is in fact a corporate controversy in contemplation of the Corporation Code.

but only before the NLRC. the Court. supra. in the proper forum. the issue of the SEC's jurisdiction is settled and the Court finds it unnecessary to dwell further on other questions raised by petitioner. Thus. In the case of Dy v. finding no grave abuse of discretion on the part of NLRC in dismissing the complaint for illegal dismissal. The resolution of the National Labor Relations Commission dated July 31. [11] The principle of estoppel cannot be invoked to prevent this Court from taking up the question of jurisdiction. the Court in Southeast Asian Fisheries Development Center-Aquaculture Department v. Ramirez [12] reiterated that the decision of a tribunal not vested with appropriate jurisdiction is null and void. the instant petition for certiorari is DISMISSED for lack of merit. citing the case of Calimlim v. SO ORDERED. 1992 dismissing the complaint for illegal dismissal for lack of jurisdiction is AFFIRMED. WHEREFORE.petitioner's insistence that PAL did not raise the issue of jurisdiction at the outset. The instant case does not provide an exception to the said rule. which has been apparent on the face of the pleadings since the start of the litigation before the Labor Arbiter. the instant petition must be dismissed. . In fine. It is well-settled that jurisdiction over the subject matter is conferred by law and the question of lack of jurisdiction may be raised at anytime even on appeal. Again. NLRC [13] restated the rule that the invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel does not apply to confer jurisdiction upon a tribunal that has none over the cause of action. without prejudice to petitioner's seeking relief. if so minded. NLRC.

PETITIONER. INC."[6] A similar conclusion was arrived at by the PAL board of directors with regard to petitioner in the "Goldair" case where he.. was elected chairman of the board while Dante G. was a Senior Vice-President-Finance of private respondent Philippine Airlines. when his services were terminated on 19 December 1990 in the aftermath of the muchpublicized "two-billion-peso PALscam. On 18 January 1991. along with three other officials. for his (Lozon) purported involvement in four cases.6 million Australian dollars.[8] Aggrieved by the action taken by the PAL board of directors. Petitioner was forthwith considered "resigned from the service x x x for loss of confidence and for acts inimical to the interests of the company. petitioner was placed under preventive suspension." "Autographics. Belmonte. Petitioner Ramon C. January 02. Jr. resulting in." Lozon started to work for the national carrier on 23 August 1967 and. he had been administratively charged by Romeo David.[4] the board deferred action on the election or appointment of some senior officers of the company who." petitioner was charged. mismanagement. to PAL President Dante Santos. NLRC (SECOND DIVISION) AND PHILIPPINE AIRLINES. the PAL board of directors issued two resolutions relative to the investigation conducted by the presidential investigating panel in the "Autographics" and "Goldair" cases. negligence.[ G. Aquino.R. Inc. Lozon. 1995 ] RAMON C. during which occasion Feliciano R. failure to observe and/or implement administrative and executive policies" and with the "concealment. VS. Among these officials was petitioner. In "Autographics. PAL's general sales agent in Australia.. Inc. LOZON. steadily climbed the corporate ladder until he became one of its vice-presidents. ("PAL"). Chavez demanded an investigation of twenty-three irregularities allegedly committed by twenty-two high-ranking PAL officials. like petitioner. labeled "Goldair. Santos was designated president and chief executive officer. dereliction of duty. of 14. among other things. on 26 June 1991. filed with the National Labor Relations Commission ("NLRC") in Manila a complaint (docketed NLRC-NCR Case No. Senior Vice-President for Corporate Services and Logistics Group.[1] His termination from the service was spawned by a letter sent some time in June 1990 by a member of PAL's board of directors." "Big Bang of 1983" and "Middle East. No. a certified public accountant. In the organizational meeting of the PAL board of directors on 19 October 1990. RESPONDENTS."[2] Pending the investigation of these cases by a panel[3] constituted by then President Corazon C.[5] with "gross inefficiency. then Solicitor General Francisco Chavez.[7] were charged with like "offenses" that had caused PAL's defraudation by Goldair. an overpayment by PAL to Autographics in the amount of around P12 million. 00-06-03684-91) for illegal .. imprudence. together with six other PAL officials. 107660. for twentythree years. or cover-up and prevention of the seasonal discovery of the anomalous transactions" had with Autographics. had been charged with various offenses. petitioner.

along with the PAL board of directors. de Vera rendered a decision ruling for petitioner.000. the labor arbiter issued a writ of execution. and benefits appertaining thereto plus backwages. Inc. in legal contemplation.00 as moral damages. whether or not private respondent is estopped from raising NLRC's lack of jurisdiction over the controversy.000. the PAL board of directors. with backwages and "fringe benefits such as Vacation leave. Sick leave. 00-06-03684-91)[19] dismissing the case on the strength of PAL's new argument on the issue of jurisdiction. PAL appealed the decision of the labor arbiter by filing a memorandum on appeal. 00261-92). petitioner questioned the authority of the panel to conduct the investigation.[16] Meanwhile. car expenses.000. 13th month pay. and attorney's fees equivalent to ten percent (10%) of all the foregoing awards. No decision was rendered by NLRC on this petition. "SO ORDERED.000. Labor Arbiter Jose G. etc. Thus. suspended petitioner for six (6) months for his supposed involvement in the anomalous administration of commercial marketing arrangements in which PAL had lost an estimated P120 million. was within the exclusive and original jurisdiction of the Securities and Exchange Commission ("SEC").[11] In the "Middle East" case. trip pass entitlement.. privileges.[14] The decretal portion of the decision read: "WHEREFORE.[20] Petitioner's motion for reconsideration was denied by the NLRC. all the foregoing premises being considered. Christmas Bonus.632.00. should be deemed to have substituted for the NLRC. asseverating that the charges leveled against him were purely administrative in nature that could have well been ventilated under the grievance procedure outlined in PAL's Code of Discipline. Further. positing the theory that since the investigating panel was constituted by then President Aquino.500.[18] On 24 July 1992.[10] the PAL board of directors also held petitioner as "resigned from the company" for loss of confidence and for acts inimical to the interests of the company in the "Big Bang of 1983" case for his alleged role in the irregularities that had precipitated the write-down (write-off) of assets amounting to P553 million from the books and financial statements of PAL.. and (b) on the assumption that the SEC has that jurisdiction. PAL averred. exclusive of fringes. the respondent company is ordered to pay complainant as follows: P5."[9] On 09 August 1991. on the same date. a corporate officer."[15] A day after promulgating the decision. the NLRC rendered a decision (in NLRC NCR Case No. P1. Petitioner interposed a partial appeal praying for an increase in the amount of moral and exemplary damages awarded by the labor arbiter. plus moral damages of P40 Million. said panel. 1992 already amounted to P2. petitioner's recourse should have been to appeal his case to the Office of the President. PAL filed a petition for injunction with the NLRC (docketed NLRC IC Case No.dismissal and for reinstatement. which as of March 15. judgment is hereby rendered ordering the respondent Philippine Airlines. once again. exemplary damages of P10 Million and reasonable attorney's fees. PAL filed a motion to quash the writ which petitioner promptly opposed.[13] On the other hand. the jurisdiction of the NLRC but this time on the ground that the issue pertaining to the removal or dismissal of petitioner. The instant petition for certiorari filed with this Court raises these issues: (a) Whether or not the NLRC has jurisdiction over the illegal dismissal case. . On 17 March 1992.[17] assailing. became "a parallel arbitration unit" which. Medical Expenses. It questioned at the same time the jurisdiction of the NLRC. to reinstate the complainant to his former position with all the rights.[12] PAL defended the validity of petitioner's dismissal before the Labor Arbiter.00 as exemplary damages. After the labor arbiter had denied the motion to quash.

Intra-corporate and partnership relations between or among the corporation. the president and general manager of the Armed Forces and Police Savings and Loan Association ("AFPSLAI") questioned his ouster from . officers or managers of such corporations. in Andaya v. partnerships or associations. Abadia[29] where.[25] the Court has quoted with approval the Solicitor General's contention that "a corporate officer's dismissal is always a corporate act and/or intra-corporate controversy and that nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action. it shall have original and exclusive jurisdiction to hear and decide cases involving: "(c) Controversies in the election or appointments of directors. in a complaint filed before the Regional Trial Court. the decree provides: "SEC." Petitioner himself admits that "vice presidents are senior members of management.We sustain NLRC's dismissal of the case. such as fraudulent practices. NLRC[28] categorically states that the question of remuneration being asserted by an officer of a corporation is "not a simple labor problem but a matter that comes within the area of corporate affairs and management." With regard to the matter of damages. b. trustees. partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations. and is in fact. in intra-corporate matters concerning the election or appointment of officers of a corporation. car expenses. petitioner has been elected to the position of Senior Vice-President . a corporate controversy in contemplation of the Corporation Code. In his own case. medical expenses."[21] whose designations are no longer than just by means of ordinary promotions. business associates. or members of registered firms. 902-A confers on the SEC original and exclusive jurisdiction to hear and decide controversies and cases involving a. Investors and corporate affairs.[23] Petitioner. and other benefits. 13th month pay. he would serve for a term of one year and until his successor shall have been elected and qualified.[24] In Fortune Cement Corporation v. for reasons already mentioned. officers. did not get to be re-elected thereafter. Petitions for suspension of payments filed by corporations." that inevitably places the case under the specialized competence of the SEC and well beyond the ambit of a labor arbiter's normal jurisdiction under the general provisions of Article 217 of the Labor Code. and/or other stockholders. 5.Finance Group by PAL's board of directors at its organizational meeting held on 20 October 1989 pursuant to the By-laws. including their elections or appointments.[27] Dy v.[26] Petitioner contends that the jurisdiction of the SEC excludes its cognizance over claims for vacation and sick leaves. partnerships or associations possessing sufficient property to cover all their debts but which foresee the impossibility of meeting them when they respectively fall due. Presidential Decree No. placed under the management of a Rehabilitation Receiver or Management Committee." Not the least insignificant in the case at bench is that petitioner's dismissal is intertwined with still another intra-corporate affair. or possessing insufficient assets to cover their liabilities and said entities are upon petition or motu proprio. as well as d. as well as for moral and exemplary damages and attorney's fees.[22] under which. partners. NLRC. employed by directors. partnerships and associations or to their franchises. Christmas bonus. Specifically. earlier so ascribed as the "two-billion-peso PALscam. and c. officers and stockholders and partners. State and corporate affairs in relation to the legal existence of corporations. particularly in respect of devices and schemes.

on the issue of estoppel. et al. let alone the parties. its directors. moreover. 37 Phil. had jurisdiction over the case. of actions.. Court of Appeals. on appeal.) We here reiterate the above holdings for. It has long been the established rule. No. the party who induced it to adopt such theory will not be permitted. The rule that jurisdiction is conferred by law."[30] As early as the initial stages of the controversy PAL had already raised the issue of jurisdiction albeit mistakenly at first on the ground that petitioner's recourse was an appeal to the Office of the President. incidental issues that properly fall within the authority of a tribunal may also be considered by it to avoid multiplicity. In the first place. officers. Such is understandable. 101 Phil. such. it does not follow that the case is necessarily taken out of the jurisdiction of the SEC as it may award damages which can be considered consequential in the exercise of its adjudicative powers. trustees. Rule 9. 957) or even after final judgment (Cruzcosa vs.J. and the case was heard and decided upon a given theory. the principle of estoppel applies. in intra-corporate matters such as those affecting the corporation. 902-A must not be so constricted as to deny to the SEC the sound exercise of its expertise and competence in resolving all closely related aspects of such corporate disputes. held: "’The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether the lower court actually had jurisdiction or not. Whenever it appears that the court has no jurisdiction over the subject matter. and may not be conferred by consent of the parties or by estoppel’ (5 C. No. this Court.[31] and the question of lack of jurisdiction may be raised at anytime even on appeal. from questioning the jurisdiction of the NLRC considering that PAL did not hold the dispute to be intracorporate until after the case had already been brought on appeal to the NLRC. that jurisdiction over a subject matter is conferred by law.’" . the action shall be dismissed (Section 2.D. Besides. shareholders. Here. allegedly convened an illegal meeting and voted for the reorganization of management resulting in petitioner's ouster as corporate officer. from assailing such jurisdiction. 73. if the lower court had jurisdiction. In People vs. If it had no jurisdiction. in dismissing the petition assailing the order of the trial court which ruled that SEC. 861-863). but the case was tried and decided upon the theory that it had jurisdiction.S. has no bearing thereon. 146). for instance.R. although unsuccessfully. there would not be much basis to indicate that PAL was "effectively barred by estoppel. as this kind of jurisdiction is conferred by law and not within the courts. to assume an inconsistent position--that the lower court had jurisdiction. has said: "The allegations against herein respondents in the amended complaint unquestionably reveal intra-corporate controversies cleverly concealed. to themselves determine or conveniently set aside. G. 93-94). the issue of consequential damages may just as well be resolved and adjudicated by the SEC. The error could not alter the fact that PAL did question even then the jurisdiction of both the labor arbiter and the NLRC. not the regular courts. nevertheless. as that the court had no jurisdiction." (Underscoring supplied. in their capacity as directors of AFPSLAI. this Court. on appeal. Consequently.the stewardship of the association. Casiano (111 Phil. indeed.[32] In the recent case of La Naval Drug Corporation vs. for the same ‘must exist as a matter of law. this Court said: "Lack of jurisdiction over the subject matter of the suit is yet another matter. 31 August 1994. 103200. during appeal (Roxas vs. by use of civil law terms and phrases. Petitioner maintains that PAL is estopped.. Judge Concepcion. However. Rules of Court). and does not depend upon the will of the parties. controversies within the purview of Section 5 of P. While it may be said that the same corporate acts also give rise to civil liability for damages. This defense may be interposed at any time. the parties are not barred. The amended complaint impleads herein respondents who. Rafferty.

and the corporate secretary of private respondent Pamana Golden Care Medical Center Foundation. 1993. [ G. 1993. RESPONDENTS. respectively. NLRC AND PAMANA GOLDEN CARE MEDICAL CENTER FOUNDATION. 1993. a member of the Board of Trustees. a recourse in the proper forum. No costs. the herein petition for certiorari is DISMISSED.a non-stock corporation engaged in extending medical and surgical services. dated June 26. We need not delve into whether or not PAL's conduct does indeed smack of opportunism. The records show that petitioner Purificacion Tabang was a founding member. 1991. 1994. PETITIONER. if circumstances permit. Although the memorandum was silent as to the amount of remuneration for the position. TABANG. It argued that petitioner’s position as Medical Director and Hospital Administrator was interlinked with her position as member of the Board of Trustees. On May 1. allowances and 13th month pay before the labor arbiter. January 21.On June 6. affirming in toto the order of the labor arbiter. suffice it to say that Robin Dui is entirely an independent and separate case and. 1990. 121143. INC. On October 30. 1997 ] PURIFICACION G. Laguna.000. but the payment thereof was allegedly stopped in November. VS. Inc. petitioner was allegedly informed personally by Dr. 1995. No.00) from private respondent. 00-4-20267) pending before that Commission. and appointing the latter and Dr. As medical director and hospital administrator. dated April 26. more than that.. without prejudice to petitioner's seeking. the Board of Trustees issued a memorandum appointing petitioner as Medical Director and Hospital Administrator of private respondent’s Pamana Golden Care Medical Center in Calamba. which dismissed petitioner’s complaint for illegal dismissal with money claims for lack of jurisdiction.. petitioner claims that she received a monthly retainer fee of five thousand pesos (P5. Ernesto Naval that in a special meeting held on April 30. Respondent corporation moved for the dismissal of the complaint on the ground of lack of jurisdiction over the subject matter.Petitioner points to "PAL's scandalous duplicity" in questioning the jurisdiction of the NLRC in this particular controversy while upholding it (NLRC's jurisdiction) in "Robin Dui v. petitioner filed a complaint for illegal dismissal and non-payment of wages. .R. Benjamin Donasco as acting Medical Director and acting Hospital Administrator. Petitioner averred that she thereafter received a copy of said board resolution. it is not before us in this instance. the Board of Trustees passed a resolution relieving her of her position as Medical Director and Hospital Administrator. Philippine Airlines" (Case No. and the decision appealed from is AFFIRMED. petitioner was tasked to run the affairs of the aforesaid medical center and perform all acts of administration relative to its daily operations. WHEREFORE. her dismissal is an intra-corporate controversy which falls within the exclusive jurisdiction of the Securities and Exchange Commission (SEC). hence. This is a petition for certiorari which seeks to annul the resolution of the National Labor Relations Commission (NLRC).

[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. however.Petitioner opposed the motion to dismiss. is an intra-corporate controversy subject to the jurisdiction of the SEC. Article I thereof states that one of the powers of the Board of Trustees is “(t)o appoint a Medical Director. the labor arbiter issued an order dismissing the complaint for lack of jurisdiction. Section 2(i). other offices are sometimes created by the charter or by-laws of a corporation.[2] On appeal. He ruled that the case falls within the jurisdiction of the SEC. was appointed by respondent corporation’s Board of Trustees in its memorandum of October 30. pursuant to Section 5 of Presidential Decree No.”[4] The president. officers or managers of corporations. and not in the . unlike an ordinary employee. a medical director and a hospital administrator are considered as corporate officers under the by-laws of respondent corporation. On April 26. We agree with the findings of the NLRC that it is the SEC which has jurisdiction over the case at bar.[9] she is deemed an officer of the corporation. vice-president. which are corporate offices. She claimed that there is no intracorporate controversy involved since she filed the complaint in her capacity as Medical Director and Hospital Administrator. Accordingly. or as an employee of private respondent. considering that herein petitioner. 1994. respondent NLRC affirmed the dismissal of the case on the additional ground that “the position of a Medical Director and Hospital Administrator is akin to that of an executive position in a corporate ladder structure.[3] Aggrieved by the decision. the determination of the rights of petitioner and the concomitant liability of private respondent arising from her ouster as a medical director and/or hospital administrator. 902-A. Chiefs of Services and such other officers as it may deem necessary and prescribe their powers and duties. Comptroller/Administrator.” hence. an “employee”usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee. secretary and treasurer are commonly regarded as the principal or executive officers of a corporation. Perforce. 1990. to be without merit. trustees.[8] In the case at bar. contending that her position as Medical Director and Hospital Administrator was separate and distinct from her position as member of the Board of Trustees.Similarly.[1] Petitioner’s motion for reconsideration was treated as an appeal by the labor arbiter who consequently ordered the elevation of the entire records of the case to public respondent NLRC for appellate review. which provides that the SEC exercises exclusive jurisdiction over controversies in the election or appointment of directors. jurisdiction over the same is vested in the SEC. or the board of directors may be empowered under the by-laws of a corporation to create additional offices as may be necessary. petitioner filed the instant petition which we find. and modern corporation statutes usually designate them as the officers of the corporation. 902-A.[7]On the other hand. Section 5(c) of Presidential Decree No.The charges against herein private respondent partake of the nature of an intra-corporate controversy. partnerships or associations.[5]However. Contrary to the contention of petitioner. applies in the present dispute. petitioner’s removal from the said position was an intra-corporate controversy within the original and exclusive jurisdiction of the SEC.

000. the same cannot be considered as compensation for her services rendered as Medical Director and Hospital Administrator.[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.”[10] and this cannot be construed other than in reference to her position or capacity as a corporate trustee. 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. it might be said. in her complaint[15]filed before the Regional Trial Court of Calamba. In fact. simply. Inc.. Although the payments were considered advances to Pamana Golden Care. to herein petitioner as a retained physician of Pamana Golden Care. Inc. of the corporation. The vouchers[13] submitted by petitioner show that the said amount was paid to her by PAMANA. Inc. Moreover. There is no distinction. It states: “We hope that you will uphold and promote the mission of our foundation. his relations with the corporation. herein petitioner is asking.’” WHEREFORE. the questioned resolution of the NLRC is hereby AFFIRMED. a close scrutiny thereof shows that said claims are actually part of the perquisites of his position in. while respondent Pamana Golden Care Medical Center Foundation. an integral part.000. A corporate officer’s dismissal is always a corporate act. and therefore interlinked with. The health care plan is called Pamana Golden Care Plan and the holders are called Pamana Golden Care Card Holders or. Inc. Calamba branch. a stock corporation which is separate and distinct from herein private respondent.[14] It is an admitted fact that herein petitioner is a retained physician of Pamana. said vouchers can only be considered as proof of payment of retainer fees made by Pamana. non-profit corporation.. whose patients are holders of the Pamana Golden Care Card.. even assuming that the monthly payment of P5. is a stock and profit corporation selling pre-need plan for education. is a non-stock. or an intra-corporate controversy.[12] With regard to the amount of P5. for professional fees and/or retainer fees earned for her treatment of Pamana Golden Care card holders. Pamana Golden Care is a division of Pamana. et al. an intra-corporate controversy is one which arises between a stockholder and the corporation.. Pamana Members. vs. qualification.[11] Also. pension and health care. etc. Inc. a person who is not a mere employee but a stockholder and officer.. In Dy. the Court said: ‘(t)he question of remuneration involving as it does.00 was a valid claim against respondent corporation. Inc.It is stated in the memorandum of petitioner that Pamana. . at most. without prejudice to petitioner’s taking recourse to and seeking relief through the appropriate remedy in the proper forum. there is no evidence to show that the Pamana Golden Care stated in the vouchers refers to herein respondent Pamana Golden Care Medical Center Foundation. Moreover.NLRC... et al.Labor Arbiter or the NLRC. nor any exemption whatsoever. among others. vs. Inc. and the nature is not altered by the reason or wisdom with which the Board of Directors may have in taking such action.[16] Thus. The provision is broad and covers all kinds of controversies between stockholders and corporations. et al. this would not operate to effectively remove this case from the jurisdiction of the SEC.00 formerly received by herein petitioner every month. Office of the Minister of Labor and Employment. Inc. the allegation of petitioner that her being a member of the Board of Trustees was not one of the considerations for her appointment is belied by the tenor of the memorandum itself. In the case of Cagayan de Oro Coliseum.

On October 13. in brief). 1981. Quezon City. 1981 and September 5. TAN lodged before the Securities and Exchange Commission (SEC) another complaint against petitioners essentially questioning the validity of the PSBA elections of August 1. Tan (TAN). 1981. and majority of its Directors. respondent Labor Arbiter also issued a subpoena duces tecum to submit the same books and documents. And. 1981. On September 21. the Board declared all corporate positions vacant except those of the Chairman and President. On September 5. 1981. three members were elected to fill vacancies in the seven-man body. LEANO OF THE NLRC AND RUFINO R. 1981. 1981. RESPONDENTS.[2] On October 15. for illegal and oppressive removal (Civil Case No.R. NCR-9-20-81) (the Labor Case. petitioners moved for the dismissal of TAN' s complaint. LABOR ARBITER LACANDOLA S. 1981. On August 1. irregularly and improperly removed from his position as Executive Vice-President x x x without cause.[3] Before the NLRC. the Philippine School of Business Administration (PSBA). 1981. TAN was not reelected as Executive Vice-President.58468. invoking the principle against split jurisdiction. and of his "ouster" as Executive Vice-President (SEC Case No. NCR-9-20-81) involving private respondent-complainant. 1984 ] PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION VS. Q-33444). also during a regular meeting.[1] On September 16. on September 28. illegally. books and records. and petitioners. L. Before September 5. .[ G. investigation or notice" (NLRC Case No. and at the same time elected a new set of officers. TAN is one of the principal stockholders of PSBA. 1981. TAN also filed a one-million-peso damage suit against petitioners before the then Court of First Instance of Rizal. No. he was a Director and the Executive Vice President enjoying salaries and allowances. Rufino R. TAN. TAN filed with the National Labor Relations Commission (NLRC) (National Capital Region) a complaint for Illegal Dismissal against petitioners alleging that he was "summarily. a domestic corporation. 2145). February 24. SEC issued a subpoena duces tecum commanding the production of corporate documents. at the PSBA Board of Directors' regular meeting. This Petition for Certiorari questions the jurisdiction of respondent Labor Arbiter over the present controversy (No.

1981. and subsequently gave due course to the Petition. Thus. and at the ensuing election of officers. General management is vested in a Board of seven directors elected annually by the stockholders entitled to vote. the Board of Directors. who serve until the election and qualification of their successors. He prays that his dismissal be declared illegal and that his reinstatement be ordered with full backwages and without loss of other benefits. he concludes. TAN alleged that the election on August 1. that of the NLRC.[7] The By-Laws likewise provide that should the position of any officer of the corporation become vacant by reason of death. by a majority vote. This is the crux of the question that TAN has raised before the SEC. that on December 17. which resulted in TAN's failure to be re-elected. and the director or directors so chosen hold office for the unexpired term. were validly held. 2145) rendered a Partial Decision annulling the election of the three directors and . 1981 of the three directors was in contravention of the PSBA By-Laws providing that any vacancy in the Board shall be filled by a majority vote of the stockholders at a meeting specially called for the purpose. the SEC (Case No. that three directors were elected to fill vacancies. So much so. TAN was not reelected as Executive Vice-President. therefore.[5] Corporate officers are provided for. among them. 1981 was tainted with irregularity on account of the presence of illegally elected directors without whom the results could have been different. enjoining respondent Labor Arbiter from proceeding in any manner with the Labor Case.[6] The officers receive such salaries or compensation as the Board of Directors may fix. Basically. the Board meeting on September 5. 1981 and the election of officers on September 5. it was at the regular Board Meeting of September 5. TAN invoked the same allegations in his complaint filed with the SEC. An intracorporate controversy would call for SEC jurisdiction. “2. 1981. the question is whether the election of directors on August 1. for he was dismissed suddenly and summarily without cause in violation of his constitutional rights to due process and security of tenure. The issuance by the respondent labor arbiter of a subpoena duces tecum was likewise without jurisdiction especially if considered in the light of procedural and substantial requirements therefor such that it is imperative that the supervising authority of this Honorable Court should be exercised to prevent a substantial wrong and to do substantial justice. The respondent labor arbiter illegally assumed jurisdiction over the complaint for 'Illegal Dismissal' because the failure of the private respondent to be reelected to the corporate position of Executive Vice-President was an intracorporate question over which the Securities and Exchange Commission had already assumed jurisdiction. Relevant and pertinent it is to note that the PSBA is a domestic corporation duly organized and existing under our laws. resignation. Any vacancy in the Board of Directors filled by a majority vote of the subscribed capital stock entitled to vote at a meeting specially called for the purpose. petitioners availed of this Petition contending mainly that: “1. the Executive Vice-President. may choose a successor or successors who shall hold office for the expired term of his predecessor. 1981. Even in his position paper before the NLRC. who is elected by the Board of Directors from their own number. or otherwise. A labor dispute.[8] It was at a Board regular monthly meeting held on August 1. 1981 that all corporate positions were declared vacant in order to effect a reorganization. And."[4] TAN counter-argues that his sole and exclusive cause of action is illegal dismissal. We issued a Temporary Restraining Order. The jurisdiction of the SEC vis-a-vis the NLRC is in issue. disqualification. 1981.On October 22. falling within the jurisdiction of the NLRC.

officers or managers of the PSBA. members of associations or organizations registered with the Commission. 902-A vests in the Securities and Exchange Commission: "x x x original and exclusive jurisdiction to hear and decide cases involving: “a) Devices or schemes employed by or any acts. “b) Controversies arising out of intra-corporate or partnership relations. Private respondent also contends that his "ouster" was a scheme to intimidate him into selling his shares and to deprive him of his just and fair return on his investment as a stockholder received through his salary and allowances as Executive Vice-President. amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or stockholders. and (3) declaring the Temporary Restraining Order heretofore issued permanent. is not determined by the nature of the services performed. partners. Generally speaking. The foregoing indubitably show that. It revolves around the election of directors. and involves the exercise of deliberate choice and the faculty of discriminative selection. whether as officer or as agent or employee. its officers or partners. TAN was present at said meeting and again sought the issuance of injunctive relief from the SEC. members. fundamentally. partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity. WHEREFORE. it follows that the issuance of a subpoena duces tecum by the Labor Arbiter will have to be set aside. business associates. The matter of whom to elect is a prerogative that belongs to the Board. partnerships or associations. and between such corporation. members or associates. NCR-9-20-81 for lack of jurisdiction. these matters fall within the jurisdiction of the SEC.[11] With the foregoing conclusion. the relationship of a person to a corporation. The situation is that of a corporate office having been declared vacant. trustees. (2) nullifying the subpoena duces tecum issued by him in said case. or associates. and of TAN's not having been elected thereafter. and between them and the corporation."[10] This is not a case of dismissal. but by the incidents of the relationship as they actually exist. between any or all of them and the corporation. Presidential Decree No. Vis-a-vis the NLRC. the relation between and among its stockholders. officers or managers of such corporations. . between and among stockholders.[9] The correctness of said conclusion is not for us to pass upon in this case.ordered the convening of a stockholders' meeting for the purpose of electing new members of the Board. respectively. of the board of directors. partnership or association of which they are stockholders. the controversy is intra-corporate in nature. judgment is hereby rendered (1) ordering respondent Labor Arbiter to dismiss the complaint in NLRC Case No. No costs. “c) Controversies in the election or appointments of directors.

RAMON G. MILLAN.00 each as paid shares of stock. Sr..00 for Macrina. her children by Ramon Sr. Norma T. INC. AND CARMENCITA S. by his first and second wife. respondents’ father.[2] The Court of Appeals upheld the jurisdiction of the regional trial court over the case pending between the parties.R.000. and Carmencita S. During the pendency of the proceedings. Saura. Millan were the absolute owners of two parcels of land located at Governor Forbes.[4] On the other hand. evidenced by Transfer Certificate of Title (TCT) Nos. Of this amount. In 1979. and Carmencita[6] filed a complaint with the Securities and Exchange Commission (SEC) against their father Ramon E. 1979.625.00 for Amelita. 1979. Sr. respondents’ father gave it a valuation of only P3 10. Saura. Helen G. Petitioner Macrina Saura is Ramon Sr. JR.375. (VGFI) a corporation duly organized and existing under Philippine laws. Saura. Sampaloc. were also assigned shares in the amount of P19. and Carmencita were credited with P73. Saura. RESPONDENTS. Sr. Though the property was appraised by bank examiners to have a value of about P2..750 shares of stocks of VGFI. valued at P237. initiated the incorporation of Villa Governor Forbes. VS..500. September 01. AMELITA S. Saura. respondents Ramon.000. and third wife as stockholders. AND VILLA GOVERNOR FORBES. 135148 and 135149. Jr. Manila. They were the children of the late Ramon E. Saura. On March 25. P42. the deed of exchange was registered with the Register of Deeds of Manila resulting in the cancellation of respondents’ certificates of title and the issuance of TCT No. and P19. respectively. respondents Ramon G... 1986. and Villa Governor Forbes.00. Ramon E.635. They may be related as follows: The parties in this case are related to one another by blood. The petition for review on certiorari seeks to annul and set aside the decision of the Court of Appeals[1] and the resolution denying reconsideration of said decision.625. 136159. Inc. recovery of corporate assets and funds.00 for Romeo.’s third wife. Jr. Amelita Saura-Vergara and Romeo S. 1999 ] MACRINA S. Saura and Raymundo Y.[3] The antecedent facts are undisputed. 135150 in the name of VGFI. his wife Macrina and their children Amelita and Romeo. Inc. Jr. No. Respondents Ramon G. Jr.000.00 each. SAURA. and Carmencita S. namely. each containing an area of seven hundred (700) square meters. SAURA.00. Millan are the legitimate children of Ramon Sr. respondents Ramon. . with his children.[5] On August 8. on May 15. She was joined by co-petitioners.. ROMEO S.375. On August 29. SAURA. SAURA.00. Saura. Saura. for annulment of subscription. respondents executed a deed of exchange of the two parcels of land for 23.[ G. The balance was made to appear as the contribution of petitioners in the corporation: P42. Their other siblings. PETITIONERS..

Eventually. the SEC panel of hearing officers[7] promulgated a decision approving a compromise agreement between respondent Carmencita S. acting in their capacities as president and vice president. (3) there was no litis pendentia because no identity of parties and issues exists. a civil case for annulment of sale. the Court of Appeals upheld the order of the trial court and dismissed the petition for lack of merit.000. (4) lack of jurisdiction. (6) estoppel. cancellation of title. Though it agreed with petitioners that the trial court had no jurisdiction insofar as the deed of exchange was concerned for being an agreement between VGFI and the respondents who are stockholders of the corporation. Sr. and (4) Sandalwood Realty Development Corporation’s claim that respondents were not the real party in interest was without basis because they stand to benefit or be injured by the result of the suit. petitioners sold the disputed real property to Sandalwood Realty Development Corporation (Sandalwood) for a consideration of P15. (2) res judicata. the panel of hearing officers dismissed the case upon finding that his shares had been declared delinquent and subsequently sold at public auction. making him not a stockholder of the corporation. ..[8] On August 26. with prayer for receivership ex parte. of VGFI. Jr. On October 29. They insist that the Securities and Exchange Commission has original and exclusive jurisdiction over the subject matter and nature of the complaint. (3) prescription. (2) the civil case was not barred by res judicata since the judgment on compromise of the SEC did not result in a complete and final settlement of the claims which the parties may have against each other. Millan and petitioners. Jr. the court deferred the resolution of the issue of prescription and lack of cause of action until after trial. On January 26.[9] On September 8. However. The validity of the deed of exchange is “intricately connected with the sale” of the real property to Sandalwood by petitioners Amelita and Romeo. and Carmencita. The sale was done without the knowledge and consent of respondents Ramon. accounting. 221008 to Sandalwood. With respect to respondent Ramon G. However. Amelita and Romeo filed with the trial court a motion to dismiss the complaint based on: (1) forum shopping. petitioners elevated the case to the Court of Appeals via certiorari contending that the trial court gravely erred when it denied the motion to dismiss.000. (5) lack of cause of action. On May 11. respondents Ramon Jr. on April 11. the trial court denied petitioners’ separate motions for reconsideration. 1997. and Carmencita filed with the Regional Trial Court.. recovery of possession. the trial court denied the motion to dismiss and held that: (1) there was no forum shopping because the cases pending with the SEC and with the regional trial court involved different issues. the Register of Deeds of Manila issued TCT No. Saura. Despite the pendency of the SEC case. there was no intra-corporate dispute. On December 11. and (7) litis pendentia. In its decision promulgated on November 28. Hence. the appellate court maintained that the SEC has no jurisdiction over the subject matter of the civil action for annulment of the sale. 1995. Sandalwood has no intra-corporate relationship with petitioners or respondents. Ramon.1992. the SEC en banc reversed such finding and remanded the case to the hearing panel for the immediate resolution of the case.00. 1990. died. 1995. damages. 1995. declaration of nullity of deed of exchange. 1996. Manila. 1995. 1995. This was because the validity of the deed of exchange was not the only matter brought before the trial court. respectively. petitioners Macrina.

The resolution of the petition hinges on the determination of the validity of the sale of realty to a third party not involved in the intra-corporate dispute. amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of stockholders. claim that the Court of Appeals gravely abused its discretion when it upheld the jurisdiction of the trial court and dismissed their petition. The Deed of Sale (Annex “E. between any or all of them and the corporation. respondents do not dispute that the validity of the deed of exchange is in issue.” Petition) indicates that the sale was signed for VGFI by petitioner Amelita S. Saura as President and Romeo S. we rely on the sound judicial principle that jurisdiction over the subject matter is conferred by law and is determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein. In the present case. it shall have original and exclusive jurisdiction to hear and decide cases involving: “(a) Devices or schemes employed by or any acts of the board of directors. Saura as Vice President. its officers or partners. Petitioners contend that the main issue to be resolved is the validity of the deed of exchange. members. between and among stockholders. they contend that this issue is “intricately connected with the sale of the realty to Sandalwood. however. we shall not deal with the merits of the questioned sale of real property from VGFI to Sandalwood. this petition for review on certiorari. On the other hand. justifying the suspension of the civil case with the trial court.”[10] Hence. “To determine which body has jurisdiction over the present controversy.Specifically. They contend that the main issue involved in the complaint filed with the trial court is the validity of the deed of exchange executed between petitioner VGFI and respondents. “(b) Controversies arising out of intra-corporate or partnership relations. Petitioners allege that this issue poses a prejudicial question to the case pending with the trial court. or associates. which is an intra-corporate matter falling within the original and exclusive jurisdiction of the SEC. partnership or association of which they are . In essence.”[11] Section 5 of Presidential Decree 902-A sets forth the jurisdiction of the SEC as follows: “ Sec. There is no showing that Sandalwood has any intra-corporate relationship with the petitioners or the private respondents. partners. business associates. In this petition. the Court of Appeals held that: “ Such sale purportedly made by the VGFI to Sandalwood Real Estate & Development Corporation is entirely a different matter. That will be resolved by the proper court. members of associations or organizations registered with the Commission. 5. one that is intra-corporate in nature since it involved a transaction between the respondents-stockholders and the corporation. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations. partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees. Hence the questioned sale between VGFI and Sandalwood is beyond the adjudicative power of the SEC. Amelita and Romeo. petitioners Macrina. petitioners advance the same assignment of errors they made in their petition with the appellate court.” It is their position that this complexity removed the dispute from the ambit of SEC’s jurisdiction and vested it on the trial court. What we are examining here is which as between the Regional Trial Court and the Securities and Exchange Commission has the competent jurisdiction over the questioned sale. in favor of another corporation.

it cannot be joined as party-defendant in the SEC case as to do so would violate the rule on jurisdiction. . officers or managers of such corporations. partnership or association has no sufficient assets to cover its liabilities but is under the management of a rehabilitation receiver or management committee created pursuant to this Decree. and (2) the nature of the question that is the subject of their controversy. “(d) Petitions of corporations. Petitioners are only impleaded as necessary parties being the officers of the seller-corporation. Respondents’ complaint for annulment of the sale is an ordinary civil action. respondents Ramon. Jr. 2968. the creeping take-over by the administrative agencies of the judicial power vested in the courts would render the judiciary virtually impotent in the discharge of the duties assigned to it by the Constitution. and between such corporation. it should not deprive the courts of justice of their power to decide ordinary cases in accordance with the general laws that do not require any particular expertise or training to interpret and apply. which has no intra. there is no necessity to resort to the expertise of the SEC. Ultimately. partnerships or associations. questioning the validity of the deed of exchange. “It is true that the trend is towards vesting administrative bodies like the SEC with the power to adjudicate matters coming under their particular specialization. the controversy is an ordinary civil litigation beyond the ambit of the limited jurisdiction of the Securities and Exchange Commission. “(c) Controversies in the election or appointment of directors. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. 2968.” [12] “The first element requires that the controversy must arise out of intra-corporate or partnership relations between and among stockholders. Otherwise. This jurisdiction is determined by a concurrence of two elements: (1) the status or relationship of the parties. members. partnership or association. annulling the deed of exchange executed in favor of VGFI. partnership or association of which they are stockholders. respondents’ complaint against Sandalwood for the annulment of the sale of realty was properly filed before the regular court. In the present case. Therefore. This action must await the final ruling of the issue raised in SEC Case No. members or associates. [15] Thus. beyond the jurisdiction of the SEC.”[13] In the complaint filed with the trial court. trustees. and Carmencita.stockholders. or associates. between any or all of them and the corporation. and between such corporation. But as expedient as this policy may be. partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they fall due or in cases where the corporation. the civil case with the trial court is directed against the buyer of the disputed property. This would also relieve the regular courts of a substantial number of cases that would otherwise swell their already clogged dockets. respectively. Hence.” “The grant of jurisdiction to the SEC must be viewed in the light of its nature and function under the law. partnership or association and the State in so far as it concerns their individual franchises. the resolution of which is a logical antecedent of the issue involved in the civil action against Sandalwood. respondents’ complaint for annulment of sale can only succeed if final judgment is rendered in SEC Case No.corporate relationship with respondents Ramon. to insure a more knowledgeable solution of the problems submitted to them. partnership or association and the State insofar as it concerns their individual franchise or right to exist as such entity. partnerships or associations to be declared in the state of suspension of payments in cases where the corporation. respectively. members or associates. Jr. and Carmencita seek the annulment of the sale to Sandalwood.” [14] Since Sandalwood has no intra-corporate relationship with the respondents.

the appellate court was right in finding that res judicata did not exist. there is forum-shopping when. we go into the discussion of other issues raised in the petition. or at least such parties as represent the same interests in both actions. Petitioners claim that respondents were guilty of forum shopping. Forbes property. accounting. between an action pending before this Court and another one. (b) the court which rendered judgment had jurisdiction over the parties and the subject matter. 39557. such that any resolution in the first would not amount to res judicata in the other.shopping: ‘*W+here a litigant sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending. regardless of which party is successful. The case pending with the SEC involved an issue different from the case pending with the trial court. said requisites also constitutive of the requisites for auter action pendant or lis pendens.[17] res judicata exists when all the following elements are present: (a) the former judgment must be final. and where a final judgment in one case will amount to res judicata in the other.’ Another case elucidates the consequence of forum. the appellate court correctly ruled that the civil case for annulment of sale of realty is properly lodged with the regular court. There is no question that the SEC has jurisdiction over the question involved. .Having resolved the issue of jurisdiction. The complaint pending with the trial court relates to the annulment of sale.R. Thus.identity of subject matter and cause of action. we find that the other requisites were not present. will. (c) it must be a judgment on the merits. it failed to meet all the elements of res judicata -. WHEREFORE. cancellation of title. a final judgment in one would constitute res judicata and thus would cause the dismissal of the rest. subject matter. “Forum-shopping exists where the elements of litis pendentia are present. damages with prayer for receivership ex parte. the defense of litis pendentia in one case is a bar to the others. and. SP No. In relation to the contention that the judgment on compromise between respondent Carmencita and petitioners barred her from filing the antecedent civil case with the trial court due to res judicata. (b) identity of rights asserted and relief prayed for. The case pending with the SEC was for the annulment of subscription and recovery of corporate assets and funds. the relief being founded on the same facts. Court of Appeals. promulgated on November 28. we MODIFY the decision of the Court of Appeals in CA-G. As held in the recent case of Banaga vs. there exist: ‘(a) identity of parties. It was not even a complete disposition of the controversies between the parties because the appellate court found that “the compromise agreement did not entirely dispose of the parties’ controversy. However. The appellate court found that there was no forum shopping. We sustain the Court of Appeal’s finding. recovery of possession.” In light of the foregoing discussion. (d) and there must be between the first and second actions identity of parties. There was no identity in the rights asserted and the relief prayed for. amount to res judicata in the action under consideration. particularly in connection with the Gov.”[16] Though it might seem that the first requisite was present in the cases pending with the SEC and the trial court. and cause of action. and (c) the identity of the two preceding particulars is such that any judgment rendered in the other action. declaration of nullity of deed of exchange.

and ordered the MCTC to dismiss Civil Case No. 1996. 2968 with all deliberate dispatch. We DIRECT the Securities and Exchange Commission to proceed with the hearing and disposition of SEC Case. ANGELES CITY. AND ANTONIO ANDA This petition for certiorari seeks to annul and set aside the decision of the Regional Trial Court. 1996. Branch 16. VS. petitioner won. 58.[6] Hence this petition. The MCTC denied the motion on February 9. Branch 58. Mabalacat and Magalang. claiming that jurisdiction was lodged with the Securities and Exchange Commission (SEC). Inc. Lozano filed Civil Case No. Angeles City which ordered the Municipal Circuit Trial Court.[3] Private respondent filed a petition for certiorari before the Regional Trial Court. Inc.00. HON.[1] Private respondent moved to dismiss the complaint for lack of jurisdiction.R. hence. Petitioner claims that: "THE RESPONDENT JUDGE ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND SERIOUS ERROR OF LAW IN CONCLUDING THAT THE SECURITIES AND EXCHANGE COMMISSION . Pampanga.[5] It denied reconsideration on May 31. 1997 ] REYNALDO M. On December 19. Petitioner was thus constrained to file the complaint to restrain private respondent from collecting the dues and to order him to pay damages in the amount of P25. ELIEZER R. Mabalacat and Magalang. petitioner and private respondent also agreed to elect one set of officers who shall be given the sole authority to collect the daily dues from the members of the consolidated association. in order to facilitate the proceedings in Civil Case No. 1995. June 19. private respondent protested and. BR. 1214 accordingly. LOZANO. 1995 and both petitioner and private respondent ran for president. subject to the jurisdiction of the SEC. Petitioner alleged that he was the president of the Kapatirang Mabalacat-Angeles Jeepney Drivers' Association. [ G. PRESIDING JUDGE. The facts are undisputed. which are suspended until final outcome of the SEC case. PETITIONER.00 and attorney's fees of P500. RTC. petitioner Reynaldo M. Angeles City. (KAMAJDA) while respondent Anda was the president of the Samahang Angeles-Mabalacat Jeepney Operators' and Drivers' Association. Pampanga to dismiss Civil Case No. 125221. DE LOS SANTOS. alleging fraud. petitioner and private respondent agreed to consolidate their respective associations and form the Unified Mabalacat-Angeles Jeepney Operators' and Drivers' Association.[2] It denied reconsideration on March 8. Pampanga. (UMAJODA). refused to recognize the results of the election.1997. 1996. Branch 58.000. elections were held on October 29. private respondent also refused to abide by their agreement and continued collecting the dues from the members of his association despite several demands to desist. No. 95-73823 pending with the Regional Trial Court. Manila. in August 1995.[4] The trial court found the dispute to be intracorporate. Inc. upon the request of the Sangguniang Bayan of Mabalacat. 1214 for damages against respondent Antonio Anda before the Municipal Circuit Trial Court (MCTC). 1214 for lack of jurisdiction. No. (SAMAJODA).

its officers or partners. Section 5 reads as follows: "Section 5. members or associates. between and among stockholders. (d) Petitions of corporations. partnership or association of which they are stockholders. (c) Controversies in the election or appointment of directors. business associates. members or associates. neither had its officers and members submitted their articles of consolidation in accordance with Sections 78 and 79 of the Corporation Code. or associates.HAS JURISDICTION OVER A CASE OF DAMAGES BETWEEN HEADS/PRESIDENTS OF TWO (2) ASSOCIATIONS WHO INTENDED TO CONSOLIDATE/MERGE THEIR ASSOCIATIONS BUT NOT YET [SIC] APPROVED AND REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION. amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders. partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity. trustees. respectively. members. partnerships or associations to be declared in the state of suspension of payments in cases where the corporation. partnership or association has no sufficient assets to cover its liabilities. the principal function of the SEC is the supervision and control of corporations.[9] The first element requires that the controversy must arise out of intracorporate or partnership relations between and among stockholders. members of associations or organizations registered with the Commission. x x x [T]he Securities and Exchange Commission [has] original and exclusive jurisdiction to hear and decide cases involving: (a) Devices or schemes employed by or any acts of the board of directors. partnership or association of which they are stockholders. (b) Controversies arising out of intracorporate or partnership relations.[12] There is no intracorporate nor partnership relation between petitioner and private respondent. or associates. respectively. partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they respect very fall due or in cases where the corporation. The controversy between them arose out of their plan to consolidate their respective jeepney drivers' and operators' associations into a single common association." The grant of jurisdiction to the SEC must be viewed in the light of its nature and function under the law.[10] The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. partnership or association and the State in so far as it concerns their individual franchises. but is under the management of a Rehabilitation Receiver or Management Committee created pursuant to this Decree. however. officers or managers of such corporations. This unified association was. and their activities pursued for the promotion of economic development. Consolidation becomes effective not upon mere agreement of the members but only upon . between any or all of them and the corporation. partnership or association. and (2) the nature of the question that is the subject of their controversy. members. still a proposal. 902A."[7] The jurisdiction of the Securities and Exchange Commission (SEC) is set forth in Section 5 of Presidential Decree No. and between such corporation. partnerships or associations. It had not been approved by the SEC. partners. partnership or association or deal with the internal affairs of the corporation.[8] This jurisdiction is determined by a concurrence of two elements: (1) the status or relationship of the parties.[11] After all. partnerships and associations with the end in view that investments in these entities may be encouraged and protected. between any or all of them and the corporation. and between such corporation.

it issues a certificate of consolidation which makes the reorganization official. 1214. upon processing and examining the articles of consolidation.[18] Corporation by estoppel is founded on principles of equity and is designed to prevent injustice and unfairness.[14] The new consolidated corporation comes into existence and the constituent corporations dissolve and cease to exist. neither can it be conferred by the acquiescence of the court. who therefore know that it has not been registered. No costs. is satisfied that the consolidation of the corporations is not inconsistent with the provisions of the Corporation Code and existing laws. Angeles City are set aside. The Municipal Circuit Trial Court of Mabalacat and Magalang. 1996 of the Regional Trial Court. any act or omission of the parties. The doctrine of corporation by estoppel[16] advanced by private respondent cannot override jurisdictional requirements. 1996 and the order dated May 31. enlarged or diminished by. there is no corporation by estoppel.[17] It cannot be acquired through or waived.[13] When the SEC. but these associations are two separate entities. It is between members of separate and distinct associations. . The dispute between petitioner and private respondent is not within the KAMAJDA nor the SAMAJODA. the petition is granted and the decision dated April 18. Petitioner and private respondent have no intracorporate relation much less do they have an intracorporate dispute.[15] The KAMAJDA and SAMAJODA to which petitioner and private respondent belong are duly registered with the SEC. Where there is no third person involved and the conflict arises only among those assuming the form of a corporation. Pampanga is ordered to proceed with dispatch in resolving Civil Case No.[20] IN VIEW WHEREOF.[19] It applies when persons assume to form a corporation and exercise corporate functions and enter into business relations with third persons.issuance of the certificate of consolidation by the SEC. Jurisdiction is fixed by law and is not subject to the agreement of the parties. Branch 58. The SEC therefore has no jurisdiction over the complaint.

00 (P15. reversing and setting aside the labor arbiter's decision and dismissing for lack of merit private respondent's complaint.[3] The case stems from NLRC NCR Case No.). 141093.[ G. February 20. 1998. PETITIONER. finding the dismissal of complainant to be without factual and legal basis.-G. SO ORDERED. the dispositive portion of which reads: "WHEREFORE. Aggrieved. judgment was rendered by Labor Arbiter Cornelio L. including the signing of transmittal letters covering the same. gratuity. as mentioned at the outset. In lieu of reinstatement. Attorney's fees equivalent to ten (10%) percent of the total award should likewise be paid by respondent. a petition for certiorari before the Supreme Court. 00-06-03462-92.R. NLRC. 2001 ] PRUDENTIAL BANK AND TRUST COMPANY. private respondent Reyes held the position of Assistant Vice President in the foreign department of the Bank. Private respondent sought reconsideration which. in the amount of P420. the Bank appealed to the NLRC which. CLARITA T. in accordance with the ruling in St. VS.00 (P15. the respondent is also ordered to pay complainant separation pay equivalent to one month salary for every year of service. private respondent commenced on October 28. however.000. judgment is hereby rendered ordering the respondent bank to pay her back wages for three (3) years in the amount of P540. was denied by the NLRC in its Resolution of 28 July 1998. The Court of Appeals reversed and set aside the resolution[2] of the National Labor Relations Commission (NLRC) in NLRC NCR CA No.R. 009364-95. REYES. RESPONDENT. Prior to her dismissal.).000 x 28 mos.A. the Court of Appeals adopted the following antecedent facts leading to Reyes's dismissal as summarized by the NLRC: .00 x 36 mos. Before the Court is a petition for review on certiorari of the Decision.[5] The subject petition was referred to the Court of Appeals for appropriate action and disposition per resolution of this Court dated November 25. After proceedings duly undertaken by the parties. fringe benefits and attorney's fees filed by Clarita Tan Reyes against Prudential Bank and Trust Company (the Bank) before the labor arbiter."[4] Not satisfied. dated December 6.000. Linsangan. 1999 of the Court of Appeals in C.[6] In its assailed decision. to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased. 1999 denying petitioner's motion for reconsideration of said decision. the respondent should also pay complainant profit sharing and unpaid fringe benefits. In addition. 30607 and of its Resolution. 1998. reversed the Labor Arbiter's decision in its Resolution dated 24 March 1997. tasked with the duties.[1] dated October 15. SP No. which is a complaint for illegal suspension and illegal dismissal with prayer for moral and exemplary damages. Martin Funeral Homes vs.000. No. among others.

) under a special collection scheme (Exhibits 4 and 5 to 5-B). Joven delivered the transmittal letters and the checks to the Accounting Section of the Foreign Department. TSN.00. Thus. p. All other transmittal letters are in fact signed by complainant. On March 8. were not sent out for collection to Hongkong Shanghai Banking Corporation on the alleged order of the complainant until the said checks became stale. a remittance clerk then assigned in the Foreign Department. She then requested complainant to sign the said transmittal letters (Exhibits 1. As the complainant failed to attend and participate in the formal investigation conducted by the Committee on May 24. 11 March 1993. 1991. c) After complying with complainant's instruction. complainant told Ms. 7 and 25. to the president. Ms.00. Ms. The Bank created a committee to investigate the findings of the auditors involving the two checks which were not collected and became stale. 4 June 1993. Hence. Joven then returned to complainant for the latter to sign the new transmittal letters. received by the Bank on April 6. No. in the amount of US$115. complainant authorized the crediting of the account of Filipinas Tyrom in the amount of P4. Joven to just hold on to the letters and checks and await further instructions (ibid. d) In June 1989. Pablo Magno. Cecilia Joven."The auditors of the Bank discovered that two checks. in favor of Filipinas Tyrom. Ms. On the same day. including the responsibility over the two (2) HSBC checks. despite due notice. responsibilities and functions. dated March 14.70 corresponding to the face value of the checks. Singapore. advised complainant to send the checks for collection despite the lapse of fifteen (15) months. the Bank's legal counsel. . her duties. in the amount of US$109. 1989. the Committee proceeded with its hearings and heard the testimonies of several witnesses. complainant instructed her to withdraw the same for the purpose of changing the addressee thereon from American Express Bank to Bank of Hawaii (ibid. complainant stated that in view of the refusal of the Bank that she be furnished copies of the pertinent documents she is requesting and the refusal to grant her a reasonable period to prepare her answer. b) After Ms. 011730-7232-146. the president of the Bank issued a memorandum to the complainant informing her of the findings of the auditors and asked her to give her side. e) When asked by Ms. 42-52). On the following day. However. TSN. The Committee's findings were: `a) The two (2) HSBC checks were received by the Foreign Department on 6 April 1989.650. pp. In a subsequent letter. the said checks were discovered in the course of an audit conducted by the Bank's auditors. Ms. Joven relayed to the latter complainant's instruction (Exhibit 14. as it is complainant who gives her instructions directly concerning the transmittal of foreign bills purchased. 42). and No.). she was constrained to make a general denial of any misfeasance or malfeasance on her part and asked that a formal investigation be made. 1991. were turned over to another remittance clerk. In reply. f) About fifteen (15) months after the HSBC checks were received by the Bank. drawn by the Sanford Trading against Hongkong and Shanghai Banking Corporation. 4 June 1993. a transmittal letter was prepared by Ms. TSN. pp. (See Exhibits 5 to 5-B). Joven was transferred to another department. 1991. 011728-7232-146.000. 27-29). Analisa Castillo (Exhibit 14.102. Atty.780. the new transmittal letters remained unsigned. complainant requested for an extension of one week to submit her explanation. for the purpose of sending out the two (2) HSBC checks for collection. Castillo about the two (2) HSBC checks. (Exhibits 6. Jurong Branch. 22 to 22-A and 23 to 23-A).

Bank legal counsel. for filing the clearly unfounded suit against the respondent`s officers. you even relayed a false advice which delayed further the sending of the two checks for collection. You deliberately withheld from Mr. Magno's advice from her superior. You tried to influence the decision of Atty. accordingly. has found the following: 1. 1991. 11728 and 11730 of Hongkong and Shanghai Banking Corporation in the total amount of US$224.g) Complainant.650. Accordingly. your monetary and retirement benefits are forfeited except those that have vested in you."[7] . complainant is liable to pay moral and exemplary damages and attorney's fees. and 3. 1991. Renato Santos and falsely informed the latter that Atty. the HSBC checks were finally sent for collection. but were returned on 16 July 1990 for the reason `account closed' (Exhibits 2-A and 3-A). As a matter of fact. Senior Vice President. the value of said checks have not been paid by Filipinas Tyrom. She further alleged that she was not afforded due process as she was not given the chance to refute the charges mentioned in the letter of dismissal. however. On the other hand. Magno advised that a demand letter be sent instead. Reyes: After a thorough investigation and appreciation of the charges against you as contained in the Memorandum of the President dated March 8. deliberately withheld Atty.' In her position paper.' To date. she alleged that it would be self-serving for the respondent to state that she was found guilty of gross misconduct in deliberately withholding the clearing of the two dollar checks. the Senior VicePresident. Hence. On July 19. Santos. the Fact Finding Committee which was created to investigate the commission and/or omission of the acts alluded therein. had just cause for terminating her services. In relation thereto. You have deliberately held the clearing of Checks Nos. the same being acts of serious misconduct in the performance of your duties resulting in monetary loss to the Bank. complainant alleged that the real reason for her dismissal was her filing of the criminal cases against the bank president. Pablo P. by asking him to do something allegedly upon instructions of a Senior Vice President of the Bank or else lose his job when in truth and in fact no such instructions was given. the Board has resolved not to re-elect you to the position of Assistant Vice President of the Bank. in a letter the text of which is quoted in full: `Dear Mrs. In view thereof. Santos. 2. Magno. respondent argues that there were substantial bases for the Bank to lose its trust and confidence on the complainant and. In view thereof. they were returned for the reason `Account closed. These findings have given rise to the Bank's loss of trust and confidence in you. you refused to heed the advice of the Bank's legal counsel to send the checks for collection. had been credited with their peso equivalent. when the said checks were finally sent to clearing after the lapse of 15 months from receipt of said checks.' After a review of the Committee's findings. Mr. the Board of Directors of the Bank resolved not to re-elect complainant any longer to the position of assistant president pursuant to the Bank's By-laws. Santos had asked you to seek. h) On 10 July 1990. your services are terminated effective immediately. thereby further delaying the collection of the HSBC checks. the advice given by the legal counsel of the Bank which Mr. complainant was informed of her termination of employment from the Bank by Senior Vice President Benedicto L. Furthermore. such filing not being a valid ground for her dismissal. the vice president and the auditors of the Bank.00 by giving instructions to the collection clerk not to send the checks for collection. Likewise. Moreover. which as payee of the checks. she was illegally dismissed.

petitioner contends that complainant is a corporate officer. EVEN ASSUMING ARGUENDO THAT RESPONDENT WAS ENTITLED TO BACKWAGES. In lieu thereof. in the light of the foregoing. and 3. the Court of Appeals reinstated the judgment of the labor arbiter with modification as follows: "WHEREFORE. the resolution of this petition hinges on (1) whether the NLRC has jurisdiction over the complaint for illegal dismissal. In effect."[9] In sum. More specifically. WHICH DECISION RESPONDENT HERSELF SOUGHT TO EXECUTE. 2. II. 1991 up to the finality of this judgment. the Bank's recourse to this Court contending in its memorandum that: "IN SETTING ASIDE THE DECISION DATED 24 MARCH 1997 AND THE RESOLUTION DATED 28 JULY 1998 OF THE NLRC AND REINSTATING WITH MODIFICATION THE DECISION DATED 20 JULY 1995 OF LABOR ARBITER CORNELIO L. (2) whether complainant Reyes was illegally dismissed. IN VIEW OF THE FOLLOWING: I. To pay petitioner full backwages and other benefits from July 19. an elective position under the corporate by-laws and her non- . petitioner seeks refuge behind the argument that the dispute is an intra-corporate controversy concerning as it does the non-election of private respondent to the position of Assistant Vice-President of the Bank which falls under the exclusive and original jurisdiction of the Securities and Exchange Commission (now the Regional Trial Court) under Section 5 of Presidential Decree No.The Court of Appeals found that the NLRC committed grave abuse of discretion in ruling that the dismissal of Reyes is valid. 902-A. On the first issue. THERE WAS SUBSTANTIAL EVIDENCE OF RESPONDENT'S MISCONDUCT JUSTIFYING THE BANK'S LOSS OF TRUST AND CONFIDENCE ON (sic) HER. EVEN ASSUMING ARGUENDO THAT THE NLRC HAS JURISDICTION. III. and (3) whether the amount of back wages awarded was proper. THE HONORABLE COURT OF APPEALS ERRED IN AWARDING UNLIMITED AND UNQUALIFIED BACKWAGES THEREBY GOING FAR BEYOND THE LABOR ARBITER'S DECISION LIMITING THE SAME TO THREE YEARS. LINSANGAN. the decision appealed from is hereby REVERSED and SET ASIDE. judgment is hereby rendered ordering respondent Bank as follows: 1. IT IS THE SEC (NOW THE REGIONAL TRIAL COURT) AND NOT THE NLRC WHICH HAS ORIGINAL AND EXCLUSIVE JURISDICTION OVER CASES INVOLVING THE REMOVAL FROM OFFICE OF CORPORATE OFFICERS. To pay attorney's fee equivalent to ten (10%) percent of the total award. To pay petitioner separation pay equivalent to one (1) month salary for every year of service in lieu of reinstatement. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED."[8] Hence. SO ORDERED.

Even before the Court of Appeals. only if favorable. to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased. Hence. it is no wonder then that the Bank endeavored to the very end to establish loss of trust and confidence and serious misconduct on the part of private respondent but. While it is true that jurisdiction over the subject matter of a case may be raised at any time of the proceedings. and attacking it for lack of jurisdiction when adverse. The bank's contention that she merely holds an elective position and that in effect she is not a regular employee is belied by the nature of her work and her length of service with the Bank."[13] As Assistant Vice-President of the Foreign Department of the Bank she performs tasks integral to the operations of the bank and her length of service with the bank totaling 28 years speaks volumes of her status as a regular employee of the bank. she rose from the ranks and has been employed with the Bank since 1963 until the termination of her employment in 1991. she is entitled to security of tenure. It was only when the Court of Appeals ruled in favor of private respondent did it raise the issue of jurisdiction. 1963.[14] This being in truth a case of illegal dismissal. not because of the mode or even the reason for hiring them. the NLRC and the Court of Appeals. the principle of estoppel lies. . including the signing of transmittal letters covering the same.[11] is most enlightening. The Court therein stated: "This Court has time and again frowned upon the undesirable practice of a party submitting his case for decision and then accepting the judgment. The Bank actively participated in the proceedings before the Labor Arbiter. such an assertion was made only in the appeal to the NLRC and raised again before the Court of Appeals. she was appointed Assistant Vice-President which she occupied until her illegal dismissal on July 19. The Bank insists that private respondent was elected Assistant Vice President sometime in 1990 to serve as such for only one year. the bank said nothing about jurisdiction.[12] Additionally. The Bank participated in the proceedings from start to finish. she is tasked. her services may be terminated only for a just or authorized cause.election is an intra-corporate controversy cognizable by the SEC invoking lengthily a number of this Court's decisions. "an employee is regular because of the nature of work and the length of service. When the decision of the Labor Arbiter was adverse to it. It filed its position paper with the Labor Arbiter. it never questioned the proceedings on the ground of lack of jurisdiction. this rule presupposes that laches or estoppel has not supervened. as will be discussed later. 1991. Bañaga vs. Here." As far as the records before this Court reveal however. that is. In this regard. As earlier stated. From that position she rose to become supervisor. It appears that private respondent was appointed Accounting Clerk by the Bank on July 14. This argument will not do either and must be rejected. In fine. the Bank also contends that estoppel cannot lie considering that "from the beginning. not for purposes of questioning jurisdiction but to establish that private respondent's tenure was subject to the discretion of the Board of Directors and that her non-reelection was a mere expiration of her term. Then in 1982. a party may be estopped or barred from raising the question of jurisdiction for the first time in a petition before the Supreme Court when it failed to do so in the early stages of the proceedings. It has been stated that "the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. the Bank appealed to the NLRC." Undeterred. as a regular employee. among others. As Assistant Vice President of the foreign department of the Bank. Commission on the Settlement of Land Problems. to no avail. an elective position which she held by virtue of her having been elected as such by the Board of Directors.[10] Petitioner Bank can no longer raise the issue of jurisdiction under the principle of estoppel. petitioner Bank has consistently asserted in all its pleadings at all stages of the proceedings that respondent held the position of Assistant Vice President. When the NLRC decided in its favor.

In a nutshell. Upon this point. Joven while testifying on the witness stand and was not impressed by her assertions. SECOND. One thing was clearly established: that the legality of complainant's dismissal based on the first ground stated in respondent's letter of termination (exh. Losada. the same should be respected by appellate tribunals since he is in a better position to assess and evaluate the credibility of the contending parties (Ala Mode Garments. Rollo). the court must adopt the testimony which it believes to be true (U. 248 SCRA 183). it must be substantial and not arbitrary. On this point. Joven in that her non-release of the dollar checks was upon the instruction of complainant Reyes is extremely doubtful. Joven's allegation that petitioner instructed her to hold the subject two dollar checks amounting to $224. and must be founded on clearly established facts sufficient to warrant the employee's separation from work (Labor vs. if carried out. On cross examination. that she is guilty of conflict of interest that she waived her right to due process for not attending the hearing. thus: This Office has repeatedly gone over the records of the case and painstakingly examined the testimonies of respondent bank's witnesses. if same was really given to her by complainant. NLRC. It will be observed that the testimonies of the bank's other witnesses. the said instruction constitutes a gross violation of the bank's standard operating procedure. 268 SCRA 497). THIRD. Settled is the rule that when the conclusions of the Labor Arbiter are sufficiently substantiated by the evidence on record. Jocson testified that the documents themselves do not show any direct withholding (pp. Joven not only to disobey the instruction but even to report the matter to management. Joven's allegation even deepens as we consider the fact that when the non- . Chairman of the Investigating Committee. In the first place. Joven was fully aware that the instruction. respondent Bank failed to adduce convincing evidence to prove bad faith and malice. Jocson. 25-J. It was incumbent upon Ms. Dante Castor and Antonio Ragasa pertaining to the non-release of the dollar checks and their corresponding transmittal letters were all anchored on what was told them by Ms.650. is not absolute. This Office had closely observed the demeanor of Ms. vs. the issue boils down to who between complainant and Ms. The right of an employer to dismiss employees on the ground that it has lost its trust and confidence in him must not be exercised arbitrarily and without just cause. The allegation of Ms. 90). Respondent Bank's charge of deliberate withholding of the two dollar checks finds no support in the testimony of Atty. 18 Phil. Analiza Castillo. 186-187.This brings us to the second issue wherein the Bank insists that it has presented substantial evidence to prove the breach of trust on the part of private respondent warranting her dismissal. vs. We quote pertinent portions of the decision. the rule that proof beyond reasonable doubt is not required to terminate an employee on the charge of loss of confidence and that it is sufficient that there is some basis for such loss of confidence. Joven and respondent's other witnesses this Office finds the evidence still wanting in proof of complainant's guilt.S. However. and that she was dismissed based on loss of trust and confidence. In this regard. Except for Joven's bare assertion to withhold the dollar checks per petitioner's instruction. It bears emphasizing that respondent Bank's witnesses merely corroborate Joven's testimony. Inc. therefore. that is: she was instructed by complainant to hold the release of subject checks. There being conflict in the statement of witnesses. Our doubt on the veracity of Ms. to wit: "FIRST: Respondent Bank heavily relied on the testimony and affidavit of Remittance Clerk Joven in trying to establish loss of confidence. Atty. supra) will rise or fall on the credibility of Miss Joven who undisputedly is the star witness for the bank. the Court quotes with approval the following disquisition of Labor Arbiter Linsangan. Ms. For loss of trust and confidence to be valid ground for an employee's dismissal. will greatly prejudice her employer bank. After painstakingly examining the testimonies of Ms. Moreover. Joven. NLRC.00 falls short of the requisite proof to warrant petitioner's dismissal. Joven is more credible. the Court of Appeals disagreed and set aside the findings of the NLRC that Reyes deliberately withheld the release of the two dollar checks.

The evidence shows that it was only on 16 May 1990 that Ms. stated in his affidavit. Cecille Joven said: "Eh.' 2. And yet. Sometime on November 15. Clarita Tan Reyes and I were in the residence of one Ms. supra). Castor and Ms. and Mrs. then a Processing Clerk in the Foreign Department of Prudential Bank. at about 8:00 p. 5. were found in a plastic envelope kept day-to-day by the former. When I asked Cecille Joven what I was supposed to do with those checks. In this regard. Castillo regarding the non-release of the checks sometime in November. Worse. her mother. Joven to confront her. Mother (Mrs. Clarita Tan Reyes. The non-release of the dollar checks was reported to top management sometime on 15 November 1989 when complainant. Joven eighteen (18) months before she explained her side on the controversy. how it came about that the two dollar checks which she was then holding with the transmittal letters. reported the matter to Vice President Santos. Tan Reyes had been intimately called Mother in the Bank) akala ko bouncing checks yon mga yon. the complainant. Mrs. Mrs. that complainant was issued a memorandum directing her to submit an explanation. she said the same should be held as per instruction of Mrs.' (Exh. Cecille Joven turned pale and was not able to answer.release of the checks was discovered by Ms. As to what prompted her to make her letter of explanation was not even mentioned. Ms. upon hearing those words. When complainant was informed by Mr. 1989 she immediately reported the matter to Vice President Santos. thus: `1. Incidentally. it was only on 08 March 1991. Mrs. It clearly appears from the foregoing that the complainant herein has no knowledge of. Joven even impliedly told by Ms. Cecille Joven. she was not even reprimanded by the bank. myself. Reyes. 3. . And as earlier mentioned. Ms. much less participation in. Castillo said: `4. complainant went to the residence of Ms. On the other hand. Celestino Bonito. Hesitatingly. Joven is solely responsible for the same. It took Ms. The delayed action taken by respondent against complainant lends credence to the assertion of the latter that her dismissal was a mere retaliation to the criminal complaints she filed against the bank's top officials. Castillo (sic) to ignore the two checks and just withhold their release. the actions taken by the complainant were spontaneous. Joven broke her silence on the matter despite the fact that on 15 November 1989. Head of the Foreign Department. Ms. complainant's driver. after a lapse of sixteen (16) months from the time the non-release of the checks was reported to the Vice President. the non-release of the dollar checks under discussion. went to her residence and confronted her regarding the non-release of the dollar checks. accompanied by Supervisor Dante Castor and Analiza Castillo. In her affidavit Ms. accompanied by driver Celestino Banito. Cecille Joven. "14". Ms. Castillo the former contented herself by continuously not taking any action on the two dollar checks. 4. Cecille Joven. papaano mong alam na bouncing na hindi mo pa pinadadala. 1989 at about 7:00 o'clock in the evening. Clarita Tan Reyes were seated in the sala when the latter asked the former. There are other factors that constrain this Office to doubt even more the legality of complainant's dismissal based on the first ground stated in the letter of dismissal. was surprised and she said: "Ano.m. And it took the bank another four (4) months before it dismissed complainant.

separation pay equivalent to one (1) month salary for every year of service in lieu of reinstatement.FOURTH. since private respondent was compelled to file an action for illegal dismissal with the labor arbiter. In any event. Indeed. she is likewise entitled to attorney's fees[22] at the rate above-mentioned. the appellate court awarded backwages in accordance with current jurisprudence. petitioner was not amply afforded opportunity to prepare an intelligent answer. 6715 on March 21. while those illegally dismissed after are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement. It must be stressed that private respondent filed a special civil action for certiorari to review the decision of the NLRC[17] and not an ordinary appeal. she is entitled to full backwages from the time her actual compensation was withheld from her (which. the Court finds it irrelevant to the charge. The Bank argues. The charge was predicated on the testimony of Ms. 1989 are entitled to backwages up to three (3) years without deduction or qualification. 1991 up to the finality of this judgment.[20] Considering that private respondent was terminated on July 19. 1999. This Court is not a trier of facts and will not weigh anew the evidence already passed upon by the Court of Appeals. Article 279 of Republic Act No. and the assailed Decision of the Court of Appeals. the Bank questions the award of full backwages and other benefits from July 19. The Court finds nothing confidential in the auditor's report and the affidavit of Transmittal Clerk Joven. that private respondent is not entitled to full backwages in view of the fact that she did not bother to appeal that portion of the labor arbiter's judgment awarding back wages limited to three years. Respondent Bank having failed to furnish petitioner necessary documents imputing loss of confidence. Joven and we defer to the findings of the Labor Arbiter as confirmed and adopted by the Court of Appeals on the credibility of said witness. WHEREFORE. resort to a judicial review of the decisions of the National Labor Relations Commission in a petition for certiorari under Rule 65 of Rules of Court is confined to issues of want or excess of jurisdiction and grave abuse of discretion. Employees illegally dismissed prior to the effectivity of Republic Act No. that its liability should be mitigated on account of its good faith and that private respondent is not entirely blameless. the instant petition for review on certiorari is DENIED. is from the time of her illegal dismissal) up to the finality of this judgment (instead of reinstatement) considering that reinstatement is no longer feasible as correctly pointed out by the Court of Appeals on account of the strained relations brought about by the litigation in this case."[15] We uphold the findings of the Court of Appeals that the dismissal of private respondent on the ground of loss of trust and confidence was without basis. she is also entitled to separation pay equivalent to one (1) month salary for every year of service. dated October 15.[18] On the other hand. including legal representation. Due process dictates that management accord the employees every kind of assistance to enable him to prepare adequately for his defense. An ordinary appeal is distinguished from the remedy of certiorari under Rule 65 of the Revised Rules of Court in that in ordinary appeals it is settled that a party who did not appeal cannot seek affirmative relief other than the ones granted in the decision of the court below. is AFFIRMED. jurisprudence is clear on the amount of backwages recoverable in cases of illegal dismissal. Since reinstatement is no longer viable. . 1991. and attorney's fees equivalent to ten (10%) percent of the total award.[16] On the third issue.[19] In the instant case. 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. The issue of conflict of interest not having been covered by the investigation. in the main. Corollary to the foregoing. the Court of Appeals found that the NLRC gravely abused its discretion in finding that the private respondent's dismissal was valid and so reversed the same.[21] Lastly. as the Bank does here. There is no room to argue. 6715[23] clearly and plainly provides for "full backwages" to illegally dismissed employees. as a rule.

speedy. absence of which can be fatal to a Petition for Certiorari. Records do not show that petitioner presented a Motion for Reconsideration of subject Decision of the National Labor Relations Commission. it is necessary that a Motion for Reconsideration of the Decision of the National Labor Relations Commission must first be resorted to. Petitioner cannot and should not rely on the liberality of the Court simply because he is a working man. Petitioner‘s inaction or negligence under the circumstances is tantamount to a deprivation of the right and opportunity of the . we gave due course to the petition to enable the Court to reiterate and clarify the jurisdictional boundaries between Labor Arbiters and Voluntary Arbitrator or Panel of Voluntary Arbitrators over money claims. Before the Court is a Petition for Certiorari seeking to annul a Decision of the National Labor Relations Commission dated April 20.. No. and adequate remedy in the ordinary course of law‖ (Rule 65. 1997. Labor law practitioners and all lawyers. this court said: ―. In the Jamer case. 112630.R. September 5. nor any plain. 121227. 1994 in NLRC-NCR Case No.. For instance. National Labor Relations Commission — The filing of such motion is intended to afford public respondent an opportunity to correct any actual or fancied error attributed to it by way of a re-examination of the legal and factual aspects of the case. Revised Rules of Court) is not a foolproof substitute for a Motion for Reconsideration.[ G. 00-03-02101-93 a case for a money claim .. a Decision of the Labor Arbiter dated January 19. most recently is the case of Building Care Corporation v. NATIONAL LABOR RELATIONS COMMISSION AND OCEAN TERMINAL SERVICES. August 17. National Labor Relations Commission. 1998 ] VICENTE SAN JOSE. 1995 in NLRC-NCR-CA-No. or seven years ago. PETITIONER. INC. there is no showing that the case at bar constitutes an exception. This premature action of petitioners constitutes a fatal infirmity as ruled in a long line of decisions. and there is no appeal. generally required before the filing of Petition for Certiorari. should be fully conversant with the requirements for the institution of certiorari proceedings under Rule 65 of the Revised Rules of Court. No. VS.underpayment of retirement benefit.. 00671-94 which reversed. The ruling in Corazon Jamer v. RESPONDENTS. on jurisdictional ground. for that matter.. which motion is. Nevertheless. 1. G. comes to the fore and should be well understood and observed. and to render substantial and speedy justice to subject aged stevedore retiree who first presented his claim for retirement benefit in April 1991. While the rule prescribing the requisite motion for reconsideration is not absolute and recognizes some exceptions. An ordinary allegation – ―.R. Sec.

16-17). pages 11 to 14) states that he was hired sometime in July 1980 as a stevedore continuously until he was advised in April 1991 to retire from service considering that he already reached 65 years old (sic). that all stevedores only for paid every time they were assigned or actually performed stevedoring.30 was the same computation applied to the other stevedores. that he only worked on rotation basis and not seven days a week due to numerous stevedores who can not all be given assignments at the same time. Whether or not complainant worked on rotation basis is a burden which lies upon the employer.00 rests upon him. he would have immediately filed this complaint but nay. The issue therefore is whether or not complainant is entitled to the claimed differential of separation pay. hence certiorari proceedings. . We find for the complainant. so while he was connected with the company for the past 11 years. as in this case. Likewise. a motion for reconsideration is an adequate remedy. thus: ―Complainant. that accordingly. 15-17).39 for retirement pay. 26-27. or 26 days a month.156. hereinbelow quoted. 15.. the facts of this case are undisputed. 00-03-02101-93. allege (Record. aside from the fact that the best evidence thereof are complainant‘s daily time records which respondent are (sic) duty bound to keep and make available anytime in case of this. that the burden of proving that complainant‘s latest salary was P200. The late filing has no bearing. in his position paper (Record. dated January 19. he did apply for retirement and was paid P3. that he already voluntarily signed a waiver of quitclaim. He is entitled to differential. pp. at pp. 15017. Reads subject Decision of the Labor Arbiter: ―Respondents. The prescription period is three years.respondent commission to cleanse itself of an error unwittingly committed or to vindicate itself of an act unfairly imputed. he did not actually render 11 years of service. unless proven otherwise.‖ As stated in the Decision of the Labor Arbiter in NLRC-NCR-Case No. reversed the Labor Arbiter‘s Decision on the issue of jurisdiction. The Labor Arbiter reported. 1994 (Rollo. the allegation that complainant rendered service for only five days a month for the past 11 years is statistically improbable. ― (Rollo. 58-59).156. pp. pp. that if indeed respondent took advantage of his illiteracy into signing his quitclaim. But the issue of jurisdiction is the bedrock of the Petition because. for it took him two (2) years to do so. pages 18 to 21) that complainant‘s latest basic salary was P120. Likewise. The presumption is that the normal working period is eight (8) hours a day and six (6) days a week. Nowhere in the Decision is made mention of or reference to the issue of jurisdiction of the Labor Arbiter (Rollo. that the use of divisor 303 is not applicable because complainant performed stevedoring job only on call. in their Reply to complainant‘s position paper. January 9. the Decision of the National Labor Relations Commission. The Labor Arbiter decided the case solely on the merits of the complaint.. will not prosper... that the computation used in arriving at the amount of P3. 1994. We cannot sustain a computation of length of service based on the ECC contribution records. It is suffice (sic) that the filing falls within the period. Decision of the Labor Arbiter in NLRC-NCR-Case No. as earlier intimated. 00-03-0201-93.34 per day.

70‖ The Decision of the National Labor Relations Commission in NLRC-NCR-CA No..P3.156. which the employers are likewise duty bound to keep and present. xxx The company agrees that in case of casual employees and/or workers who work on rotation basis the criterion for determining their retirement pay shall be 303 rotation calls or work days as equivalent to one (1) year and shall be paid their retirement pay equivalent to one half (1/2) month for every year of service. vouchers.30 . the Labor Arbiter should have dismissed it for lack of jurisdiction in accordance with Article 217 (c) of the Labor Code.200 x 11 years _________________ 2 = (P2. (c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the interpretation or enforcement of company procedure/policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitrator as may be provided in said agreements.30 . April 20. He shall be paid his retirement pay equivalent to one-half (1/2) month salary for every year of service. 1995 (Rollo.P3. His claim for separation pay differential is based on the Collective Bargaining Agreement (CBA) between his union and the respondent company.600 = P25.600 x 11 years) = P28..443. There being non. unless otherwise extended by the company for justifiable reason.Also. 06701-94. pp. the burden of proving the amount of salaries paid to employees rests upon the employer not on the employee.443. which reads: (Underscoring supplied) Art. 18-21).156. 217. etc. The National Labor Relations Commission reversed on jurisdictional ground the aforesaid Decision of the Labor Arbiter. Therefore. as follows: ―.‖ Petitioner contends that: . a fraction of at least six months being considered as one (1) whole year. Since the instant case arises from interpretation or implementation of a collective bargaining agreement.70 broken down as follows: P200 x 26 days = P5. we have to sustain complainant‘s assertion that his latest salary rate was P200 a day or P5.200 a month. ruling. Jurisdiction of Labor Arbiter and the Commission. the pertinent portion of which reads: xxx ANY UNION member shall be compulsory retired (sic) by the company upon reaching the age of sixty (60) years. It can be easily proven by payrolls. his retrenchment pay differential is P25.

executives. In fact. If such decision had to be completely overturned or set aside. G. pp.R. re: jurisdiction raised by the Petitioner (Rollo. and the Supreme Court serve not only to adjudicate disputes. On the issues raised by the Petitioner. The same thing goes for the findings of fact made by the NLRC. As this Court said in Juan Saballa. NLRC. It is a requirement of due process and fair play that the parties to a litigation be informed of how it was decided. generalizations. 1995 by the Office of the Solicitor General support the second issue. et al. at pp. 38-32).I. such resolution or decision should likewise state the factual and legal foundation relied upon. as it is a settled rule that such findings are entitled to great respect and even finality when supported by substantial evidence. the court should be able to justify such a sudden change of course. II. and assumptions. 26-33. otherwise. advice and a critique to stress that both have obligations to the Courts and students of the law. 1996: ―xxx This Court has previously held that judges and arbiters should draw up their decisions and resolutions with due care. and make certain that they truly and accurately reflect their conclusions and their final dispositions. decisions rise or fall on the basis of the analysis and reasoning processes of decision makers or adjudicators. we rule: I. 10247284. it must be able to convincingly explain the taking back of its solemn conclusions and pronouncements in the earlier decision. An Arbiter cannot rely on simplistic statements. Article VIII of the Constitution which provides that no decision shall be rendered by any court without expressing therein clearly and distinctly the facts of the case and the law on which it is based. with an explanation of the factual and legal reasons that led to the conclusions of the court. its Implementing Rules. Decisions of the Labor Arbiters. THE PUBLIC RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION N SETTING ASIDE THE DECISION OF XXX DATED 19 JANUARY 1994 AND DISMISSING THE CASE ON THE GROUND OF LACK OF JURISDICTION WHEN THE ISSUE DOES NOT INVOLVE ANY PROVISION OF THE COLLECTIVE BARGAINING AGREEMENT. THE PUBLIC RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN GIVING DUE COURSE TO THE APPEAL DESPITE THE FACT 4 (SIC) THAT IT WAS FILED OUT OF TIME AND THERE IS NO SHOWING THAT A SURETY BOND WAS POSTED. upon the modified decision. v. they shall be struck down for being whimsical and capricious and arrived at with grave abuse of discretion. Labor Arbiter Decision Labor Arbiters should exert all efforts to cite statutory provisions and/or judicial decision to buttress their dispositions. but also as an educational tool to practitioners. and germane decisions of the Supreme Court. A decision should faithfully comply with Section 14. No. labor leaders and law students. August 22. They all have a keen interest in methods of analysis and the reasoning processes employed in labor dispute adjudication and resolution. Had the Labor Arbiter exerted more research efforts. 7-8) The Manifestation and Motion (In Lieu of Comment) sent in on December 6. xxx‖ This is not an admonition but rather. These are not substitutes for reasoned judgment. support for the Decision could have been found in pertinent provisions of the Labor Code. (Rollo. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached and is especially prejudicial to the losing party. pp. the National Labor Relations Commission. Timeliness of Appeal And Filing of Appeal Bond . who is unable to pinpoint the possible errors of the court for review by a higher tribunal. The reason for this is obvious: aside from being required by the Constitution.

moral. 11-01-91 which took effect on January 14. pp. 1992. We adopt the following Comment dated August 14. Period of Appeal — Decisions. the last day to perfect the decision shall be the next working day. Except claims for Employees Compensation. for the simple reason that a surety bond was issued by BF General Insurance Company. Thus.The Court rules that the appeal of the respondent corporation was interposed within the reglementary period. Inc. Resolution No. — (a) Except as otherwise provided under this Code the Labor Arbiter shall have original and exclusive jurisdiction to hear and decide. Likewise. Sunday or a Holiday. submitted by the National Labor Relations Commission. 1996. the last day to perfect an appeal shall be the next working day. 443.000) regardless of whether accompanied with a claim for reinstatement. 2.. Jurisdiction of Labor Arbiters Art. it is crystal clear that the appeal was filed within the prescriptive period to perfect an appeal. provides in part: 1. and. 1994 of the Labor Arbiter xxx and filed its appeal on February 14. the amendments to the New Rules of Procedure of the NLRC. 1994. Jurisdictional Issue The jurisdiction of Labor Arbiters and Voluntary Arbitrator or Panel of Voluntary Arbitrators is clearly defined and specifically delineated in the Labor Code. within thirty (30) calendar days after the submission of the case by the parties for decision without extension. in accordance with the Rules of the National Labor Relations Commission. If accompanied with a claim for reinstatement. Sections 1 and 6 are hereby amended to read as follows: Section 1. 63-64). including questions involving the legality of strikes and lockouts.. it is undisputed that the tenth day within which to file an appeal fell on a Saturday.. those cases that workers may file involving wages. exemplary and other forms of damages arising from the employer-employee relations. Jurisdiction of Labor Arbiter and the Commission. hours of work and other terms and conditions of employment. awards or orders of the Labor Arbiter . including those of persons in domestic or household service. Unfair labor practice cases. even in the absence of stenographic notes. (Underscoring supplied) Hence. If the 10th day .. 3. read: ―A. deserves scant consideration. Termination disputes. in the amount of P25. shall be final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions. and an appeal bond was duly posted.70 (Rollo. . the petitioner‘s contention that private respondent did not post the required surety bond. 217. to wit: ―xxx While it is true that private respondent company received a copy of the decision dated January 19. 6. rates of pay. Rule VI.. Social Security. 5. 2. claims for actual.. falls on a Saturday. awards or orders of the Labor Arbiter xxx . Cases arising from any violation of Article 264 of this Code. 4. whether agricultural or non-agricultural: 1.. Medicare and maternity benefits. involving an amount exceeding five thousand pesos (P5. The pertinent provisions of the Labor Code. the following cases involving all workers. all other claims. arising from employer-employee relations.

can possibly include money claims in one form or another. — The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. The cases where the Labor Arbiters have original and exclusive jurisdiction are enumerated in Article 217. shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.. Art.‖ The aforecited provisions of law cannot be read in isolation or separately. to wit: ―Art. 262. 217. Art. (a) Except as otherwise provided under this Code the Labor Arbiter shall have original and exclusive jurisdiction to hear and decide . and that of the Voluntary Arbitrator or Panel of Voluntary Arbitrators in Article 261. Jurisdiction of Labor Arbiters . Jurisdiction of Labor Arbiters .. The original and exclusive jurisdiction of Labor Arbiters is qualified by an exception as indicated in the introductory sentence of Article 217 (a). For purposes of this Article. — The Voluntary Arbitrator or panel of Voluntary Arbitrators.. B. 2. They must be read as a whole and each Article of the Code reconciled one with the other. The Commission. Jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators Art. 217..‖ The phrase ―Except as otherwise provided under this Code‖ refers to the following exceptions: A.. The jurisdiction of the Labor Arbiter and Voluntary Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in Articles 217. 3.. shall no longer be treated as unfair labor practice and shall be resolved as grievances under the collective bargaining agreement. 261. violations of a Collective Bargaining Agreement.. An analysis of the provisions of Articles 217. 261 and 262. grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement. its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. except those which are gross in character. that: 1. the following cases involving all workers. 261. upon agreement of the parties. (c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the interpretation or enforcement of company procedure/policies shall be disposed of ..(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the interpretation or enforcement of company procedure/policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitrator so maybe provided in said agreement. gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. Jurisdiction over other labor disputes. and 262 indicates. Accordingly.

violations of a collective bargaining agreement. xxx. A close reading of Article 261 indicates that the original and exclusive jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is limited only to: ―. under Article 261. The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is provided for in Arts. Any further delay would be a denial of speedy justice to .. 1.. can exercise jurisdiction over any and all disputes between an employer and a union and/or individual worker as provided for in Article 262. ―Art.‖ It must be emphasized that the jurisdiction of the Voluntary Arbitrator or Panel of Voluntary Arbitrators under Article 262 must be voluntarily conferred upon by both labor and management. 261. 262.. shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement.‖ 2. 3. Jurisdiction over other labor disputes. however. as the controversy between the parties involved an issue ―arising from the interpretation or implementation‖ of a provision of the collective bargaining agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators will have original and exclusive jurisdiction over money claims ―arising from the interpretation or implementation of the Collective Bargaining Agreement and. Accordingly. 261 and 262 of the Labor Code as indicated above.by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitrator as may be provided in said agreement. unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies. and not the Labor Arbiter.eight (8) years. . 262. The Voluntary Arbitrator or Panel of Voluntary Arbitrators has original and exclusive jurisdiction over the controversy under Article 261 of the Labor Code. upon agreement of the parties. shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.The Voluntary Arbitrator or panel of Voluntary Arbitrators. those arising from the interpretation or enforcement of company personnel policies‖. Merits of the Case The Court will not remand the case to the Voluntary Arbitrator or Panel of Voluntary Arbitrators for hearing.. for money claims is limited only to those arising from statutes or contracts other than a Collective Bargaining Agreement. the National Labor Relations Commission correctly ruled that the Labor Arbiter had no jurisdiction to hear and decide petitioner‘s money-claim underpayment of retirement benefits. . The labor disputes referred to in the same Article 262 can include all those disputes mentioned in Article 217 over which the Labor Arbiter has original and exclusive jurisdiction. the original and exclusive jurisdiction of the Labor Arbiter under Article 217 (c). Art. 4. shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. Jurisdiction over other labor disputes. except those which are gross in character. and 262 of the Labor Code.The voluntary arbitrator or panel of voluntary arbitrators. upon agreement of the parties. Parenthetically. This case has dragged on far too long . Voluntary Arbitrators or Panel of Voluntary Arbitrators. As shown in the above contextual and wholistic analysis of Articles 217. B.

it must therefore suffer the consequences of such failure.the employer was forewarned of the need for accurate record keeping. of the Labor Code. Title II.8. and salary as a basis for benefit computation ..an aged retired stevedore. Safety and Welfare Benefits. Health. Employees Compensation and State Insurance Fund. The worker has no ready access to this employer‘s record. We adopt as our own the retirement benefit computation formula of the Labor Arbiter. Labor Code). i. it is farthest from his mind to inquire into the amount of employer‘s contribution. the Court hereby rules 1. was not amply explained by the Labor Arbiter.443. (See Book III. That the National Labor Relations Commission correctly ruled that the Labor Arbiter had no jurisdiction over the case. because the case involved an issue ―arising from the interpretation or implementation‖ of a Collective Bargaining Agreement. however. and 3. This is precisely the basis of retirement. there is legal and factual basis for the same. specifically Secs. (See Article 196 (b). That the appeal to the National Labor Relations Commission was filed within the reglementary period and that the appeal bond was filed. Rule X. By its own folly. To recapitulate. much less whether the employer remits the contributions. simply because the insurance fund is solely funded by the employer and the rate of employer‘s contribution varies according to time and actuarial computations.e.by the provision of the retirement provision of the Collective Bargaining Agreement. and the computation of benefits based on years of service and monthly wage.70) Pesos.7. That we adopt the computation formula for the retirement benefits by the Labor Arbiter. the length of service as requirement for retirement. Labor Code). It is unrealistic to expect a lowly stevedore to know what reports his employer submits to the Employee‘s Compensation Commission under Book IV. There is further the possibility that any Decision by the Voluntary Arbitrator or Panel of Voluntary Arbitrators will be appealed to the Court of Appeals. [1990] ) From the very beginning . Hence. and the basis thereof. and the reasons therefor as stated in the decision abovequoted. The respondent-employer was afforded the opportunity to show proof of the petitioner‘s length of service and pay records. In view of the long delay in the disposition of the case. The respondent must therefore pay the petitioner the additional amount of Twenty-Five Thousand Four Hundred Forty-Three and Seventy Centavos P25. Tosoc. 1 and 12. All employers are likewise required to keep an employment record of all their employees. (South Motorists Enterprises v. 6. Omnibus Rules . and time records. namely: payrolls. this decision is immediately executory. and finally to this Court. . 2. The worker is at all times entitled to benefits upon the occurrence of the defined contingency even when the employer fails to remit the contributions. In fact. 181 SCRA 386. (See Articles 183-184. the respondent-employer failed. The simple statement of the Labor Arbiter that ―we cannot sustain a computation of length of service based on ECC contribution records‖. In both instances. the Court will rule on the merits of the case.Implementing the Labor Code).

a Complaint 2 (docketed as Case No. Ministry of Labor and Employment. Mandaue City." and was supposed to eliminate certain alleged defects in the quality and taste of the product "San Miguel Beer Grande:" Title of Proposal Modified Grande Pasteurization Process Present Condition or Procedure At the early stage of beer grande production." Private respondent thus claimed entitlement to a cash prize of P60..000. Frivate respondent Vega alleged there that his proposal "[had] been accepted by the methods analyst and implemented by the Corporation [in] October 1980. Vega at that time had been in the employ of petitioner Corporation for thirteen (1 3) years and was then holding the position of "mechanic in the Bottling Department of the SMC Plant Brewery situated in Tipolo. . except [ED-HO staff..00 (the maximum award per proposal offered under the Innovation Program) and attorney's fees. Division Managers and higher-ranked personnel" who submit to the Corporation Ideas and suggestions found to be beneficial to the Corporation. reduce the speed of the beer grande pasteurizer thereby. 1988 SAN MIGUEL CORPORATION.R. petitioner." "SMC") and under which management undertook to grant cash awards to "all SMC employees . however. 1 Mr. On 22 February 1983. Vega's subsequent demands for a cash award under the Innovation Program. Vega's proposal was entitled "Modified Grande Pasteurization Process. Petitioner Corporation. No. the self-life (sic) of beer grande will also be increased. did not find the aforequoted proposal acceptable and consequently refused Mr. private respondent Rustico Vega submitted on 23 September 1980 an innovation proposal. NLRC In line with an Innovation Program sponsored by petitioner San Miguel Corporation ("Corporation. vs. Proposed lnnovation (Attach necessary information) In order to minimize if not elienate underpasteurization of beer grande. These effects are usually caused by underpasteurization time and the pasteurzation units for beer grande were almost similar to those of the steinie.. 80774 May 31. VII (Cebu City) of the then.G. The RBF's were found to have sediments and their contents were hazy. RAB-VII-0170-83) was filed against petitioner Corporation with Regional Arbitration Branch No. In this way. increasing the pasteurization time and the pasteurization acts for grande beer." and that the same "ultimately and finally solved the problem of the Corporation in the production of Beer Grande. several cases of beer grande full goods were received by MB as returned beer fulls (RBF).". Mr.

Among other things. "even if implemented [could not] achieve the desired result. the appealed Order is hereby set aside and another udgment entered. and 5. 5 the dispositive portion of which reads: WHEREFORE. rendered a Decision. 227 which took effect on 1 June 1982: ART. in a gesture of "compassion and to show the government's concern for the workingman. the Labor Arbiter. Cases involving household services. Vega's proposal was tumed down by the company "for lack of originality" and that the same.000. including those based on non-payment or underpayment of wages.00 as "financial assistance. Code. Mr. as last amended by Batas Pambansa Blg. (a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties for decision. (Emphasis supplied) While paragraph 3 above refers to "all money claims of workers." The Labor Arbiter's order was subsequently appealed by both parties. petitioner Corporation. overtime compensation. In an Order 4 dated 30 April 1986. Cases arising from any violation of Article 265 of this. medicare and maternity benefits. whether agricultural or non-agricultural: 1. All money claims of workers. the following cases involving are workers. Acting on the appeals. It denied ever having approved or adopted Mr." Petitioner further alleged that the Labor Arbiter had no jurisdiction." the Labor Arbiter also directed petitioner to pay Mr. the public respondent National Labor Relations Commission. RAB-VII-01 70-83 upon the ground that the Labor Arbiter and the Commission have no jurisdiction over the subject matter of the case. Unfair labor practice cases.In an Answer With Counterclaim and Position Paper. Jurisdiction of Labor Arbiters and the commission. 4. SO ORDERED. private respondent Vega assailing the dismissal of his complaint for lack of jurisdiction and petitioner Corporation questioning the propriety of the award of "financial assistance" to Mr. seeks to annul the Decision of public respondent Commission in Case No. order the respondent to pay the complainant the amount of P60. except claims for employees' compensation. Vega. A counterclaim for moral and exemplary damages. However. In the present Petition for certiorari filed on 4 December 1987. (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. Vega's proposal as part of the Corporation's brewing procedure in the production of San Miguel Beer Grande. Those that workers may file involving wages. attorney's fees. hours of work and other terms and conditions of employment. 3. Vega having improperly bypassed the grievance machinery procedure prescribed under a then existing collective bargaining agreement between management and employees. 3 petitioner Corporation alleged that private respondent had no cause of action. social security. noting that the money claim of complainant Vega in this case is "not a necessary incident of his employment" and that said claim is not among those mentioned in Article 217 of the Labor Code. 217.000.00 as explained above. Vega the sum of P2. and litigation expenses closed out petitioner's pleading. petitioner stated that Mr. dismissed the complaint for lack of jurisdiction. separation pay and other benefits provided by law or appropriate agreement. and available administrative remedies provided under the rules of the Innovation Program. 2. invoking Article 217 of the Labor Code." it is not necessary to suppose that the entire universe of money claims that might be asserted by workers against their employers has been absorbed into the . on 4 September 1987. including questions involving the legality of strikes and lockouts. The jurisdiction of Labor Arbiters and the National Labor Relations Commission is outlined in Article 217 of the Labor Code.

At the pre-trial in the lower court. 227 on June 1. Labor Arbiters. or some aspect or incident of such relationship. although the parties were an employer and two employees. Blg. and which would therefore fall within the general jurisdiction of the regular courts of justice. Inc. while private respondent was the sales Manager of petitioner." 6 which clause was not expressly carried over. more specifically to employees below the rank of manager. this Court. believes and so holds that the money claims of workers" referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employer-employee relationship. In Medina vs. In the first place. a particular species of employer-employee relations). For it cannot be presumed that money claims of workers which do not arise out of or in connection with their employer-employee relationship. . repair jobs on cars personally owned by him. that money claims of workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal connection with the employer-employee relationship." Even then. that they all refer to cases or disputes arising out of or in connection with an employer-employee relationship. We reach the above conclusion from an examination of the terms themselves of Article 217. in printer's ink. in other words. For if the Labor Code has no relevance. there would have been no occasion to consider the petitioner's Innovation Program or the submission by Mr. v. it fell outside the jurisdiction of the court and consequently should be dismissed. in Article 217 as it exists today. the Labor Arbiters have no jurisdiction if the Labor Code is not involved. as amended. we note that petitioner's Innovation Program is an employee incentive scheme offered and open only to employees of petitioner Corporation. in negating jurisdiction of the Labor Arbiter.P. In reversing the order of dismissal and requiring respondent Judge to take cognizance of the case below. a situation where the rule of noscitur a sociis may be usefully invoked in clarifying the scope of paragraph 3. stating that because petitioner's complaint arose out of the employer-employee relationship. paragraph 4 (claims relating to household services. is enough to bring such money claim within the original and exclusive jurisdiction of Labor Arbiters. In Molave Motor Sales. 227. 7 the petitioner was a corporation engaged in the sale and repair of motor vehicles. <äre|| anº•1àw> Applying the foregoing reading to the present case. therefore. Mr. The money claim of private respondent Vega in this case. under paragraph 5 of Article 217 of the Labor Code had jurisdiction over" all other cases arising from employer-employee relation. Vega of his proposal concerning beer grande. the principle followed by this Court was that. Without the existing employer-employee relationship between the parties here. without that relationship. 11 SCRA 597. were intended by the legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. expressly excluded by this Code. and any other paragraph of Article 217 of the Labor Code. private respondent Vega's suit against petitioner Corporation would never have arisen. as last amended by B. hence. and even though earlier versions of Article 217 of the Labor Code expressly brought within the jurisdiction of the Labor Arbiters and the NLRC "cases arising from employer employee relations. It is evident that there is a unifying element which runs through paragraphs 1 to 5 and that is. and paragraph 5 (relating to certain activities prohibited to employees or to employers). unless. Justice Melencio-Herrera. any discussion concerning the statutes amending it and whether or not they have retroactive effect is unnecessary. speaking through Mme. 1982. This is. holding that the sum of money and damages sued for by the employer arose from the employer-employee relationship and. Petitioner had sued private respondent for non-payment of accounts which had arisen from private respondent's own purchases of vehicles and parts. Castro-Bartolome. The next issue that must logically be confronted is whether the fact that the money claim of private respondent Vega arose out of or in connection with his employment relation" with petitioner Corporation. Respondent Judge did dismiss the case. fell within the jurisdiction of the Labor Arbiter and the NLRC. Justice Abad Santos stated: The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by the plaintiffs. 604. paragraph 2 (relating to claims concerning terms and conditions of employment). arose out of or in connection with his employment relationship with petitioner. private respondent raised the question of lack of jurisdiction of the court. paragraph 3 should be read not in isolation from but rather within the context formed by paragraph 1 related to unfair labor practices). Put a little differently. said: Before the enactment of BP Blg. therefore. The Court. and cash advances from the corporation. although a controversy is between an employer and an employee.original and exclusive jurisdiction of Labor Arbiters. Laron.

122 SCRA 671. the jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. Such being the case. In such situations. but rather having recourse to our law on contracts. in the judgment of the Corporation's officials. Thus. and that petitioner Corporation undertook to grant cash awards to employees who accept such invitation and whose innovation suggestions.It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. It results that the orders under review are based on a wrong premise. Singapore Airlines Limited v. involved a claim for liquidated damages not by a worker but by the employer company. whether or not it had been breached. such as payment of wages. the Court notes that the SMC Innovation Program was essentially an invitation from petitioner Corporation to its employees to submit innovation proposals. Paño. PLAINTIFF had sued for monies loaned to DEFENDANT. referred to in the above excerpt. Hence the civil courts. if he so desires. though unilateral in origin. Applying the foregoing to the instant case. not in labor management relations nor in wage structures and other terms and conditions of employment. In the case below. Theirs is a simple action for damages for tortious acts allegedly committed by the defendants. also cited in Molave. satisfied the standards and requirements of the Innovation Program 10 and which. The primary relief sought is for liquidated damages for breach of a contractual obligation. could nonetheless ripen into an enforceable contractual (facio ut des) 11 obligation on the part of petitioner Corporation under certain circumstances. The important principle that runs through these three (3) cases is that where the claim to the principal relief sought 9 is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by the general civil law. and for the purchase price of vehicles and parts sold to him. Paño. The cause of action was one under the civil laws. Clearly. but rather in the application of the general civil law. . and it does not breach any provision of the Labor Code or the contract of employment of DEFENDANT. had arisen between petitioner Corporation and private respondent Vega in the circumstances of this case. are preeminently legal questions. therefore. such claims fall outside the area of competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes. overtime compensation or separation pay. RAB-VII-0170-83 is hereby DISMISSED. Those accounts have no relevance to the Labor Code. petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. questions not to be resolved by referring to labor legislation and having nothing to do with wages or other terms and conditions of employment. No pronouncement as to costs. the following was said: Stated differently. resolution of the dispute requires expertise. intrinsically a civil dispute. the cost of repair jobs made on his personal cars. Castro-Bartolome. The decision dated 4 September 1987 of public respondent National Labor Relations Commission is SET ASIDE and the complaint in Case No. whether or not an enforceable contract. clearly if impliedly suggesting that the claim for damages did not necessarily arise out of or in connection with the employer-employee relationship. could be translated into some substantial benefit to the Corporation. The Court treated the claim for damages as "a simple action for damages for tortious acts" allegedly committed by private respondents. without prejudice to the right of private respondent Vega to file a suit before the proper court. arising from the use of slanderous language on the occasion when the General Manager fired the two (2) employees (the Plant General Manager and the Plant Comptroller). WEREFORE. albeit implied arid innominate. 8 It seems worth noting that Medina v. unlike Medina. The items claimed are the natural consequences flowing from breach of an obligation. the governing statute is the Civil Code and not the Labor Code. Such undertaking. and if so. 677. the Petition for certiorari is GRANTED. not the Labor Arbiters and the NLRC should have jurisdiction. And in Singapore Airlines Limited v. involved a claim for damages by two (2) employees against the employer company and the General Manager thereof.

complainant Benedicto Faburada shall only be awarded what are due him in proportion to the nine and a half months that he had served the respondent. No. No. Petitioner PHCCI contends that private respondents are its members and are working for it as volunteers. Furthermore. 2001 ] PERPETUAL HELP CREDIT COOPERATIVE VS. the dispositive portion of which reads: WHEREFORE. filed a complaint against the Perpetual Help Credit Cooperative. the Labor Arbiter rendered a decision. for illegal dismissal. 1990. private respondents. petitioner filed a supplemental motion to dismiss alleging that Article 121 of R. Not being . separation pay for one month for every year of service since reinstatement is evidently not feasible anymore. On the same date. premises considered. the NLRC affirmed the Labor Arbiter's decision. otherwise known as the Cooperative Development Authority Law which took effect on March 26. wage differential. 1990. Inc. Dumaguete City. 121948. The computation of the foregoing awards is hereto attached and forms an integral part of this decision. the Labor Arbiter denied petitioner's motion to dismiss. and attorney's fees. thus respondent is directed to pay Complainants backwages computed from the time they were illegally dismissed up to the actual reinstatement but subject to the three year backwages rule. separation pay. he being a part-time employee. Department of Labor and Employment (DOLE). petitioner. wage differentials and Ten Percent (10%) attorney's fees from the aggregate monetary award.[ G. Forthwith. premium pay on holidays and rest days. Hence. However.R. The issue for our resolution is whether or not respondent judge committed grave abuse of discretion in ruling that there is an employer-employee relationship between the parties and that private respondents were illegally dismissed. moral damages. 1990. On September 3. petitioner PHCCI filed a motion to dismiss the complaint on the ground that there is no employer-employee relationship between them as private respondents are all members and co-owners of the cooperative.A. with the Arbitration Branch. BENEDICTO FABURADA On January 3. private respondents have not exhausted the remedies provided in the cooperative by-laws. holding that the case is impressed with employer-employee relationship and that the law on cooperatives is subservient to the Labor Code. Imelda Tamayo and Harold Catipay. judgment is hereby rendered declaring complainants illegally dismissed. Benedicto Faburada. (PHCCI). this petition by the PHCCI. Sisinita Vilar. On November 23. to pay complainants 13th month pay. All other claims are hereby dismissed for lack of merit. 6939." On appeal[1]. October 08. 1993. requires conciliation or mediation within the cooperative before a resort to judicial proceeding.

1989 to December 31.m and 1:00 to 4:00 p. 1989. effect mortuary deductions and dividends on fixed deposits. Enter data into the computer. P250.050. Jr.m. carefully considered by respondent NLRC in affirming the Labor Arbiter's decision. Worked with the Cooperative since December 1. P1. mortuary. (3) the payment of wages by whatever means. from 1:00 p. Tamayo . dividends and patronage funds.350. P500.8:00 to 11:30 a. Monthly salary: P1. Worked with the Cooperative since March 3 to December 29. reconcile bank statements to the daily summary of disbursements. 1989.for at least three (3) hours.from January to June 1989. Sisinita Vilar -Clerk. That an employer-employee exists between the parties is shown by the averments of private respondents in their respective affidavits. Harold D.00 from July to December 1989.Clerk.00 from July to December 1989. journal vouchers. fill up members logbook of regular depositors. and P1. to 5:30 p.m. and perform such other bookkeeping and accounting duties as may be assigned her from time to time.500. 1987 to December 31. Catipay . daily summary of disbursements to respective classifications.from January 1.00 for December 1987. Saturday . perform various forms for mimeographing.000. mortuary and patronage funds. and for at least three (3 ) hours during Sundays.00 -from June to December 1988. (2) the power to dismiss. Monthly salary: P60.for at least three (3) hours. and 1:00 to 4:00 p. They worked regularly on regular working hours.m and 2:00 to 5:30 p.from January to June 1989.m. were paid regular wages and made to accomplish daily time records just like any other regular employee.m.Clerk.. P1. Monthly salary: P900. with the latter assuming primacy in the overall consideration. dividends. and one Sunday each month . and P1.00 .. Duties: Among others. Petitioner PHCCI. disburse checks during regular and emergency loans.[2] The above elements are present here. P950 .from December 1. maintain the masterlist of the cooperative members.regular employees. Duties: Among others.00 .from July to . receive deposits from members. pick up balances for the computation of interests on savings deposit. Duties: Among others..m.m.00 . 1988. junior depositors and special accounts. post the monthly balance of fixed and savings deposits in preparation for the computation of interests. prepare cash vouchers. take charge of loan releases every Monday morning.m. Work schedule: Tuesdays and Thursdays. Imelda C.m. But unfortunately.m.00 . Prepare summary of salary advances.000. 1989. and perform such other duties as may be assigned from time to time. Worked with the Cooperative since October 19. Work schedule: Regular working hours. the following elements are considered: (1) the selection and engagement of the worker or the power to hire.. Edilberto Lantaca. Worked with the Cooperative since June 1. were assigned specific duties. and every Saturday from 8:00 to 11:30 a. and 1:00 to 4:00 p. 1989 to June 30. and P1.00 . through Mr. take charge of the preparation of new passbooks and ledgers for new applicants. prepare checks and cash vouchers for regular and emergency loans. Any competent and relevant evidence may show the relationship.from July 1.8:00 to 11:30 a. In determining the existence of an employer-employee relationship.150. 1987 up to December 29. No particular form of proof is required to prove the existence of an employer-employee relationship. 1989.00 . compute interests on savings deposits. 1988 up to December 29. 1987 up to December 29. and for one Sunday each month .m. they were dismissed. 1989. and (4) the power to control the worker's conduct. its Manager.from March to June 1989.from January to December 1988. Work schedule: . assist in the posting and preparation of deposit slips.from October to November 1987.8:00 to 11:30 a.8:00 to 11:30 a. every Saturday .000. schedule loans. and perform such other bookkeeping and accounting duties as may be assigned to her from time to time. check petty cash vouchers. and 2:00 to 5:30 p. 1989. P1. Monthly salary: P500. thus: Benedicto Faburada -Regular part-time Computer programmer/ operator. They worked under the supervision of the cooperative manager. Work schedule: Monday to Friday . they cannot sue petitioner. hired private respondents to work for it.00 .00 .Monday to Friday .

and (b) those casual employees who have rendered at least one (1) year of service. private respondents were rendering services necessary to the day-to-day operations of petitioner PHCCI. private respondents are entitled to security of tenure. The authorized causes are: (1) the installation of labor-saving devices. All of them. the same being supported by substantial evidence. 1989. and (4) closing or cessation of operations of the establishment or undertaking. for two (2) years and two (2) months. All of them were given a memorandum of termination on January 2. Petitioner missed the point. analogous cases. for one and a half (1 1/2) years. 1990. Bookkeeping. the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. We are not prepared to disregard the findings of both the Labor Arbiter and respondent NLRC. whether such service is continuous or broken. Tamayo. with observance of due process. Necessarily. does not mean that he is not a regular employee. such as. post daily collections from the two (2) collectors in the market. 703 (1989 ) is misplaced. Article 284 provides that an employer would be authorized to terminate the services of an employee found to be suffering from any disease if the employee's continued employment is prohibited by law or is prejudicial to his health or to the health of his fellow employees[6] . accounting and collecting duties. and (3) casual employees or those who are neither regular nor project employees. that quantum of evidence required in quasi-judicial proceedings.[3] The employees who are deemed regular are: (a) those who have been engaged to perform activities which are usually necessary or desirable in the usual trade or business of the employer. effective December 29. this leads us to the issue of whether or not private respondents are regular employees. must necessarily fail. like this one. reconcile passbooks and ledgers of members in the market. not whether or not the members can be employees. with respect to the activity in which they are employed. Its invocation of San Jose City Electric Cooperative vs.. (2) redundancy. and. except Harold D. That Benedicto Faburada worked only on a part-time basis. unless the closing is for the purpose of circumventing the provisions of law. The just causes are: (1) serious misconduct or willful disobedience of lawful orders in connection with the employee's work. their services may be terminated only for a valid cause. Sisinita Vilar. worked with petitioner for more than one (1) year: Benedicto Faburada. Duties: Among others. Ministry of Labor and Employment (173 SCRA 697. One's regularity of employment is not determined by the number of hours one works but by the nature and by the length of time one has been in that particular job.[5] Petitioner's contention that private respondents are mere volunteer workers. This fact alone qualified them as regular employees.December 1989. Catipay.[4] Undeniably. The issue in this case is whether or not the employeesmembers of a cooperative can organize themselves for purposes of collective bargaining. not regular employees. for two (2) years. (2) gross or habitual neglect of duties. (3) retrenchment to prevent losses. Article 280 of the Labor Code provides for three kinds of employees: (1) regular employees or those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. The valid causes are categorized into two groups: the just causes under Articles 282 of the Labor Code and the authorized causes under Articles 283 and 284 of the same Code. Thus. and assist the other clerks in their duties. and Imelda C. As regular employees or workers. (2) project employees or those whose employment has been fixed for a specific project or undertaking. (3) fraud or willful breach of trust. (4) commission of a crime or an offense against the person of the employer or his immediate family member or representative.

Private respondents were dismissed not for any of the above causes. They were dismissed because petitioner considered them to be mere voluntary workers, being its members, and as such work at its pleasure. Petitioner thus vehemently insists that their dismissal is not against the law. Procedural due process requires that the employer serve the employees to be dismissed two (2) written notices before the termination of their employment is effected: (a) the first, to apprise them of the particular acts or omissions for which their dismissal is sought and (b) the second, to inform them of the decision of the employer that they are being dismissed.[7] In this case, only one notice was served upon private respondents by petitioner. It was in the form of a Memorandum signed by the Manager of the Cooperative dated January 2, 1990 terminating their services effective December 29, 1989. Clearly, petitioner failed to comply with the twin requisites of a valid notice. We hold that private respondents have been illegally dismissed. Petitioner contends that the labor arbiter has no jurisdiction to take cognizance of the complaint of private respondents considering that they failed to submit their dispute to the grievance machinery as required by P.D 175 (strengthening the Cooperative Movement)[8] and its implementing rules and regulations under LOI 23. Likewise, the Cooperative Development Authority did not issue a Certificate of Non-Resolution pursuant to Section 8 of R.A. 6939 or the Cooperative Development Authority Law. As aptly stated by the Solicitor General in his comment, P.D. 175 does not provide for a grievance machinery where a dispute or claim may first be submitted. LOI 23 refers to instructions to the Secretary of Public Works and Communications to implement immediately the recommendation of the Postmaster General for the dismissal of some employees of the Bureau of Post. Obviously, this LOI has no relevance to the instant case. Article 121 of Republic Act No. 6938 (Cooperative Code of the Philippines) provides the procedure how cooperative disputes are to be resolved, thus: "ART. 121. Settlement of Disputes.- Disputes among members, officers, directors, and committee members, and intracooperative disputes shall, as far as practicable, be settled amicably in accordance with the conciliation or mediation mechanisms embodied in the bylaws of the cooperative, and in applicable laws. Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of competent jurisdiction." Complementing this Article is Section 8 of R.A. No. 6939 (Cooperative Development Authority Law) which reads: SEC. 8 Mediation and Conciliation.- Upon request of either or both parties, the Authority shall mediate and conciliate disputes within a cooperative or between cooperatives: Provided, That if no mediation or conciliation succeeds within three (3) months from request thereof, a certificate of non-resolution shall be issued by the Commission prior to the filing of appropriate action before the proper courts. The above provisions apply to members, officers and directors of the cooperative involved in disputes within a cooperative or between cooperatives. There is no evidence that private respondents are members of petitioner PHCCI and even if they are, the dispute is about payment of wages, overtime pay, rest day and termination of employment. Under Art. 217 of the Labor Code, these disputes are within the original and exclusive jurisdiction of the Labor Arbiter.

As illegally dismissed employees, private respondents are therefore entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, inclusive of allowances, plus other benefits or their monetary equivalent computed from the time their compensation was witheld from them up to the time of their actual reinstatement.[9] Since they were dismissed after March 21, 1989, the effectivity date of R.A. 6715[10] they are granted full backwages, meaning, without deducting from their backwages the earnings derived by them elsewhere during the period of their illegal dismissal.[11] If reinstatement is no longer feasible, as when the relationship between petitioner and private respondents has become strained, payment of their separation pay in lieu of reinstatement is in order.[12] WHEREFORE, the petition is hereby DENIED. The decision of respondent NLRC is AFFIRMED, with modification in the sense that the backwages due private respondents shall be paid in full, computed from the time they were illegally dismissed up to the time of the finality of this Decision.

[ G.R. No. 79907, March 16, 1989 ]
SAMUEL CASAS LIM VS. NLRC [G.R. NO. 79975. MARCH 16, 1989] SWEET LINES VS. NATIONAL LABOR RELATIONS COMMISSION
These two cases have been consolidated because they relate to the same factual antecedents and the same private respondent. The issues are: 1. In G.R. No. 79975, whether or not the private respondent was an employee of the petitioner and, if so, had been illegally dimissed; and corollarily, whether or not the NLRC had jurisdiction over their dispute. 2. In G.R. No. 79907, whether or not the petitioner could be held solidarily liable with Sweet Lines, Inc. to the private respondent. The record shows that private respondent Victoria Calsado was hired by Sweet Lines, Inc. on March 5, 1981, as Senior Branch Officer of its International Accounts Department for a fixed salary and a stipulated 5% commission on sales production. On December 1, 1983, after tendering her resignation to accept another offer of employment, she was persuaded to remain with an offer of her promotion to Manager of the Department with corresponding increase in compensation, which she accepted. She was also allowed to buy a second-hand Colt Lancer pursuant to a liberal car plan under which one-half of the cost was to be paid by the company and the other half was to be deducted from her salary. Relations began to sour later, however, when she repeatedly asked for payment of her commissions, which had accumulated and were long overdue. She also complained of the inordinate demands on her time even when she was sick and in the hospital. Finally, on July 16, 1985, she was served with a letter from Samuel Casas Lim, the other petitioner, informing her that her "employment with Sweet Lines" would terminate on August 5, 1985. Efforts were also taken by Sweet Lines to forcibly take the car from her, culminating in an action for replevin against her in the regional trial court of Manila. On August 14, 1985, Calsado filed a complaint against both petitioners for illegal dismissal, illegal deduction, and unpaid wages and commissions plus moral and exemplary damages, among other claims.[1] There followed an extended hearing where she testified on the details of her employment, emphasizing her unsatisfactory treatment by the management of Sweet Lines and especially the termination of her services without the required notice and hearing and without valid cause. She also presented four other witnesses to corroborate her charges.

The respondents' defenses were based mainly on the claim that Calsado was not an employee of Sweet Lines but an independent contractor and that therefore their dispute with her came under the jurisdiction of the civil courts and not of the Labor Arbiter.[2] On this matter the private respondent pointedly comments:
At this point, private respondent would like to underscore the fact that while private respondent in the proceedings before the Labor Arbiter presented five witnesses including herself, all of whom were cross-examined by petitioners, and numerous documents which were marked as Exhs. "A" to "GG-8d" and 858 receipts and bills, all of which were duly identified and testified to by private respondent and her witnesses and examined by petitioners, petitioners failed to present any single evidence, testimonial or documentary, to controvert private respondent's evidence. All that they presented were their unsubstantiated pleadings not one of which was under oath, not even their position paper which, under the NLRC rules (Sec. 2, Rule 7, Revised Rules of the NLRC), have to be verified.[3]

On December 29, 1986, decision was rendered against the two petitioners by the Labor Arbiter,[4] who held them liable in solidum to the complainant for the following amounts:
(a) Separation pay equivalent to one month pay for every year of service based on her latest basic salary of P2,500.00 plus allowance of P500.00, or a total monthly pay of P3,000.00; (b) Backwages based on her last monthly pay rate of P3,000.00 to be computed from the time of her dismissal to the actual payment of her separation pay; (c) Proportionate 13th month pay for the year 1985; (d) Sales commission in the sum of P432,656.68; (e) Moral damages of P100,000.00; (f) Exemplary damages of P10,000.00; and (g) Attorney's fees of P10,000.00 plus 25% of the total monetary awards in favor of the complainant.

The decision was appealed to the National Labor Relations Commission and affirmed in toto except as to the attorney's fees, which were reduced to 10% of the total award.[5] Both Sweet Lines and Lim then came to us in separate petitions to raise the above-stated issues. On October 14, 1987, we issued a temporary restraining order against the enforcement of the decision of the public respondent dated September 11, 1987.[6] The petitions were consolidated on December 7, 1987, and given due course on May 16, 1987, with the parties being required to submit their respective memoranda. On the first question, we hold that the employe-employer relations between Calsado and Sweet Lines have been sufficiently established. The following documents submitted by the former and not controverted by the latter should belie the claim that Calsado was only an independent contractor over whom Sweet Lines had no control.
1. Certification issued by Sweet Lines, Inc. dated May 21, 1984, stating that private respondent “is employed with this company since March 5, 1982 up to the present, presently designated as International Accounts Manager of the Sweet Lines, Inc., Manila Branch." (Exh. ”W") 2. Termination letter issued by Samuel Casas Lim to private respondent reading: "Your employment with Sweet Lines, Inc. will cease effective August 15, 1985. In connection with the foregoing, you are entitled to (1) separation pay equivalent to one half month for every year of service x x x; (2) The computed money value of unused vacation leave x x x; (3) Thirteenth month pay x x x;" (Exh. "V') 3. Notice of private respondent's promotion effective December 1, 1982 from Senior Branch Officer to Manager, International Accounts, with an increase in basic salary from P1,250 to P2,500 a month; (Exh. "D")

in fact. Indeed. counsel for petitioner company. that private respondent “is a bona fide employee of Sweet Lines. 1985 to April 3. informed her not only of her separation but also of the benefits due her as a result of the termination of her services. Inc. its notarized certification that Calsado was its bona fide employee is irrefutable." Sweet Lines has also failed to substantiate its allegation that Calsado was an independent contractor." On the fourth issue.” (Exh. is a benefit usually extended only to employees). Inc. 1985 to April 3. Under Article 247 of the Code. the damages (allegedly) suffered by the petitioners only form part of the civil component of the injury arising from the unfair labor practice. we agree with petitioner Lim that he cannot be held personally liable with Sweet Lines for merely having signed the letter informing Calsado of her separation. the ascertainment of the employment status of the private respondent was made on the basis of the criteria consistently employed by the Court in the determination of the employeeemployer relationship. Approved application for sick leave of private respondent for 15 days from March 7. One must prove what one alleges. the third issue is automatically resolved and requires not much elaboration. "E") 5. the determination of the existence of employee-employer relations is a factual finding which this Court will not disturb or reverse in the absence of a showing of grave abuse of discretion. notarized on January 10. (Exh. The petitioner cannot now argue that the grant to her of the 13th month pay and even the differential pay was a mere accommodation like the car plan (which. Lazaro. as it should have. subscribed and sworn to before a notary public declaring that private respondent was then an Account Executive of Sweet Lines. International Account. Such relationship having been established.[7] We find from the record that all these tests have been satisfied. 1985. (Exh. Gregorio Francisco.. for that matter. 1985. If it is true that Sweet Lines had no control over her and left her free to determine her work schedule. there would have been no reason at all for its approval of her application for sick leave from March 7. (Exh.4. The termination letter itself. Certification. and presently holding the position of Manager. "Y") 7. Suffice it only to stress that the damages claimed by private respondent as a result of her illegal dismissal and the violation of the terms and conditions of her employment also come within the jurisdiction of the Labor Arbiter as a contrary rule would result in the splitting of actions and the consequent multiplication of suits. Inc. There is no evidence that he acted with malice or bad faith. . by Atty. "I") There is in the above exhibits a consistent and categorical recognition of Calsado as an employee of petitioner Sweet Lines. whose signatures appear thereon. Inc. but Sweet Lines confined itself to mere denials. At any rate. Certification dated September 6. We do not see such justification here. prepared and approved by the proper officials of petitioner Sweet Lines. The letter.[9] where we declared: As we stated. Computation of her salary. said she was "entitled" to certain payments as a result of the cessation of her "employment with Sweet Lines. allowance and 13th month pay differentials on account of her promotion. On the contrary. which was signed by the other petitioner as Vice President of Sweet Lines. "E") 6. So we recently affirmed in Limquiaco v. 1985. 1983 issued by the petitioner company. Ramolete[8] and more positively in National Union of Bank Employees v. "the civil aspects of all cases involving unfair labor practices which may include claims for damages and other affirmative relief. shall be under the jurisdiction of the labor arbiters. with evidence showing inter alia that she had the financial resources and other means or equipment to operate as such.

[13] We especially uphold the award of moral and exemplary damages in view of the acts of harassment and bad faith testified to by the private respondent and not refuted by Sweet Lines. granting him separation pay only would entitle him to only one month salary. the mere fact that Lim is part of the family corporation does not mean that all its acts are imputable to him directly and personally. In fact. Petitioner Sunio. But these circumstances should not be allowed to operate against him if he is to be accorded substantial justice in the resolution of the private respondent's claim. Lufthansa German Airlines. There appears to be no evidence on record that he acted maliciously or in bad faith in terminating the services of private respondents.000. clearly demonstrate the validity of the private respondent's complaints. was within the scope of his authority and was a corporate act." As for the second charge. His acts were official acts. the pressures exerted upon her even when she was sick in the hospital. . Separation pay is granted where reinstatement is no longer advisable because of strained relations between the employee and the employer. Back wages represent compensation that should have been earned but were not collected because of the unjust dismissal. Her treatment during her employment. Sweet Lines is still existing and able to satisfy the judgment in favor of the private respondent The Solicitor General. her arbitrary separation. if an employee who has worked only one year is sustained by the labor court after three years from his unjust dismissal. the questionable attempts to get the vehicle from her after her dismissal. Sweet Lines posted as required a bond in the amount of P850. 1987. Finally.[11] where it was held: Petitioner Sunio was impleaded in the Complaint in his capacity as General Manager of petitioner corporation. therefore. There is no showing that he acted without or in excess of his authority or was motivated by personal ill-will toward Calsado. among other aggravations. should not have been made personally answerable for the payment of private respondents' back salaries. if it finds that its consideration is necessary in arriving at a just decision of the case.It is true that Lim has raised this matter rather tardily and also that he belongs to a closed corporation controlled by the members of one family only. Thus. We have ordered the payment of both in proper cases[14] as otherwise the employee might be deprived of benefits justly due him.00. NLRC[12] is not in point because there the debtor corporation actually ceased operations after the decision of the Court of Industrial Relations was promulgated against it. The applicable decision is Sunio v. even if they are not assigned as errors in the appeal. as a condition for the issuance of our temporary restraining order of October 14. the delays in the payment of her commissions. making it necessary to enforce it against its former president. the first being usually the length of the employee‘s service and the second the actual period when he was unlawfully prevented from working. therefore. But this precaution. NLRC. observes that making Lim solidarily liable with Sweet Lines will ensure payment of Calsado's claim. The case of Ransom v. invoking equity rather than law. is really unnecessary. the suggestion of one of the company officers that she discuss her complaints with him alone in a private place. which should cover the amounts awarded to the private respondent.[10] the Court is "clothed with ample authority to review matters. even assuming it to be valid. As we said in Ortigas vs. we hold that the contention of Sweet Lines that separation pay and back wages are inconsistent with each other is not well-taken. His act. done in his capacity as Vice President of Sweet Lines and on its behalf. It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other entity to which it may be related. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality. The bases for computing the two are different.

97 plus 12% interest as loss of profit and/or unearned income of three years.R. for three years. properties. the Court also pointed out that even if all the procedural requirements for the filing of the petition were met. taking jurisdiction over an action for damages filed by an employer against its dismissed employee. facilities. 1996 and October 16. private respondent "indefinitely suspended" petitioner and the latter filed a complaint for illegal dismissal with the National Labor Relations Commission ("NLRC") in Iligan City. HON. P119. PETITIONER. VALDEVILLA AND ORO MARKETING. In a decision dated July 7.R. having arisen from an employer-employee relationship. are assailed in this petition for certiorari under Rule 65 of the Rules of Court for having been issued in grave abuse of discretion.700. . 128024. it would still be dismissed for failure to show grave abuse of discretion on the part of the NLRC. subject to the modification that the award of back wages shall be limited to only three years. INC. WHEREFORE. It is so ordered. G.00 plus 12% interest as estimated cost of supplies. Petitioner was the sales operations manager of private respondent in its branch in Iligan City. and P25. private respondent filed a complaint for damages before the Regional Trial Court ("RTC") of Misamis Oriental. 79975 is DISMISSED. In 1993.00 as initial expenses of litigation.R. [ G. which dismissed the same for having been filed out of time. is LIFTED. etc. P709.[4] On January 30. space. Palangan found petitioner to have been illegally dismissed and ordered the payment of separation pay in lieu of reinstatement. d. DOWNEY C. petitioner filed a motion to dismiss the above complaint. RESPONDENTS. was squarely under the exclusive original jurisdiction of the NLRC under Article 217(a). BAÑEZ. The decision was appealed to the NLRC. No.217. 1996. Labor Arbiter Nicodemus G. He interposed in the court below that the action for damages. with costs against the petitioner. in accordance with existing policy. The temporary restraining order dated October 14. stating that the latter could very well have included the instant claim for damages in its counterclaim before the Labor Arbiter. docketed as Civil Case No. 1994. P5. He also pointed out that the civil action of private respondent is an act of forum-shopping and was merely resorted to after a failure to obtain a favorable decision with the NLRC. G. paragraph 4 of the Labor Code and is barred by reason of the final judgment in the labor case. the case was dismissed on technical grounds[3]. b. 2000 ] BEBIANO M. No. 79907 is GRANTED and petitioner Samuel Casas Lim is hereby absolved of liability in his personal capacity.. and of backwages and attorney's fees.00 as attorney's fees. however. 95-554.[2] Elevated by petition for certiorari before this Court. c. VS. On November 13. May 09. He accused private respondent of splitting causes of action. No. 1987. which prayed for the payment of the following: a.There is no reason why he should not also be paid three years back wages corresponding to the period when he could not return to his work or could not find employment elsewhere.000. 1995. The orders of respondent judge[1] dated June 20.000. 1996.

whether agricultural or non-agricultural: . and jurisdiction over the controversy belongs to the regular courts. The determining issue. would buy the items on cash basis at ex-factory price. property and manpower. While seemingly the cause of action arose from employer. Jurisdiction of Labor Arbiters and the Commission. 1997. the employer's claim for damages is grounded on the nefarious activities of defendant causing damage and prejudice to plaintiff as alleged in paragraph 7 of the complaint. defendant collected the installment payments either personally or through Venus Lozano. The collection and receipt of payments were made inside the Iligan City branch using plaintiff’s facilities.Ruling upon the motion to dismiss.) xxx[6] Petitioner's motion for reconsideration of the above Order was denied for lack of merit on October 16. the Second Division of this Court issued a Temporary Restraining Order ("TRO ") on March 5. It seeks to recover damages as redress for defendant's breach of his contractual obligation to plaintiff who was damaged and prejudiced. Paño. Article 217(a).[5] In declaring itself as having jurisdiction over the subject matter of the instant controversy. Hence. respondent court stated: A perusal of the complaint which is for damages does not ask for any relief under the Labor Code of the Philippines. purportedly for the plaintiff but in reality on his own account or business. which is intrinsically a civil dispute. lack of jurisdiction over the subject matter of the action. purporting that said customer purchased the items from plaintiff on installment basis. this petition. Ltd. which was already in effect at the time of the filing of this case. a Group Sales Manager of plaintiff but also utilized by him as secretary in his own business for collecting and receiving of installments. 1996. Acting on petitioner's prayer. reads: ART. within thirty (30) calendar days after the submission of the case by the parties for decision without extension.employee relations. a privilege not given to customers. the following cases involving all workers. even in the absence of stenographic notes. and forum-shopping. and paragraph 7 of the same complaint briefly narrated the modus operandi of defendant. The Court believes that there was a breach of a contractual obligation. without the knowledge of said customer and plaintiff. the petition reiterates the grounds raised in the Motion to Dismiss dated January 30. Vs. That accordingly plaintiff’s sales decreased and reduced to a considerable extent the profits which it would have earned. --. 122 SCRA 671. splitting of causes of action. By way of assignment of errors. If said customer decided to buy items from plaintiff on installment basis. enjoining respondents from further proceeding with Civil Case No. Thereafter. is the issue of jurisdiction. res judicata. 95-554 until further orders from the Court. (Singapore Airlines. 217. however. quoted herein: Defendant canvassed customers personally or through salesmen of plaintiff which were hired or recruited by him. The Court believes such cause of action is within the realm of civil law. and thereafter required the customer to sign promissory notes and other documents using the name and property of plaintiff. defendant.(a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide. respondent judge issued the herein questioned Order. 1996. paragraph 4 of the Labor Code. namely. The averments in the complaint removed the controversy from the coverage of the Labor Code of the Philippines and brought it within the purview of civil law. which summarized the basis for private respondent's action for damages in this manner: Paragraph 5 of the complaint alleged that the defendant violated the plaintiff’s policy re: His business in his branch at Iligan City wherein defendant was the Sales Operations Manager.

"[8] This limitation in jurisdiction. Presidential Decree ("P. Presently.D.A.A. where the basis for the claim arises from or is necessarily connected with the fact of termination. lasted only briefly since on May 1. 1367 and restored Article 217 of the Labor Code almost to its original form. however. which took effect on March 21. was originally lodged with the Labor Arbiters and the NLRC by Article 217 of the Labor Code. It will be recalled that years prior to R. namely."[11] Thus.D.[9] we hold that by the designating clause "arising from the employer-employee relations" Article 217 should apply with equal force to the claim of an employer for actual damages against its dismissed employee.[7] On May 1. 875 (the "Industrial Peace Act". having been otherwise preoccupied by his unauthorized installment sale scheme. exemplary and other forms of damages arising from the employer-employee relations. Second.D.A. and which put to rest the earlier confusion as to who between Labor Arbiters and regular courts had jurisdiction over claims for damages as between employers and employees. P. such complaint for damages is deeply rooted from the labor dispute between the parties. which is prejudicial to the orderly administration of justice. In the first place. the jurisdiction is exclusively with the (now defunct) Court of Industrial Relations. and more importantly. and equally so in the interest of greater promptness in the disposition of labor matters. however. and should be entered as a counterclaim in the illegal dismissal case.") No. 6715. the present Labor Code is even more committed to the view that on policy grounds. an alleged unfair labor practice committed by the union. No.4. including claims for damages.[10] To allow otherwise would be "to sanction split jurisdiction. Thus. and as amended by R. and the assumption of jurisdiction of regular courts over the same is a nullity. Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages filed by employees. those equivalent to the value of private respondent's property and supplies which petitioner used in conducting his "business ". 1691 nullified P. a court is spared the often onerous task of determining what essentially is a factual matter. 6715. to allow respondent court to proceed with the instant action for damages would be to . 1367 amended said Article 217 to the effect that "Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages. the damages that may be incurred by either labor or management as a result of disputes or controversies arising from employer-employee relations. 127 SCRA 419: Certainly. the jurisdiction of Labor Arbiters and the NLRC in Article 217 is comprehensive enough to include claims for all forms of damages "arising from the employer-employee relations". jurisdiction over all money claims of workers. Even under Republic Act No. the damages alleged in the complaint below are: first. and second. or was necessarily intertwined with. where the damages separately claimed by the employer were allegedly incurred as a consequence of strike or picketing of the union. Eisma. Claims for actual. 1980. As held by this Court in National Federation of Labor vs. now completely superseded by the Labor Code). The above provisions are a result of the amendment by Section 9 of Republic Act ("R. 1989. No. 1979. 6715. even after the enactment of the Labor Code. jurisprudence was settled that where the plaintiff's cause of action for damages arose out of. There is no mistaking the fact that in the case before us. private respondent would not have taken issue with petitioner's "doing business of his own" had the latter not been concurrently its employee. and should be dismissed by ordinary courts for lack of jurisdiction.") No. private respondent's claim against petitioner for actual damages arose from a prior employer-employee relationship. moral. those amounting to lost profits and earnings due to petitioner's abandonment or neglect of his duties as sales manager.

but in . the lawmaking authority had second thoughts about depriving the Labor Arbiters and the NLRC of the jurisdiction to award damages in labor cases because that setup would mean duplicity of suits. found to the contrary ---that no business losses may be attributed to petitioner as in fact. Presidential Decree No. This is. which is now final and executory. the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws. and back to labor tribunals. de Guzman. xxx (Underscoring supplied) Clearly. as when the claimant seeks to recover a debt from a former employee[16] or seeks liquidated damages in enforcement of a prior employment contract. So. or breach of contract. Still on the prospect of re-opening factual issues already resolved by the labor court. claimed for were based on tort[14].[12] In other words. where private respondent brought up as a defense the same allegations now embodied in his complaint. the dispute is intrinsically civil. 1980. This issue has been duly raised and ruled upon in the illegal dismissal case. the jurisdiction of regular courts was upheld where the damages. The Labor Arbiter. it was by reason of petitioner's installment plan that the sales of the Iligan branch of private respondent (where petitioner was employed) reached its highest record level to the extent that petitioner was awarded the 1989 Field Sales Achievement Award in recognition of his exceptional sales performance. splitting the cause of action and possible conflicting findings and conclusions by two tribunals on one and the same claim. malicious prosecution[15]. xxx Evidently. it may help to refer to that period from 1979 to 1980 when jurisdiction over employment-predicated actions for damages vacillated from labor tribunals to regular courts. as amended.[18] Thus. Thus. 1691 (which substantially reenacted Article 217 in its original form) nullified Presidential Decree No. of course. and presented evidence in support thereof. Article 217(a) of the Labor Code. 113 SCRA 52. to distinguish from cases of actions for damages where the employer-employee relationship is merely incidental and the cause of action proceeds from a different source of obligation. however. respondent court's taking jurisdiction over the instant case would bring about precisely the harm that the lawmakers sought to avoid in amending the Labor Code to restore jurisdiction over claims for damages of this nature to the NLRC. 1367 and restored to the Labor Arbiter and the NLRC their jurisdiction to award all kinds of damages in cases arising from employer-employee relations. on May 1. but also damages governed by the Civil Code.[13] this Court discussed: The lawmakers in divesting the Labor Arbiters and the NLRC of jurisdiction to award moral and other forms of damages in labor cases could have assumed that the Labor Arbiters' position-paper procedure of ascertaining the facts in dispute might not be an adequate tool for arriving at a just and accurate assessment of damages. and that the trial procedure in the Court of First Instance would be a more effective means of determining such damages. [17] Neither can we uphold the reasoning of respondent court that because the resolution of the issues presented by the complaint does not entail application of the Labor Code or other labor laws. In Ebon vs. the issue of actual damages has been settled in the labor case. and that the installment scheme was in fact with the knowledge of the management of the Iligan branch of private respondent. clearly bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damages arising from employer-employee relations ---in other words.open anew the factual issue of whether petitioner's installment sale scheme resulted in business losses and the dissipation of private respondent's property. as distinguished from backwages and separation pay. it is obvious that private respondent's remedy is not in the filing of this separate action for damages.

and the instant action for damages cannot take the place of such lost appeal. WHEREFORE. the Petition is GRANTED. the decision in the labor case stands as a final judgment on the merits. . and the complaint in Civil Case No. Respondent court clearly having no jurisdiction over private respondent's complaint for damages. we will no longer pass upon petitioner's other assignments of error.properly perfecting an appeal from the Labor Arbiter's decision. Having lost the right to appeal on grounds of untimeliness. 95-554 before Branch 39 of the Regional Trial Court of Misamis Oriental is hereby DISMISSED. No pronouncement as to costs.

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

And in Singapore Airlines Limited v. Theirs is a simple action for damages for tortious acts allegedly committed by the defendants. Justice Melencio-Herrera. PLAINTIFF had sued for monies loaned to DEFENDANT. private respondent raised the question of lack of jurisdiction of the court. 7 the petitioner was a corporation engaged in the sale and repair of motor vehicles. unlike Medina. involved a claim for liquidated damages not by a worker but by the employer company. The Court treated the claim for damages as "a simple action for damages for tortious acts" allegedly committed by private respondents. such as payment of wages. and for the purchase price of vehicles and parts sold to him." Even then. 677. while private respondent was the sales Manager of petitioner. Paño. 11 SCRA 597. in negating jurisdiction of the Labor Arbiter. The primary relief sought is for liquidated damages for breach of a contractual obligation. and it does not breach any provision of the Labor Code or the contract of employment of DEFENDANT. holding that the sum of money and damages sued for by the employer arose from the employer-employee relationship and. Such being the case. In reversing the order of dismissal and requiring respondent Judge to take cognizance of the case below. It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Singapore Airlines Limited v. repair jobs on cars personally owned by him. any discussion concerning the statutes amending it and whether or not they have retroactive effect is unnecessary. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes. involved a claim for damages by two (2) employees against the employer company and the General Manager thereof. It results that the orders under review are based on a wrong premise. In Molave Motor Sales. although a controversy is between an employer and an employee. Laron. For if the Labor Code has no relevance. overtime compensation or separation pay. also cited in Molave. Castro-Bartolome. 122 SCRA 671. Inc. Mr. The items claimed are the natural consequences flowing from breach of an obligation. although the parties were an employer and two employees. 1982. 604. Those accounts have no relevance to the Labor Code. is enough to bring such money claim within the original and exclusive jurisdiction of Labor Arbiters. the cost of repair jobs made on his personal cars. 8 It seems worth noting that Medina v. Labor Arbiters. said: Before the enactment of BP Blg. arising from the use of slanderous language on the occasion when the General Manager fired the two (2) employees (the Plant General Manager and the Plant Comptroller). not the Labor Arbiters and the NLRC should have jurisdiction. In the case below. it fell outside the jurisdiction of the court and consequently should be dismissed. the principle followed by this Court was that. v. At the pre-trial in the lower court. this Court. Petitioner had sued private respondent for non-payment of accounts which had arisen from private respondent's own purchases of vehicles and parts. speaking through Mme. expressly excluded by this Code. unless. 227 on June 1. under paragraph 5 of Article 217 of the Labor Code had jurisdiction over" all other cases arising from employer-employee relation. referred to in the above excerpt. and cash advances from the corporation. The important principle that runs through these three (3) cases is that where the claim to the principal relief sought 9 is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by the general civil law. the jurisdiction over the dispute belongs to . petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. Hence the civil courts. the governing statute is the Civil Code and not the Labor Code. fell within the jurisdiction of the Labor Arbiter and the NLRC. The cause of action was one under the civil laws. the Labor Arbiters have no jurisdiction if the Labor Code is not involved. stating that because petitioner's complaint arose out of the employer-employee relationship. clearly if impliedly suggesting that the claim for damages did not necessarily arise out of or in connection with the employer-employee relationship. the following was said: Stated differently. hence.The next issue that must logically be confronted is whether the fact that the money claim of private respondent Vega arose out of or in connection with his employment relation" with petitioner Corporation. Paño. Respondent Judge did dismiss the case. Castro-Bartolome. intrinsically a civil dispute. Justice Abad Santos stated: The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by the plaintiffs. In Medina vs.

could be translated into some substantial benefit to the Corporation. Such undertaking. Applying the foregoing to the instant case. but rather in the application of the general civil law. the Petition for certiorari is GRANTED. and if so. In such situations. whether or not it had been breached. such claims fall outside the area of competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears. whether or not an enforceable contract. Clearly. and that petitioner Corporation undertook to grant cash awards to employees who accept such invitation and whose innovation suggestions. without prejudice to the right of private respondent Vega to file a suit before the proper court. in the judgment of the Corporation's officials. therefore. if he so desires. the Court notes that the SMC Innovation Program was essentially an invitation from petitioner Corporation to its employees to submit innovation proposals. had arisen between petitioner Corporation and private respondent Vega in the circumstances of this case.the regular courts of justice and not to the Labor Arbiter and the NLRC. albeit implied arid innominate. are preeminently legal questions. but rather having recourse to our law on contracts. questions not to be resolved by referring to labor legislation and having nothing to do with wages or other terms and conditions of employment. satisfied the standards and requirements of the Innovation Program 10 and which. though unilateral in origin. Thus. . RAB-VII-0170-83 is hereby DISMISSED. No pronouncement as to costs. The decision dated 4 September 1987 of public respondent National Labor Relations Commission is SET ASIDE and the complaint in Case No. resolution of the dispute requires expertise. not in labor management relations or in wage structures and other terms and conditions of employment. WEREFORE. could nonetheless ripen into an enforceable contractual (facio ut des) 11 obligation on the part of petitioner Corporation under certain circumstances.

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