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REFORMIST UNION OF R. B. LINER, INC., HEVER DETROS, ET AL., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, R.B.

LINER, INC., BERNITA DEJERO, FELIPE DEJERO, RODELIO DEJERO, ANA TERESA DEJERO, and RODELIO RYAN DEJERO, respondents. DECISION DAVIDE, JR., J.: This is a special civil action for certiorari under Rule 65 of the Rules of Court seeking to [1] set aside the decision of the National Labor Relations Commission (NLRC) in NLRC NCR CA [2] No. 004115-92, which affirmed the decision of the Labor Arbiter in the consolidated cases NLRC NCR Case Nos. 00-03-01392-90 and 00-04-02088-90, and the resolution of the former [3] denying the motion for the reconsideration of its decision. Petitioner Reformist Union of R.B. Liner, Inc. (hereinafter Reformist) with Hever Detros as its president, is composed of drivers, conductors, and mechanics of private respondent R.B. Liner, Inc. Private respondents Bernita, Felipe, Rodelio, Ana Teresa, and Rodelio Ryan, all surnamed Dejero, are the incorporators of R.B. Liner, Inc. From the record and the pleadings filed by the parties, we cull the following material facts in this case: Petitioner union was organized in May 1989 "by affiliating itself with Lakas Manggagawa sa [4] Pilipinas (hereinafter Lakas)." Lakas filed a notice of strike on 13 November 1989 because [5] of alleged acts of unfair labor practice committed by the private respondents. Despite conciliation hearings held on 4 and 6 December 1989, the parties failed to reach an agreement. Later, another act of unfair labor practice allegedly committed by the private respondents impelled Reformist, with the authorization of Lakas, to go on strike on 13 [6] December 1989 even as conciliation proceedings continued. On 21 December 1989, R.B. Liner, Inc. petitioned then Secretary Fanklin Drilon of the Department of Labor and Employment (DOLE) to assume jurisdiction over the ongoing [7] dispute or certify it to the NLRC. Secretary Drilon determined that "[t]he ongoing work stoppage in the company . . . . adversely affects an industry indispensable to the national interest;" thus on 28 December 1989, he certified the dispute to the NLRC for compulsory [8] arbitration and issued a return-to-work order. The certified case (NLRC Certified case No. 0542, entitled In Re: Labor Dispute at RB Liner, [9] Inc.) was dismissed on 13 February 1990 after the union and the company reached all [10] agreement on 19 January 1990 providing, among other matters, for the holding of a certification election. On 31 January 1990, a certification election was held where Lakas won as the collective [11] bargaining agent of the rank-and-file employees. On 13 February 1990, Lakas presented a [12] proposal for a collective bargaining agreement to Bernita and Rodelia Dejero, but they [13] refused to bargain. Meanwhile, as admitted by private respondents' witness Arcile

Tanjuatco, Jr., eight R.B. Liner buses were "converted" to Sultran Lines, one "became MCL," [14] and another "became SST Liner." The petitioners filed NLRC NCR Case No. NCR 00-03-01392-90 charging the private respondents with unfair labor practice, i.e., illegal lock out. The private respondents countered with NLRC Case No. NCR-00-04-02088-90, which sought to declare as illegal the union's 13 December 1989 strike, as well as other "work stoppages/boycotts" staged by the [15] petitioners. The two cases were consolidated and simultaneously tried. In his decision of 27 October 1992, Labor Arbiter Ricardo Nora ruled that the evidence, e.g., the private respondents' proof of payment of percentage taxes for 1990 and Conductors/Inspectors Daily Reports, "indicate[d] against an illegal lockout," while finding that Reformist staged an illegal strike for the following reasons: 1. The Reformist failed to show that they observed the legal requirements of a legal strike, like the following: First, the Reformist failed to show and present evidence that the approval of majority vote of its members were obtained by secret ballot before the strike; Second, they failed to show that they submitted the strike vote to the department of Labor at least seven (7) days prior to the intended strike; and Third, all members of the Reformist Union struck even before the certification election? when there was no definitive bargaining unit duly recognized and while the conciliation process was still on-going and in progress. Exh. 7-D is clear which states the following: "The Union object[s] with [sic] the position of Management for the reason that considering that they are on strike such election is moot and academic. All employees as per union allegation participate[d] in that concerted a ction." 2. The Reformist engaged in illegal, prohibited activities by obstructing the free ingress and egress to and from the R.B. Liner's garage premises where the trucks were Parked; (Exhs. "8", "8-A" to "8-D"). 3. The Reformist failed to present clear evidence . . . rebutting respondents' claim that the Reformist, blatantly defied the Secretary's return-to-work Order dated December 28, 1989. The evidence adduced particularly Exhibit "12" (the minutes of the conference on January 19, 1990 in Office of the NLRC Commissioner Diokno) includes the following: "That the Union assured to cause the return within five (5) days or January 24, of all employees who have not reported for work and management agreed to accept them." This clearly indicates an admission by the Reformist that its members did not comply with the Return-to-work order of the Secretary of Labor. It may be noted though that some members complied with the Order as per testimony of respondents' witness, however, the same workers had earlier participated in prohibited and illegal activities like illegal picketing that [16] characterized an illegal strike. The Labor Arbiter then disposed as follows:

IN VIEW OF THE FOREGOING, judgment is hereby rendered: 1. Dismissing the complaint of Reformist in NLRC-NCR-Case No. 00-03-0139290 for Unfair Labor Practice (Illegal Lockout) for lack of merit; Declaring the December 13, 1989 Strike by the Reformist as ILLEGAL in NLRC-NCR-Case No. 00-04-02088-90; Declaring all the Officers and Members of the Reformist to have lost their employment status for participating in an Illegal Strike. They are named as follows: xxx All other issues are Dismissed for lack of merit.
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good faith, that the private respondents were committing an act of unfair labor practice. The NLRC ruled that this circumstance: [M]itigate[d] the liability of the striking union as well as its members not only in considering the propriety of administering the avowed principle of equity in labor case[s] but likewise on the strength of the pronouncements of the Supreme Court in a line of cases where it was held that a strike undertaken on account of what the workers perceived to be unfair labor practices Acts on the part of the employer should not be outrightly taken as illegal even if the allegations of unfair labor practice acts are [20] subsequently found to be untrue. Thus, the NLRC affirmed the decision of the Labor Arbiter but allowed reinstatement of the dismissed employees: Accordingly, as a measure of social justice, resumption of employment relations between the parties shall be decreed without however granting any monetary relief considering that both parties had, to a certain extent, engaged in the commission of acts which rendered them undeserving of their prayer for damages and other concomitant reliefs akin to their causes of [21] action. Reformist and its members moved to reconsider the NLRC decision, which was, [22] however, denied on 31 March 1995. The petitioners then came to us with this special civil action forcertiorari, citing the following in support thereof : 1. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO GIVE WEIGHT TO THE OVERWHELMING EVIDENCE OF THE PETITIONERS SHOWING [AN] ILLEGAL LOCKOUT COMMITTED BY THE RESPONDENTS. 2. RESPONDENT NLRC DENIED SUBSTANTIAL JUSTICE TO THE PETITIONERS BY NOT AWARDING THEM THE MONETARY RELIEFS PRAYED FOR. 3. RESPONDENT NLRC ERRONEOUSLY INTERPRETED THE LAW ENUNCIATED BY THE HON. SUPREME COURT GIVING SEPARATION PAY PLUS BACKWAGES TO EMPLOYEES WHOSE REINSTATEMENT TO THEIR FORMER POSITIONS HAVE BEEN RENDERED IMPOSSIBLE BY THE RESPONDENTS. The private respondents insist that the petitioners-employees were validly dismissed for serious misconduct and violations of labor laws and lawful orders of the Labor Secretary, hence not entitled to reinstatement nor separation pay in lieu of reinstatement. This petition must be granted, albeit not on the grounds advocated by the petitioners. The private respondents can no longer contest the legality of the strike held by the petitioners on 13 December 1989, as the private respondents themselves sought compulsory arbitration in order to resolve that very issue, hence their letter to the Labor Secretary read, in part:

2.

3.

On appeal, the NLRC affirmed the Labor Arbiter's finding that Reformist held an illegal strike, reasoning as follows: It [Reformist] disputes the holding that an illegal strike was staged on December 13, 1989 on the ground that previous thereto, conciliation and mediation conferences were conducted and which thus constituted . . . evidence that there was a notice of strike filed consequent to a strike vote had among the members of the union. This, assuming for the sake of argument is true, did not outrightly put a stamp of validity for such concerted action as the fact remains that no certification election was conducted previous to the strike. Hence, the union could not have validly claimed that it was the exclusive bargaining agent of the workers in petitioners' premises when it staged the subject strike. Nevertheless, such flaw, as correctly assumed by the appellants, could have been corrected by the Return to Work Order of then Secretary of Labor Franklin Drilon. The finding that this Order was defied is contested by the appellants alleging that the logbook which contains an entry of all those who reported for work was never presented by management, this constituting suppression of evidence. This could have been true had the said logbook constituted as the sole evidence in support of petitioners' assertion as to appellants' failure to comply with the return to work order. However, the minutes of the January 19, 1990 conference before then Commissioner Diokno establishes such fact on the strength of the Union's admission when it undertook to assure "the return within five (5) days or January 24 of all [18] employees who have not reported for work . . ." Further it was also established that the strikers were guilty of committing illegal activities, particularly the obstruction of free ingress and egress to and from the Liner's garage premises as shown by the pictures taken thereat. All told, the foregoing established circumstances yield no other [19] conclusion except to declare the strike staged by the union as illegal. Anent the illegal lockout, the NLRC deemed R.B. Liner, Inc.'s conversion of some of its buses into those of other bus companies as sufficient reason for the petitioners to believe, in

This is to request your good office to certify for compulsory arbitration or to assume jurisdiction over the labor dispute (strike continuing) between R.B. Liner Inc . . . . and the Lakas Manggagawa sa Pilipinas . . . The current strike by Lakas which started on December 13, 1989 even before Certification Election could be held could not be resolved by the NCR Conciliation-Mediation Division after [23] six meetings/conferences between the parties. The dispute or strike was settled when the company and the union entered into an agreement on 19 January 1990 where the private respondents agreed to accept all employees who by then, had not yet returned to work. By acceding to the peaceful settlement brokered by the NLRC, the private respondents waived the issue of the illegality of the strike. The very nature of compulsory arbitration makes the settlement binding upon the private respondents, for compulsory arbitration has been defined both as "the process of settlement of labor disputes by a government agency which has the authority to investigate [24] and to make an award which is binding on all the parties," and as a mode of arbitration where the parties are "compelled to accept the resolution of their dispute through [25] arbitration by a third party." Clearly then, the legality of the strike could no longer be reviewed by the Labor Arbiter, much less by the NLRC, as this had already been resolved. It was the sole issue submitted for compulsory arbitration by the private respondents, as is obvious from the portion of their letter quoted above. The case certified by the Labor Secretary to the NLRC was dismissed after the union and the company drew up the agreement mentioned earlier. This conclusively disposed of the strike issue. The Labor Code provides that the decision in compulsory arbitration proceedings "shall [26] be final and executory ten (10) calendar days after receipt thereof by the parties." The parties were informed of the dismissal of the case in a letter dated 14 February 1990, and while nothing in the record indicates when the said letter was received by the parties, it is reasonable to infer that more than ten days elapsed - - hence, the NLRC decision had already become final and executory - - before the private respondents filed their complaint with the [27] Labor Arbiter on 13 July 1990. A final judgment is no longer susceptible to change, [28] revision, amendment, or reversal. Neither the Labor Arbiter nor the NLRC, therefore, could review the same issue passed upon in NLRC Certified Case No. 0542, and their decisions to the contrary have been rendered in grave abuse of discretion amounting to excess of jurisdiction. The agreement entered into by the company and the union, moreover, was in the nature of a compromise agreement, i.e., "an agreement between two or more persons, who for preventing or putting an end to a lawsuit, adjust their difficulties by mutual consent in the manner which they agree on, and which everyone of them prefers to the hope of gaining, [29] balanced by the danger of losing." Thus, in the agreement, each party made concessions in favor of the other to avoid a protracted litigation. While we do not abandon the rule that [30] "unfair labor practice acts are beyond and outside the sphere of compromises," the agreement herein was voluntarily entered into and represents a reasonable settlement, thus [31] it binds the parties. On this score, the Labor Code bestows finality to unvitiated compromise agreements:

Art. 227. Compromise agreements. - - Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation or coercion. The agreement in this case complies with the above requisites, forged as it was under authority of the Labor Secretary, with representatives from both the union and the company signing the handwritten agreement to signify their consent thereto. The private respondents [32] never. alleged in their answer to the petitioners' complaint before the Labor Arbiter, nor [33] in their complaint, that the petitioners did: not comply with the agreement. The binding effect of the agreement on the private respondents is thus unimpaired. The private respondents' cause likewise fails in light of Article 2037 of the Civil Code, which gives compromise agreements "the effect and authority of res judicata" upon the [34] parties to the same, even when effected without judicial approval. The Labor Arbiter and the NLRC therefore erroneously reviewed an issue which had already been laid to rest by the parties themselves and which, applying the principle of res judicata they could no longer re[35] litigate. The only barrier then to the petitioners employees' reinstatement is their defiance of the Labor Secretary's .return to work order, which the private respondents claim as one reason to validly dismiss the petitioners employees. We disagree, however, with the finding that Lakas Reformist violated the said order. It is upon the private respondents to substantiate the aforesaid defiance, as the burden of proving just and valid cause for dismissing employees from employment rests on the employer, and the latter's failure to do so results in a finding that the dismissal was [36] unfounded. The private respondents fell short of discharging this burden. Contrary to the Labor Arbiter's and the NLRC's view, the union's undertaking to cause absentee employees to return to work was not an admission that its members defied the Labor Secretary's order. Those who did not report for work after the issuance of the Labor Secretary's order may not have been informed of such order, or they may have been too few so as to conclude that they deliberately defied the order. The private respondents ailed to eliminate these probabilities. The most conclusive piece of evidence that the union members did not report for work [37] would be the company's logbook which records the employees' attendance. The private respondents' own witness, Administrative Manager Rita Erni, admitted that the logbook [38] would show who among the employees reported for work. The logbook was supposed to [39] be marked as Exhibit "14" for the private respondents, but was withdrawn, then the private respondents' counsel, Atty. Godofredo Q. Asuncion, later intimated that the said [40] logbook was "stolen or lost." We are not prepared to conclude that the private respondents willfully suppressed this particular piece of evidence, in which case the same would be presumed adverse to them if [41] produced. However, other evidence indicate that the petitioners-employees complied

with the Labor Secretary's return to work order, namely, the private respondents' Exhibits [42] "11" to "11-E." These are Conductors/Inspectors Daily Reports which detail the bus trips made by a particular conductor-driver tandem, as well as the numbers of the bus tickets used during each trip, and these reports are all dated 30 December 1989 merely two days after Secretary Drilon issued his order indicating that a number of employees did report for work in compliance with the Secretary's order. Moreover, the said exhibits were executed by [43] some of the employees ordered dismissed by the Labor Arbiter. The private respondents intended the exhibits to prove that only a handful of employees reported for work following the issuance of the Labor Secretary's order, but they never established that these exhibits were the only reports filed on 30 December 1989, thus, there may have been employees Other than those named in the said exhibits who reported for work in obeisance to the Labor Secretary. Certainly, the Daily Reports accomplished by drivers and conductors would not reflect the attendance of mechanics. Besides, it was not shown by the private respondents that their employees were required to file the Conductors/Inspectors Daily Reports such that those who did not file would be instantly deemed absent. The private respondents thus failed to satisfactorily establish any violation of the Labor Secretary's return-to-work order, and consequently, the Labor Arbiter's and the NLRC's contrary finding is not anchored on substantial evidence. Grave abuse of discretion was thus committed once more. As regards the illegal lockout-alleged by the petitioners, we agree with the NLRC's finding that the petitioners had sufficient basis to believe in good faith that the private respondents were culpable. The NLRC found this circumstance to justify the petitionersemployees' reinstatement; we add that since there was, in fact, no defiance of the Labor Secretary's return-to-work order, and no cause to decree the petitioners employees' dismissal in the first instance, reinstatement of the dismissed employees can be the only outcome in this case. The possibility of reinstatement is a question of fact, and where a factual determination is indispensable to the complete resolution of the case, this Court usually [44] remands the case to the NLRC. In view, however, of both parties' assertion that reinstatement has become impossible because, as claimed by the petitioners, "the buses were already disposed of"; or as claimed by the private respondents, R.B. Liner, Inc., had "ceased operations" because "its Certificate of Public Convenience had expired and was denied renewal," and further, of "closure of the company" due to "lack of operational trucks [45] and buses and high costs of units, " there is no need to remand this case to the NLRC. Due to the infeasibility of reinstatement, the petitioners' prayer for separation pay must be granted. Separation pay, equivalent to one month's salary for every year of service, [46] is awarded as an alternative to reinstatement when the latter is no longer an option, and is computed from the commencement of employment up to the time of termination, including the period of imputed service for which the employee is entitled to back wages. The salary rate prevailing at the end of the period of putative service should be the [47] basis for computation. The petitioners are also entitled to back wages. The payment of back wages "is a form [48] of relief that restores the income that was lost by reason of unlawful dismissal." The petitioners' dismissal being unwarranted as aforestated, with the employees dismissed after

R.A. No. 6715 took effect, then, pursuant to the said law and the latest rule on the matter laid down in the Resolution of 28 November 1996 of this Court, sitting en banc, [50] in Bustamante vs. National Labor Relations Commission, the petitioners-employees are entitled to payment of full back wages from the date of their dismissal up to the time when reinstatement was still possible, i.e., in this instance, up to the expiration of the franchise of R.B. Liner, Inc. WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations Commission in NLRC NCR CA No. 004115-92, as well as that of the Labor Arbiter in the consolidated cases of NLRC NCR Case Nos. 00-03-01392-90 and 00-04-0208890 are SET ASIDE. Petitioners-employees are hereby awarded full back wages and separation pay to be determined by the Labor Arbiter as prescribed above within thirty (30) days from notice of this judgment. SO ORDERED. Narvasa, C.J., (Chairman), Melo, Francisco, and Panganiban, JJ., concur.

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G.R. No. 95237-38 September 13, 1991 DAVAO CITY WATER DISTRICT, CAGAYAN DE ORO CITY WATER DISTRICT, METRO CEBU WATER DISTRICT, ZAMBOANGA CITY WATER DISTRICT, LEYTE METRO WATER DISTRICT, BUTUAN CITY WATER DISTRICT, CAMARINES NORTE WATER DISTRICT, LAGUNA WATER DISTRICT, DUMAGUETE CITY WATER DISTRICT, LA UNION WATER DISTRICT, BAYBAY WATER DISTRICT, METRO LINGAYEN WATER DISTRICT, URDANETA WATER DISTRICT, COTABATO CITY WATER DISTRICT, MARAWI WATER DISTRICT, TAGUM WATER DISTRICT, DIGOS WATER DISTRICT, BISLIG WATER DISTRICT, and MECAUAYAN WATER DISTRICT,petitioners, vs. CIVIL SERVICE COMMISSION, and COMMISSION ON AUDIT, respondents. Rodolfo S. De Jesus for petitioners. Evalyn H. Itaas-Fetalino, Rogelio C. Limare and Daisy B. Garcia-Tingzon for CSC.

Significantly, Article IX (B), Section 2(1) of the 1987 Constitution provides that the Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of the government, including government-owned and controlled corporations with original charters. Inasmuch as PD No. 198, as amended, is the original charter of the petitioner, Tanjay Water District, and respondent Tarlac Water District and all water districts in the country, they come under the coverage of the Civil Service Law, rules and regulations. (Sec. 35, Art. VIII and Sec. 37, Art. IX of PD No. 807). As an offshoot of the immediately cited ruling, the CSC. issued Resolution No. 90-575, the dispositive portion of which reads: NOW THEREFORE, in view of all the foregoing, the Commission resolved, as it hereby resolves to rule that Local Water Districts, being quasi-public corporations created by law to perform public services and supply public wants, the matter of hiring and firing of its officers and employees should be governed by the Civil Service Law, rules and regulations. Henceforth, all appointments of personnel of the different local water districts in the country shall be submitted to the Commission for appropriate action. (Rollo. p. 22). However, on May 16, 1990, in G.R. No. 85760, entitled "Metro Iloilo Water District v. National Labor Relations Commission, et al.," the Third Division of this Court ruled in a minute resolution: xxx xxx xxx Considering that PD 198 is a general legislation empowering and/or authorizing government agencies and entities to create water districts, said PD 198 cannot be considered as the charter itself creating the Water District. Public respondent NLRC did not commit any grave abuse of discretion in holding that the operative act, that created the Metro Iloilo Water District was the resolution of the Sangguniang Panglunsod of Iloilo City. Hence, the employees of Water Districts are not covered by Civil Service Laws as the latter do (sic) not have original charters. In adherence to the just cited ruling, the CSC suspended the implementation of Resolution No. 90-575 by issuing Resolution No. 90-770 which reads: xxx xxx xxx NOW, THEREFORE, in view of all the foregoing, the Commission resolved to rule, as it hereby rules, that the implementation of CSC. Resolution No. 575 dated June 27, 1990 be deferred in the meantime pending clarification from the Supreme Court are regards its conflicting decisions

MEDIALDEA, J.:p Whether or not the Local Water Districts formed and created pursuant to the provisions of Presidential Decree No. 198, as amended, are government-owned or controlled corporations with original charter falling under the Civil Service Law and/or covered by the visitorial power of the Commission on Audit is the issue which the petitioners entreat this Court, en banc, to shed light on. Petitioners are among the more than five hundred (500) water districts existing throughout the country formed pursuant to the provisions of Presidential Decree No. 198, as amended by Presidential Decrees Nos. 768 and 1479, otherwise known as the "Provincial Water Utilities Act of 1973." Presidential Decree No. 198 was issued by the then President Ferdinand E. Marcos by virtue of his legislative power under Proclamation No. 1081. It authorized the different local legislative bodies to form and create their respective water districts through a resolution they will pass subject to the guidelines, rules and regulations therein laid down. The decree further created and formed the "Local Water Utilities Administration" (LWUA), a national agency attached to the National Economic and Development Authority (NEDA), and granted with regulatory power necessary to optimize public service from water utilities operations. The respondents, on the other hand, are the Civil Service Commission (CSC) and the Commission on Audit (COA), both government agencies and represented in this case by the Solicitor General. On April 17, 1989, this Court ruled in the case of Tanjay Water District v. Gabaton, et al. (G.R. No. 63742, 172 SCRA 253):

in the cases ofTanjay Water District v. Gabaton and Metro Iloilo Water District v. National Labor Relations Commission. (p. 26, Rollo) In the meanwhile, there exists a divergence of opinions between COA on one hand, and the (LWUA), on the other hand, with respect to the authority of COA to audit the different water districts. COA opined that the audit of the water districts is simply an act of discharging the visitorial power vested in them by law (letter of COA to LWUA dated August 13, 1985, pp. 2930, Rollo). On the other hand, LWUA maintained that only those water districts with subsidies from the government fall within the COA's jurisdiction and only to the extent of the amount of such subsidies, pursuant to the provision of the Government Auditing Code of the Phils. It is to be observed that just like the question of whether the employees of the water districts falls under the coverage of the Civil Service Law, the conflict between the water districts and the COA is also dependent on the final determination of whether or not water districts are government-owned or controlled corporations with original charter. The reason behind this is Sec. 2(1), Article IX-D of the 1987 constitution which reads: Sec. 2(1) The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to the Government, or any of its subdivisions, agencies or instrumentalities, including government-owned or controlled corporations with original charters, and on a post audit basis. (emphasis supplied) Petitioners' main argument is that they are private corporations without original charter, hence they are outside the jurisdiction of respondents CSC and COA. Reliance is made on the Metro Iloilo case which declared petitioners as quasi-public corporations created by virtue of PD 198, a general legislation which cannot be considered as the charter itself creating the water districts. Holding on to this ruling, petitioners contend that they are private corporations which are only regarded as quasi-public or semi-public because they serve public interest and convenience and that since PD 198 is a general legislation, the operative act which created a water district is not the said decree but the resolution of the sanggunian concerned. After a fair consideration of the parties' arguments coupled with a careful study of the applicable laws as well as the constitutional provisions involved, We rule against the petitioners and reiterate Our ruling in Tanjay case declaring water districts governmentowned or controlled corporations with original charter. As early as Baguio Water District v. Trajano, et al., (G.R. No. 65428, February 20, 1984, 127 SCRA 730), We already ruled that a water district is a corporation created pursuant to a

special law P.D. No. 198, as amended, and as such its officers and employees are covered by the Civil Service Law. In another case (Hagonoy Water District v. NLRC, G.R. No. 81490, August 31, 1988, 165 SCRA 272), We ruled once again that local water districts are quasi-public corporations whose employees belong to the Civil Service. The Court's pronoucement in this case, as extensively quoted in the Tanjay case, supra, partly reads: "The only question here is whether or not local water districts are governmkent owned or controlled corporations whose employees are subject to the provisions of the Civil Service Law. The Labor Arbiter asserted jurisdiction over the alleged illegal dismissal of private respondent Villanueva by relying on Section 25 of Presidential decree No. 198, known as the Provincial Water Utilities Act of 1973" which went onto effect in 25 May 1973, and which provides as follows: Exemption from Civil Service. The district and its employees, being engaged in a proprietary function, are hereby exempt from the provisions of the Civil Service Law. Collective Bargaining shall be available only to personnel below supervisory levels:Provided, however, That the total of all salaries, wages emoluments, benefits or other compensation paid to all employees in any month shall not exceed fifty percent (50%) of average net monthy revenue. Said net revenue representing income from water sales and sewerage service charges, less pro-rata share of debt service and expenses for fuel or energy for pumping during the preceding fiscal year. The Labor Arbiter failed to take into accout the provisions of Presidential Decree No. 1479, which went into effect on 11 June 1978, P.D. No. 1479, wiped away Section 25 of PD 198 quoted above, and Section 26 of PD 198 was renumbered as Section 25 in the following manner: Section 26 of the same decree PD 198 is hereby amended to read as Section 25 as follows: Section 25. Authorization. The district may exercise all the powers which are expressly granted by this Title or which are necessarily implied from or incidental to the powers and purposes herein stated. For the purpose of carrying out the objectives of this Act, a district is hereby granted the power of eminent domain, the exercise thereof shall, however, be subject to review by the Administration.

Thus, Section 25 of PD 198 exempting the employees of water districts from the application of the Civil Service Law was removed from the statute books: xxx xxx xxx We grant the petition for the following reasons: 1. Section 25 of PD No. 198 was repealed by Section 3 of PD No. 1479; Section 26 of PD No. 198 was amended ro read as Sec. 25 by Sec. 4 of PD No. 1479. The amendatory decree took effect on June 11, 1978. xxx xxx xxx 3. The BWD is a corporation created pursuant to a special law PD No. 198, as amended. As such its officers and employees are part of the Civil Service (Sec. 1, Art. XII-B, [1973] Constitution; PD No. 868). Ascertained from a consideration of the whole statute, PD 198 is a special law applicable only to the different water districts created pursuant thereto. In all its essential terms, it is obvious that it pertains to a special purpose which is intended to meet a particular set of conditions and cirmcumstances. The fact that said decree generally applies to all water districts throughout the country does not change the fact that PD 198 is a special law. Accordingly, this Court's resolution in Metro Iloilo case declaring PD 198 as a general legislation is hereby abandoned. By "government-owned or controlled corporation with original charter," We mean government owned or controlled corporation created by a special law and not under the Corporation Code of the Philippines. Thus, in the case ofLumanta v. NLRC (G.R. No. 82819, February 8, 1989, 170 SCRA 79, 82), We held: The Court, in National Service Corporation (NASECO) v. National Labor Relations Commission, G.R. No 69870, promulgated on 29 November 1988, quoting extensively from the deliberations of 1986 Constitutional Commission in respect of the intent and meaning of the new phrase "with original character," in effect held that government-owned and controlled corporations with original charter refer to corporations chartered by special law as distinguished from corporations organized under our general incorporation statute the Corporations Code. In NASECO, the company involved had been organized under the general incorporation statute and was a sbusidiary of the National Investment Development Corporation (NIDC) which in turn was a subsidiary of the Philippine National Bank, a bank chartered by a special statute. Thus, government-owned or controlled corporations like NASECO are effectively, excluded from the scope of the Civil Service. (emphasis supplied)

From the foregoing pronouncement, it is clear that what has been excluded from the coverage of the CSC are those corporations created pursuant to the Corporation Code. Significantly, petitioners are not created under the said code, but on the contrary, they were created pursuant to a special law and are governed primarily by its provision. No consideration may thus be given to petitioners' contention that the operative act which created the water districts are the resolutions of the respective local sanggunians and that consequently, PD 198, as amended, cannot be considered as their charter. It is to be noted that PD 198, as amended is the source of authorization and power to form and maintain a district. Section 6 of said decree provides: Sec. 6. Formation of District. This Act is the source of authorization and power to form and maintain a district. Once formed, a district is subject to the provisions of this Act and not under the jurisdiction of any political subdivision, . . . . Moreover, it must be observed that PD 198, contains all the essential terms necessary to constitute a charter creating a juridical person. For example, Section 6(a) provides for the name that will be used by a water district, thus: Sec. 6. . . . To form a district, the legislative body of any city, municipality or province shall enact a resolution containing the following: a) The name of the local water district, which shall include the name of the city, municipality, or province, or region thereof, served by said system, followed by the words "Water District." It also prescribes for the numbers and qualifications of the members of the Board of Directors: Sec. 8. Number and Qualification. The Board of Directors of a district shall be composed of five citizens of the Philippines who are of voting age and residents within the district. One member shall be a representative of civic-oriented service clubs, one member of representative of professional associations, one member a representative of business, commercial or financial organizations, one member a representative of educational institutions and one member a representative of women's organization. No public official shall serve as director. Provided, however, that if the district has availed of the financial assistance of the Administration, the Administration may appoint any of its personnel to sit in the board of directors with all the rights and privileges appertaining to a regular member for such period as the indebtedness remains unpaid in which case the board shall be composed of six members; (as amended by PDs Nos. 768 and 1479).

the manner of their appointment and nominations; Sec. 9. Appointment. Board members shall be appointed by the appointing authority. Said appointments shall be made from a list of nominees, if any, submitted pursuant to Section 10. If no nominations are submitted, the appointing authority shall appoint any qualified person of the category to the vacant position; Sec.10. Nominations. On or before October 1 of each even numbered year, the secretary of the district shall contact each known organization, association, or institution being represented by the director whose term will expire on December 31 and solicit nominations from these organizations to fill the position for the ensuing term. One nomination may be submitted in writing by each such organization to the Secretary of the district on or before November 1 of such year: This list of nominees shall be transmitted by the Secretary of the district to the office of the appointing authority on or before November 15 of such year and he shall make his appointment from the list submitted on or before December 15. In the event the appointing authority fails to make his appointments on or before December 15, selection shall be made from said list of nominees by majority vote of the seated directors of the district constituting a quorum. Initial nominations for all five seats of the board shall be solicited by the legislative body or bodies at the time of adoption of the resolution forming the district. Thirty days thereafter, a list of nominees shall be submitted to the provincial governor in the event the resolution forming the district is by a provincial board, or the mayor of the city or municipality in the event the resolution forming the adoption of the district is by the city or municipal board of councilors, who shall select the initial directors therefrom within 15 days after receipt of such nominations; their terms of office: Sec. 11. Term of Office. Of the five initial directors of each newly formed district, two shall be appointed for a maximum term of two years, two for a maximum term of four years, and one for a maximum term of six years. Terms of office of all directors in a given district shall be such that the term of at least one director, but not more then two, shall expire on December 31 of each even-numbered year. Regular terms of office after the initial terms shall be for six years commencing on January 1 of odd-numbered years. Directors may be removed for cause only, subject to review and approval of the Administration; (as amended by PD 768). the manner of filling up vacancies: Sec. 12. Vacancies. In the event of a vacancy in the board of directors occurring more than six months before expiration of any director's term,

the remaining directors shall within 30 days, serve notice to or request the secretary of the district for nominations and within 30 days, thereafter a list of nominees shall be submitted to the appointing authority for his appointment of a replacement director from the list of nominees. In the absence of such nominations, the appointing authority shall make such appointment. If within 30 days after submission to him of a list of nominees the appointing authority fails to make an appointment, the vacancy shall be filled from such list by a majority vote of the remaining members of the Board of Directors constituting a quorum. Vacancies occurring within the last six months of an unexpired term shall also be filled by the Board in the above manner. The director thus appointed shall serve the unexpired term only; (as amended by PD 768). and the compensation and personal liability of the members of the Board of Directors: Sec. 13. Compensation. Each director shall receive a per diem, to be determined by the board, for each meeting of the board actually attended by him, but no director shag receive per diems in any given month in excess of the equivalent of the total per diems of four meetings in any given month. No director shall receive other compensation for services to the district. Any per diem in excess of P50.00 shall be subject to approval of the Administration (as amended by PD 768). Sec. 14. Personal Liability. No director may be held to be personally liable for any action of the district. Noteworthy, the above quoted provisions of PD 198, as amended, are similar to those which are actually contained in other corporate charters. The conclusion is inescapable that the said decree is in truth and in fact the charter of the different water districts for it clearly defines the latter's primary purpose and its basic organizational set-up. In other words, PD 198, as amended, is the very law which gives a water district juridical personality. While it is true that a resolution of a local sanggunian is still necessary for the final creation of a district, this Court is of the opinion that said resolution cannot be considered as its charter, the same being intended only to implement the provisions of said decree. In passing a resolution forming a water district, the local sanggunian is entrusted with no authority or discretion to grant a charter for the creation of a private corporation. It is merely given the authority for the formation of a water district, on a local option basis, to be exercised under and in pursuance of PD 198. More than the aforequoted provisions, what is of important interest in the case at bar is Section 3, par. (b) of the same decree which reads: Sec. 3(b). Appointing authority. The person empowered to appoint the members of the Board of Directors of a local water district, depending upon the geographic coverage and population make-up of the particular

district. In the event that more than seventy-five percent of the total active water service connections of a local water districts are within the boundary of any city or municipality, the appointing authority shall be the mayor of that city or municipality, as the case may be; otherwise, the appointing authority shall be the governor of the province within which the district is located: Provided, That if the existing waterworks system in the city or municipality established as a water district under this Decree is operated and managed by the province, initial appointment shall be extended by the governor of the province. Subsequent appointments shall be as specified herein. If portions of more than one province are included within the boundary of the district, and the appointing authority is to be the governors then the power to appoint shall rotate between the governors involved with the initial appointments made by the governor in whose province the greatest number of service connections exists (as amended by PD 768). The above-quoted section definitely sets to naught petitioners' contention that they are private corporations. It is clear therefrom that the power to appoint the members who will comprise the Board of Directors belongs to the local executives of the local subdivision units where such districts are located. In contrast, the members of the Board of Directors or trustees of a private corporation are elected from among the members and stockholders thereof. It would not be amiss to emphasize at this point that a private corporation is created for the private purpose, benefit, aim and end of its members or stockholders. Necessarily, said members or stockholders should be given a free hand to choose those who will compose the governing body of their corporation. But this is not the case here and this clearly indicates that petitioners are definitely not private corporations. The foregoing disquisition notwithstanding, We are, however, not unaware of the serious repercussion this may bring to the thousands of water districts' employees throughout the country who stand to be affected because they do not have the necessary civil service eligibilities. As these employees are equally protected by the constitutional guarantee to security of tenure, We find it necessary to rule for the protection of such right which cannot be impaired by a subsequent ruling of this Court. Thus, those employees who have already acquired their permanent employment status at the time of the promulgation of this decision cannot be removed by the mere reason that they lack the necessary civil service eligibilities. ACCORDINGLY, the petition is hereby DISMISSED. Petitioners are declared "governmentowned or controlled corporations with original charter" which fall under the jurisdiction of the public respondents CSC and COA. SO ORDERED. Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Paras, Padilla, Grio-Aquino, Regalado and Davide, Jr., JJ., concur.

Gutierrez, Jr., Feliciano and Sarmiento, JJ., are on leave. Separate Opinion BIDIN, J., dissenting: I regret I have to register my dissent in this case. I agree with the main ponencia that P.D. 198, as amended, authorizes the different local legislative bodies (Sanggunian) to form and create their respective water districts through a Resolution which they will pass subject to the guidelines, rules and regulations therein laid down. The issue, therefore, to be resolved is whether the local water districts so created are government-owned or controlled corporations with original charters embraced by the Civil Service as contemplated by Art. IXB, Sec. 2[1] of the 1987 Constitution. P.D. 198 is a general legislation which authorizes the formation of water districts. However, the operative act which creates a water district is not said decree but the resolution of the Sanggunian concerned forming and maintaining a local water district. Thus, Section 2 of P.D. 198, among others, provides: Sec. 2. Declaration of Policy . . . To encourage the formulation of such local water districts and the transfer thereto of existing water supply and waste water disposal facilities, this Decree provides by general act the authority for the formation thereof, on a local option basis. . . . (Emphasis supplied) Implementing the above policy, Title II of P.D. 198 provides: TITLE II. LOCAL WATER DISTRICT LAW CHAPTER I. Title Sec. 4. Title. The provisions of this Title shall be known and referred to as the "Local Water District Law." CHAPTER II. Purpose and Formation Sec. 5. Purpose. Local water districts may be formed pursuant to this Title for the purposes of (a) acquiring, installing, improving, maintaining and operating water supply and distribution systems for domestic, industrial, municipal and agricultural uses for residents and lands within the boundaries of such districts, (b) providing, maintaining and operating wastewater collection, treatment and disposal facilities, and (c) conducting such other functions and operations incidental to water resource development, utilization and disposal within such districts, as are necessary or incidental to said purpose.

Sec. 6. Formation of District. This Act is the source of authorization and power to form and maintain a district. For purposes of this Act, a district shall be considered as a quasi-public corporation performing public service and supplying public wants. As such, a district shall exercise the powers, rights and privileges given to private corporations under existing laws, in addition to the powers granted in, and subject to such restrictions imposed, under this Act. xxx xxx xxx Sec. 7. Filing of Resolution. A certifted copy of the resolution or resolutions forming a district shall be forwarded to the office of the Secretary of the Administration. If found by the Administration to conform to the requirements of Section 6 and the policy objectives in Section 2, the resolution shall be duly filed. The district shall be deemed duly formed and existing upon the date of such filing. A certified copy of said resolution showing the filing stamp of the Administration shall be maintained in the office of the district. Upon such filing, the local government or governments concerned shall lose ownership, supervision and control or any right whatsoever over the district except as provided herein. (Emphasis supplied) It is apparent that insofar as the formation of local water districts are concerned, P.D. 198 is not an original charter but a general act authorizing the formation of water districts on local option basis (Sec. 2, P.D. 198) similar to the Corporation Code. What is chartered, formed and created under P.D. 198 as a government corporation is the "Local Water Utilities Administration" attached to the Office of the President as follows: Sec. 49. Charter. There is hereby chartered, created and formed a government corporation to be known as the "Local Water Utilities Administration which is hereby attached to the Office of the President. The provisions of this title shall be and constitute the charter of the Administration. On the other hand, local water districts are formed by resolutions of the respective Provincial, City and Municipal councils (Sec. 7, P.D. 198) filed with the Local Water Utilities Administration, a government corporation chartered under Section 49, P.D. 198 and attached to the Office of the President. Consequently, without the requisite resolution of the Sanggunian concerned forming the water district having been filed with the Local Water Utility Administration, no water district is formed. What gives the water districts juridical personality is the resolution of the respective Sanggunian forming the district and filed with the Local Water Utilities Administration. Once formed, a water district is subject to the provisions of P.D. 198 and no longer under the jurisdiction of any political administration which shall thereafter lose ownership, supervision and control over the district (Sec. 7, PD 198).

In view of the foregoing, I vote to Grant the petition and to declare petitioners as quasipublic corporations performing public service without original charters and therefore not embraced by the Civil Service.

Separate Opinions BIDIN, J., dissenting: I regret I have to register my dissent in this case. I agree with the main ponencia that P.D. 198, as amended, authorizes the different local legislative bodies (Sanggunian) to form and create their respective water districts through a Resolution which they will pass subject to the guidelines, rules and regulations therein laid down. The issue, therefore, to be resolved is whether the local water districts so created are government-owned or controlled corporations with original charters embraced by the Civil Service as contemplated by Art. IXB, Sec. 2[1] of the 1987 Constitution. P.D. 198 is a general legislation which authorizes the formation of water districts. However, the operative act which creates a water district is not said decree but the resolution of the Sanggunian concerned forming and maintaining a local water district. Thus, Section 2 of P.D. 198, among others, provides: Sec. 2. Declaration of Policy . . . To encourage the formulation of such local water districts and the transfer thereto of existing water supply and waste water disposal facilities, this Decree provides by general act the authority for the formation thereof, on a local option basis. . . . (Emphasis supplied) Implementing the above policy, Title II of P.D. 198 provides: TITLE II. LOCAL WATER DISTRICT LAW CHAPTER I. Title Sec. 4. Title. The provisions of this Title shall be known and referred to as the "Local Water District Law." CHAPTER II. Purpose and Formation Sec. 5. Purpose. Local water districts may be formed pursuant to this Title for the purposes of (a) acquiring, installing, improving, maintaining and operating water supply and distribution systems for domestic, industrial, municipal and agricultural uses for residents and lands within the boundaries of such districts, (b) providing, maintaining and operating wastewater collection, treatment and disposal facilities, and (c) conducting such other functions and operations incidental to water

resource development, utilization and disposal within such districts, as are necessary or incidental to said purpose. Sec. 6. Formation of District. This Act is the source of authorization and power to form and maintain a district. For purposes of this Act, a district shall be considered as a quasi-public corporation performing public service and supplying public wants. As such, a district shall exercise the powers, rights and privileges given to private corporations under existing laws, in addition to the powers granted in, and subject to such restrictions imposed, under this Act. xxx xxx xxx Sec. 7. Filing of Resolution. A certifted copy of the resolution or resolutions forming a district shall be forwarded to the office of the Secretary of the Administration. If found by the Administration to conform to the requirements of Section 6 and the policy objectives in Section 2, the resolution shall be duly filed. The district shall be deemed duly formed and existing upon the date of such filing. A certified copy of said resolution showing the filing stamp of the Administration shall be maintained in the office of the district. Upon such filing, the local government or governments concerned shall lose ownership, supervision and control or any right whatsoever over the district except as provided herein. (Emphasis supplied) It is apparent that insofar as the formation of local water districts are concerned, P.D. 198 is not an original charter but a general act authorizing the formation of water districts on local option basis (Sec. 2, P.D. 198) similar to the Corporation Code. What is chartered, formed and created under P.D. 198 as a government corporation is the "Local Water Utilities Administration" attached to the Office of the President as follows: Sec. 49. Charter. There is hereby chartered, created and formed a government corporation to be known as the "Local Water Utilities Administration which is hereby attached to the Office of the President. The provisions of this title shall be and constitute the charter of the Administration. On the other hand, local water districts are formed by resolutions of the respective Provincial, City and Municipal councils (Sec. 7, P.D. 198) filed with the Local Water Utilities Administration, a government corporation chartered under Section 49, P.D. 198 and attached to the Office of the President. Consequently, without the requisite resolution of the Sanggunian concerned forming the water district having been filed with the Local Water Utility Administration, no water district is formed. What gives the water districts juridical personality is the resolution of the respective Sanggunian forming the district and filed with the Local Water Utilities Administration. Once formed, a water district is subject to the provisions of P.D. 198 and no longer under the jurisdiction of any political administration

which shall thereafter lose ownership, supervision and control over the district (Sec. 7, PD 198). In view of the foregoing, I vote to Grant the petition and to declare petitioners as quasipublic corporations performing public service without original charters and therefore not embraced by the Civil Service.

G.R. No. 85611 April 6, 1990 VICTORIANO ZAMORAS, petitioner, vs. ROQUE SU, JR., ANITA SU HORTELLANO and NATIONAL LABOR RELATIONS COMMISSION, respondents. Paulo V. Briones for petitioner. Pacifico C. Cimafranca for private respondents.

GRIO-AQUINO, J.: The issue in this petition is whether, upon the established facts, the petitioner was an employee or tenant of the private respondents. The petitioner, Victoriano Zamoras, was hired by the respondent, Roque Su, Jr., in 1957 as overseer of his coconut land in Asenario, Dapitan City. Zamoras was charged with the task of having the land titled in Su's name, and of assigning portions to be worked by tenants, supervising the cleaning, planting, care and cultivation of the land, the harvesting of coconuts and selling of the copra. As compensation, Su paid Zamoras a salary of P2,400 per month plus one-third (1/3) of the proceeds of the sales of copra which normally occurred every two months. Another one-third of the proceeds went to the tenants and the other third to Su. This system of sharing was regularly observed up to September, 1981. As the coconut plantation yielded an average harvest of 21,000 nuts worth P18,900, based on the current market price of P3 per kilo, Zamoras' share amounted to P6,300 every two months. In May, 1981, Su informed Zamoras in writing that he obtained a loan from the other respondent, Anita Su Hortellano, and that he authorized her to harvest the coconuts from his property "while the loan was outstanding" (p. 8, Rollo). Su sent Zamoras a letter dated May 29, 1981 informing him that he was being laid-off temporarily until Su could obtain a loan from the Development Bank of the Philippines with which to pay Anita. However, Zamoras was not allowed anymore to work as overseer of the plantation. Without his knowledge and consent, Hortellano harvested the coconuts without giving him his one-third share of the copra sales. On August 8, 1983, Zamoras filed in the Regional Arbitration Branch of the Ministry of Labor and Employment in Zamboanga City a complaint against Roque Su, Jr. and Anita Su Hortellano for illegal termination and breach of contract with damages of not less than P75,600 as his uncollected share of the copra sales from September 15, 1981 to August 1983. The officer-in-charge of the NLRC Sub-Regional Office in Dipolog City who investigated the case submitted the following findings which were adopted by the Labor Arbiter

The record would show that the respondent, Atty. Roque Su, Jr., is a resident of 976-A Gerardo Avenue Extension, Lahug, Cebu City and at the same time an employee in the government up to the present, while the land wherein the complainant herein was employed by the respondent as overseer of the land since 1957 up to and until his termination from the service sometime in September 1981 without just cause or causes duly authorized by law and after due process. That to prove that complainant was the overseer of the land owned by the respondent are the sworn declaration of the three witnesses, namely: Vicente Amor, Narcisa Arocha, and Wilfredo Bernaldes who are presently working as tenants of the respondent. That the three witnesses testified that they knew the complainant personally who has been working as overseer of the land because it was through him, the complainant, that they were allowed to work and/or occupy the land as tenants ever since up to the present. In fact, they further declared that they do not know personally the owner of the land and besides, they have not seen personally the said owner as their dealing were directly done thru the complainant. That they always received their share of the produce from the complainant for every two months up to 1981. xxx xxx xxx It is very clear in the evidence of record that complainant was an employee of the respondent. This fact is even admitted by the respondent in his answer by way of controverting the claim of the complainant. (pp. 44-45, Rollo.) On July 30, 1986, the Labor Arbiter rendered a decision holding that Zamoras, as overseer of the respondent's plantation, was a regular employee whose services were necessary and desirable to the usual trade or business of his employer. The Labor Arbiter held that the dismissal of Zamoras was without just cause, hence, illegal. The private respondents were ordered to reinstate him to his former position as overseer of the plantation and to pay him backwages equivalent to P31,975.83 in the event that he opted not to be reinstated or that his reinstatement was not feasible. The private respondents appealed to the National Labor Relations Commission, alleging that the Labor Arbiter erred: 1. in disregarding respondents' evidence (a financial report showing the yearly copra sales from 1973 to 1977), proving that complainant's one-third share of the copra sales amounted to P5,985.16 only and not P6,300 per harvest; 2. in not holding that the complainant can no longer be reinstated for he is already dead; and 3. in not finding that no employer-employee relationship existed between the parties.

On September 16, 1988, the NLRC rendered a decision reversing the Labor Arbiter. It held that "the right to control test used in determining the existence of an employer-employee relationship is unavailing in the instant case and that what exists between the parties is a landlord-tenant relationship" (p. 32, Rollo), because such functions as introducing permanent improvements on the land, assigning portions to tenants, supervising the cleaning, planting, care and cultivation of the plants, and deciding where and to whom to sell the copra are attributes of a landlord-tenant relationship, hence, jurisdiction over the case rests with the Court of Agrarian Relations. Zamoras filed this petition, assailing the NLRC's decision. There is merit in the petition. The NLRC's conclusion that a landlord-tenant relationship existed between Su and Zamoras is not supported by the evidence which shows that Zamoras was hired by Su not as a tenant but as overseer of his coconut plantation. As overseer, Zamoras hired the tenants and assigned their respective portions which they cultivated under Zamoras' supervision. The tenants dealt directly with Zamoras and received their one-third share of the copra produce from him. The evidence also shows that Zamoras, aside from doing administrative work for Su, regularly managed the sale of copra processed by the tenants. There is no evidence that Zamoras cultivated any portion of Su's land personally or with the aid of his immediate farm household. In fact the respondents never raised the issue of tenancy in their answer. Under Section 5 (a) of R.A. No. 1199, a tenant is "a person who by himself, or with the aid available from within his immediate household, cultivates the land belonging to or possessed by another, with the latter's consent for purposes of production, sharing the produce with the landholder or for a price certain or ascertainable in produce or in money or both, under the leasehold tenancy system" (Matienzo vs. Servidad, 107 SCRA 276). Agricultural tenancy is defined as "the physical possession by a person of land devoted to agriculture, belonging to or legally possessed by another for the purpose of production through the labor of the former and of the members of his immediate farm household in consideration of which the former agrees to share the harvest with the latter or to pay a price certain or ascertainable, whether in produce or in money, or both" (Sec. 3, R.A. No. 1199; 50 O.G. 4655-56; Miguel Carag vs. CA, et al., 151 SCRA 44). The essential requisites of a tenancy relationship are: (1) the parties are the landholder and the tenant; (2) the subject is the agricultural holding; (3) there is consent between the parties; (4) the purpose is agricultural production; (5) there is personal cultivation by the tenant; and (6) there is a sharing of harvests between landlord and tenant (Antonio Castro vs. CA and De la Cruz, G.R. L-34613, January 26, 1989; Tiongson vs. CA, 130 SCRA 482; Guerrero vs. CA, 142 SCRA 138). The element of personal cultivation of the land, or with the aid of his farm household, essential in establishing a landlord-tenant or a lessor-lessee relationship, is absent in the relationship between Su and Zamoras (Co vs. IAC, 162 SCRA 390; Graza vs. CA, 163 SCRA 39), for Zamoras did not cultivate any part of Su's plantation either by himself or with the help of his household.

On the other hand, the following circumstances are indicative of an employer-employee relationship between them: 1. Zamoras was selected and hired by Su as overseer of the coconut plantation. 2. His duties were specified by Su. 3. Su controlled and supervised the performance of his duties. He determined to whom Zamoras should sell the copra produced from the plantation. 4. Su paid Zamoras a salary of P2,400 per month plus one-third of the copra sales every two months as compensation for managing the plantation. Since Zamoras was an employee, not a tenant of Su, it is the NLRC, not the Court of Agrarian Relations, that has jurisdiction to try and decide Zamora's complaint for illegal dismissal (Art. 217, Labor Code; Manila Mandarin Employees Union vs. NLRC, 154 SCRA 368; Jacqueline Industries Dunhill Bags Industries, et al. vs. NLRC, et al., 69 SCRA 242). WHEREFORE, the assailed decision is reversed and a new one is entered, declaring Zamoras to be an employee of respondent Roque Su, Jr. and that his dismissal was illegal and without lawful cause. He is entitled to reinstatement with backwages, but because he is dead and may no longer be reinstated, the private respondents are ordered to pay to his heirs the backwages due him, as well as his share of the copra sales from the plantation for a period of three (3) years from his illegal dismissal in September, 1981, plus separation pay in lieu of reinstatement. Costs against the private respondents. SO ORDERED. Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.

G.R. No. 79762 January 24, 1991 FORTUNE CEMENT CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (First Division) and ANTONIO M. LAGDAMEO, respondents. De Leon, Diokno & Associates Law Offices for petitioner. Romarie G. Villonco and George C. Nograles for private respondent.

The Labor Arbiter granted the motion to dismiss (p. 22, Rollo). On appeal, however, the NLRC set aside the Labor Arbiter's order and remanded the case to the Arbitration Branch "for appropriate proceedings" (NLRC Resolution dated April 30, 1987). The NLRC denied FCC's motion for reconsideration (p. 5, Rollo). Dissatisfied, FCC filed this petition for certiorari. We find merit in the petition. The sole issue to be resolved is whether or not the NLRC has jurisdiction over a complaint filed by a corporate executive vice-president for illegal dismissal, resulting from a board resolution dismissing him as such officer. Section 5 of Presidential Decree No. 902-A vests in the SEC original and exclusive jurisdiction over this controversy:

GRIO-AQUINO, J.:p This is a petition for certiorari with prayer to annul the resolution dated May 29, 1987 of respondent National Labor Relations Commission (NLRC) reversing the order dated December 3, 1985 of the Labor Arbiter which dismissed private respondent Antonio M. Lagdameo's (Lagdameo for brevity) complaint for Illegal Dismissal (NLRC NCR Case No. 1-22885) against petitioner Fortune Cement Corporation (FCC for brevity) for lack of jurisdiction. Lagdameo is a registered stockholder of FCC. On October 14, 1975, at the FCC Board of Directors' regular monthly meeting, he was elected Executive Vice-President of FCC effective November 1, 1975 (p. 3, Rollo). Some eight (8) years later, or on February 10, 1983, during a regular meeting, the FCC Board resolved that all of its incumbent corporate officers, including Lagdameo, would be "deemed" retained in their respective positions without necessity of yearly reappointments, unless they resigned or were terminated by the Board (p. 4, Rollo). At subsequent regular meetings held on June 14 and 21, 1983, the FCC Board approved and adopted a resolution dismissing Lagdameo as Executive Vice-President of the company, effective immediately, for loss of trust and confidence (p. 4, Rollo). On June 21, 1983, Lagdameo filed with the National Labor Relations Commission (NLRC), National Capital Region, a complaint for illegal dismissal against FCC (NLRC-NCR Case No. 1228-85) alleging that his dismissal was done without a formal hearing and investigation and, therefore, without due process (p. 63, Rollo). On August 5, 1985, FCC moved to dismiss Lagdameo's complaint on the ground that his dismiss as a corporate officer is a purely intra-corporate controversy over which the Securities and Exchange Commission (SEC) has original and exclusive jurisdiction.

Sec. 5. 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, it shall have original and exclusive jurisdiction to hear and decide cases involving: a) Devices and schemes employed by or any acts, of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or stockholders, partners, members of associations or organization registered with the Commission; b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity; c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnership or associations." (Section 5, P.D. 902-A; Emphasis supplied.) In reversing the decision of Labor Arbiter Porfirio E. Villanueva, respondent NLRC held: . . . . It is not disputed that complainant Lagdameo was an employee of respondent Fortune Cement Corporation, being then the Executive VicePresident. For having been dismissed for alleged loss of trust and confidence, complainant questioned his dismissal on such ground and the manner in which he was dismissed, claiming that no investigation was conducted, hence, there was and is denial of due process. Predicated on the above facts, it is clear to Us that a labor dispute had arisen between

the appellant and the respondent corporation, a dispute which falls within the original and exclusive jurisdiction of the NLRC. A labor dispute as defined in the Labor Code includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment regardless of whether or not the disputants stand in the proximate relations of employers and employees." (pp. 16-17, Rollo). The Solicitor General, declining to defend public respondent in its pleading entitled "Manifestation in Lieu of Comment," aptly observed: The position of "Executive Vice-President," from which private respondent Lagdameo claims to have been illegally dismissed, is an elective corporate office. He himself acquired that position through election by the corporation's Board of Directors, although he also lost the same as a consequence of the latter's resolution. Indeed the election, appointment and/or removal of an executive vicepresident is a prerogative vested upon a corporate board. And it must be, not only because it is a practice observed in petitioner Fortune Cement Corporation, but more so, because of an express mandate of law. (p. 65, Rollo.) The Solicitor General pointed out that "a corporate officer's dismissal is always a corporate act and/or intra-corporate controversy and that nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action." The dispute between petitioner and Lagdameo is of the class described in Section 5, par. (c) of Presidential Decree No. 902-A, hence, within the original and exclusive jurisdiction of the SEC. The Solicitor General recommended that the petition be granted and NLRC-NCR Case No. 1-228-85 be dismissed by respondent NLRC for lack of jurisdiction (p. 95, Rollo). In PSBA vs. Leao (127 SCRA 778), this Court, confronted with a similar controversy, ruled that the SEC, not the NLRC, has jurisdiction: This is not a case of dismissal. The situation is that of a corporate office having been declared vacant, and of Tan's not having been elected thereafter. The matter of whom to elect is a prerogative that belongs to the Board, and involves the exercise of deliberate choice and the faculty of discriminative selection. Generally speaking, the relationship of a person to a corporation, whether as officer or as agent or employee is not determined by the nature of the services performed, but by the incidents of the relationship as they actually exist.

Lagdameo claims that his dismissal was wrongful, illegal, and arbitrary, because the "irregularities" charged against him were not investigated (p. 85, Rollo); that the case of PSBA vs. Leao (supra) cited by the Labor Arbiter finds no application to his case because it is not a matter of corporate office having been declared vacant but one where a corporate officer was dismissed without legal and factual basis and without due process; that the power of dismissal should not be confused with the manner of exercising the same; that even a corporate officer enjoys security of tenure regardless of his rank (p. 97, Rollo); and that the SEC is without power to grant the reliefs prayed for in his complaint (p. 106, Rollo). The issue of the SEC's power or jurisdiction is decisive and renders unnecessary a consideration of the other questions raised by Lagdameo. Thus did this Court rule in the case of Dy vs. National Labor Relations Commission (145 SCRA 211) which involved a similar situation: It is of no moment that Vailoces, in his amended complaint, seeks other reliefs which would seemingly fall under the jurisdiction of the Labor Arbiter, because a closer look at these underpayment of salary and non-payment of living allowance shows that they are actually part of the perquisites of his elective position, hence, intimately linked with his relations with the corporation. The question of remuneration, involving as it does, a person who is not a mere employee but a stockholder and officer, an integral part, it might be said, of the corporation, is not a simple labor problem but a matter that comes within the area of corporate affairs and management, and is in fact a corporate controversy in contemplation of the Corporation Code. (Emphasis ours.) WHEREFORE, the questioned Resolution of the NLRC reversing the decision of the Labor Arbiter, having been rendered without jurisdiction, is hereby reversed and set aside. The decision of the Labor Arbiter dated December 3, 1985 dismissing NLRC-NCR Case No. 1-22885 is affirmed, without prejudice to private respondent Antonio M. Lagdameo's seeking recourse in the appropriate forum. No costs. SO ORDERED. Narvasa, Gancayco and Medialdea, JJ., concur. Cruz, J., took no part.

G.R. No. 82631 February 23, 1995 SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and YONG CHAN KIM, respondents.

On February 14, 1992, this Court, in Southeast Asian Fisheries Development CenterAquaculture Department v.National Labor Relations Commission, 206 SCRA 283 (1992) held that NLRC had no jurisdiction over petitioner, the latter being "an international agency beyond the jurisdiction of the courts or local agencies of the Philippine Government." By reason of this Court's pronouncement in the aforementioned case, petitioner filed a supplemental petition on May 16, 1992, raising the issue of lack of jurisdiction on the part of NLRC to hear and decide the case.

QUIASON, J.: This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse and set aside the Decision and Resolution of the National Labor Relations Commission, (NLRC) dated August 20, 1987 and February 15, 1988 respectively, in RAB Case No. 0093-83. We grant the petition. On June 10, 1983, private respondent Yong Chan Kim (Yong) filed a complaint for illegal dismissal against petitioner Southeast Asian Fisheries Development Center (SEAFDEC). On June 16, 1986, the Labor Arbiter rendered a decision ordering petitioner ". . . to reinstate complainant [respondent Yong] to his former position . . . with full back wages . . . and to pay complainant moral damages in the amount of P50,000.00 (Rollo, p. 65). Petitioner appealed the decision to the NLRC. Respondent Yong likewise filed a partial appeal wherein he sought to increase the award of moral damages to P200, 000.00. On August 20, 1987, NLRC affirmed the decision of the Labor Arbiter but increased the moral damages to P200,000.00, added P50,000.00 as exemplary damages and awarded ten percent of the total monetary awards as attorney's fees (Rollo, p. 84). The motion for reconsideration was denied by NLRC in its Resolution dated February 15, 1988, which prompted petitioner to elevate the matter to this Court through a petition for review on certiorari. (Rollo, pp. 119-153). On May 9, 1988, petitioner filed an urgent motion for the issuance of an order restraining NLRC from issuing a writ of execution in connection with its August 20, 1987 Decision. In a resolution dated May 12, 1988, this Court, without giving due course to the petition, issued a temporary restraining order. On July 12, 1989, we resolved to give due course to the petition and required the parties to submit their respective memoranda.

In opposition to the supplemental petition, private respondent Yong argued that petitioner was precluded from raising the issue of jurisdiction in view of the latter's failure to do so before the Labor Arbiter or even before the Commission. In support of his argument, he invoked the doctrine of estoppel in Tijam v. Sibonghanoy, 23 SCRA 29 (1968), which justified the departure from the accepted concept of non-waivability of objection to jurisdiction. The Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) was established by the Government of Burma, the Kingdom of Cambodia, the Republic of Indonesia, Japan, the Kingdom of Laos, Malaysia, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand and the Republic of Vietnam. The Philippines was a signatory to the Agreement establishing SEAFDEC (Lacanilao v. de Leon, 147 SCRA 286 [1987]). The purpose of establishing said international organization is to contribute to the promotion of the fisheries development in Southeast Asia by mutual co-operation among the member governments of the Center, and governments external to the Center (Agreement Establishing the SEAFDEC, Art. 1). In Southeast Asian Fisheries Development Center-Aquaculture Department v. Danilo Acosta, Resolution, 226 SCRA 49 (1993), we reiterated our rulings in Southeast Asia Center, supra, and Lacanilao v. de Leon, 147 SCRA 286 (1987) that SEAFDEC, as an international agency, enjoys diplomatic immunity. In Opinion No. 139, Series of 1984, the Minister of Justice explained the concept of the immunity of international organizations from the jurisdiction of local courts, thus: 4. One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals of the court where it is found. (See Jenks; Id., pp. 37-44) The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in their operations or even influence or control its policies and decisions of the organization; besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially, on behalf of its member-states. In the case at bar, for instance, the entertainment by the National Labor Relations Commission of Mr. Madamba's reinstatement cases would amount to interference by

the Philippine Government in the management decisions of the SEARCA governing board; even worse, it could compromise the desired impartiality of the organization since it will have to suit its actuations to the requirements of Philippine law, which may not necessarily coincide with the interests of the other member-states. It is precisely to forestall these possibilities that in cases where the extent of the immunity is specified in the enabling instruments of international organizations, (jurisdictional immunity, is specified in the enabling instruments of international organizations) jurisdictional immunity from the host country is invariably among the first accorded. (See Jenks, Id; See Bowett. The Law of International Institutions, pp. 284-285). Private respondent Yong's invocation of estoppel is unavailing. The issue of estoppel on the part of petitioner to timely raise the question of jurisdiction has been squarely passed upon in Southeast Asian Fisheries Development Center-Aquaculture Department v. National Labor Relations Commission, 206 SCRA 283 (1992). In said case, we reiterated the general rule that estoppel does not apply to confer jurisdiction to a tribunal that has none over a cause of action. As we explained in, Calimlim v. Ramirez, 118 SCRA 399 (1982), there were exceptional circumstances involved in the Tijam case which justified the exception to the general rule enunciated therein. In the Tijam case, a complaint for the collection of P1,908.00 was filed on July 19, 1948 in the Court of First Instance of Cebu when under the Judiciary Act of 1948, it was the Municipal Court that had jurisdiction thereof. It was only in 1963 or long after the decision of the trial court had become final and executory that a motion to dismiss the complaint was filed. At any rate, we rule that the Tijam case applies only to ordinary litigants and not to parties which enjoy sovereign or diplomatic immunity. With respect to foreign states and international organizations, the immunity from suit or the jurisdiction of local courts can only be waived expressly by said entities and not by the employees or agents (Salonga and Yap, Public International Law 114-115 [5th ed.]; Akehurst, A Modern Introduction to International Law 118 [5th ed.]). WHEREFORE, the petition is GRANTED. The restraining order is made PERMANENT. SO ORDERED. Padilla, Davide, Jr., Bellosillo and Kapunan, JJ., concur.

G.R. No. 80767 April 22, 1991 BOY SCOUTS OF THE PHILIPPINES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, FORTUNATO ESGUERRA, ROBERTO MALABORBOR, ESTANISLAO MISA, VICENTE EVANGELISTA, and MARCELINO GARCIA, respondents. Julio O. Lopez for petitioner.

On 21 November 1984 (or the day immediately following the date of scheduled transfer), the BSP Camp Manager in Makiling issued a Memorandum requiring the five (5) private respondents to explain why they should not be charged administratively for insubordination. The Memorandum was a direct result of the refusal by private respondents, two (2) days earlier, to accept from petitioner BSP their respective boat tickets to Davao del Norte and their relocation allowances. Meanwhile, in a letter of the same date, the BSP National President informed private respondents that their refusal to comply with the Special Orders was not sufficiently justified and constituted rank disobedience. Memoranda subsequently issued by the BSP SecretaryGeneral stressed that such refusal as well as the explanations proffered therefor, were unacceptable and could altogether result in termination of employment with petitioner BSP. These warnings notwithstanding, private respondents continued pertinaciously to disobey the disputed transfer orders.

FELICIANO, J.:p This Petition for Certiorari is directed at (1) the Decision, dated 27 February 1987, and (2) 2 the Resolution dated 16 October 1987, both issued by the National Labor Relations Commission ("NLRC") in Case No. 1637-84. Private respondents Fortunato C. Esquerra, Roberto O. Malaborbor, Estanislao M. Misa, Vicente N. Evangelista and Marcelino P. Garcia, had all been rank-and-file employees of petitioner Boy Scouts of the Philippines ("BSP"). At the time of termination of their services in February 1985, private respondents were stationed at the BSP Camp in Makiling, Los Baos, Laguna. The events which led to such termination of services are as follows: On 19 October 1984, the Secretary-General of petitioner BSP issued Special Orders Nos. 80, 81, 83, 84 and 85 addressed separately to the five (5) private respondents, informing them that on 20 November 1984, they were to be transferred from the BSP Camp in Makiling to the BSP Land Grant in Asuncion, Davao del Norte. These Orders were opposed by private respondents who, on 4 November 1984, appealed the matter to the BSP National President. On 6 November 1984, petitioner BSP conducted a pre-transfer briefing at its National Headquarters in Manila. Private respondents were in attendance during the briefing and they were there assured that their transfer to Davao del Norte would not involve any diminution in salary, and that each of them would receive a relocation allowance equivalent to one (1) month's basic pay. This assurance, however, failed to persuade private respondents to abandon their opposition to the transfer orders issued by the BSP Secretary-General. On 13 November 1984, a complaint (docketed as NLRC Case No. 16-84J) for illegal transfer was filed with the then Ministry of Labor and Employment, Sub-Regional Arbitration Branch IV, San Pablo City, Laguna. Private respondents there sought to enjoin implementation of Special Orders Nos. 80, 81, 83, 84 and 85, alleging, among other things, that said orders were "indubitable and irrefutable action[s] prejudicial not only to [them] but to [their] families and [would] seriously affect [their] economic stability and solvency considering the present cost of living."
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Petitioner BSP consequently imposed a five-day suspension on the five (5) private respondents, in the latter part of January 1985. Subsequently, by Special Order dated 12 February 1985 issued by the BSP Secretary-General, private respondents' services were ordered terminated effective 15 February 1985. On 22 February 1985, private respondents amended their original complaint to include 4 charges of illegal dismissal and unfair labor practice against petitioner BSP. The Labor Arbiter thereafter proceeded to hear the complaint. In a decision dated 31 July 1985, the Labor Arbiter ordered the dismissal of private respondents' complaint for lack of merit. On 27 February 1987, however, the ruling of the Labor Arbiter was reversed by public respondent, NLRC, which held that private respondents had been illegally dismissed by petitioner BSP. The dispositive portion of the NLRC decision read: WHEREFORE, premises considered the Decision appealed from is hereby SET ASIDE and a new one entered ordering the respondent-appellee [petitioner BSP] to reinstate the complainants-appellants [private respondents] to their former positions without loss of seniority rights and other benefits appurtenant thereto and with full backwages from the time they were illegally dismissed from the service up to the date of their actual reinstatement. SO ORDERED. The Court notes at the outset that in the Position Paper filed by petitioner BSP with the Labor Arbiter, it was alleged in the second paragraph thereof, that petitioner is a "civic service, non-stock and non-profit organization, relying mostly [on] government and public support, existing under and by virtue of Commonwealth Act No. 111, as amended, by Presidential Decree No. 460 . . . " A similar allegation was contained in the Brief for
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Appellee and in the Petition and Memorandum filed by petitioner BSP with public respondent NLRC and this Court, respectively. The same allegation, moreover, appeared in 10 the Comment (also treated as the Memorandum) submitted to this Court by the Solicitor General on behalf of public respondent NLRC; for their part, private respondents stated in 11 their Appeal Memorandum with the NLRC that petitioner BSP is "by mandate of law a 12 Public Corporation," a statement reiterated by them in their Memorandum before this Court. In a Resolution dated 9 August 1989, this Court required the parties and the Office of the Government Corporate Counsel to file a comment on the question of whether or not petitioner BSP is in fact a government-owned or controlled corporation. Petitioner, private respondents, the Office of the Solicitor General and the Office of the Government Corporate Counsel filed their respective comments. The central issue is whether or not the BSP is embraced within the Civil Service as that term is defined in Article IX (B) (2) (1) of the 1987 Constitution which reads as follows: The Civil Service embraces all branches, subdivisions, instrumentality mentalities and agencies of the Government, including governmentowned or controlled corporations with original charters. xxx xxx xxx The answer to the central issue will determine whether or not private respondent NLRC had jurisdiction to render the Decision and Resolution which are here sought to be nullified. The responses of the parties, on the one hand, and of the Office of the Solicitor General and the Office of the Government Corporate Counsel, upon the other hand, in compliance with the Resolution of this Court of 9 August 1989, present a noteworthy uniformity. Petitioner BSP and private respondents submit substantially the same view "that the BSP is a purely private organization". In contrast, the Solicitor General and the Government Corporate Counsel take much the same position, that is, that the BSP is a "public corporation' or a "quasi-public corporation" and, as well, a "government controlled corporation." Petitioner BSP's compliance with our Resolution invokes the following provisions of its Constitution and By-laws: The Boy Scouts of the Philippines declares that it is an independent, voluntary, non-political, non-sectarian and non-governmental organization, with obligations towards nation building and with international orientation. The BSP, petitioner stresses, does not receive any monetary or financial subsidy 13 from the Government whether on the national or local level. Petitioner declares that it is a "purely private organization" directed and controlled by its National

Executive Board the members of which are, it is said, all "voluntary scouters," 14 including seven (7) Cabinet Secretaries. Private respondents submitted a supplementary memorandum arguing that while petitioner BSP was created as a public corporation, it had lost that status when Section 2 of Commonwealth Act No. 111 as amended by P.D. No. 460 conferred upon it the powers which ordinary private corporations organized under the Corporation Code have: Sec. 2. The said corporation shall have perpetual succession with power to sue and be sued; to hold such real and personal estate as shall be necessary for corporate purposes, and to receive real and personal property by gift, devise, or bequest; to adopt a seal, and to alter or destroy the same at pleasure; to have offices and conduct its business and affairs in the City of Manila and in the several provinces; to make and adopt by-laws, rules and regulations not inconsistent with the laws of the Philippines, and generally to do all such acts and things (including the establishment of regulations for the election of associates and successors: as may be necessary to carry into effect the provisions of the Act and promote the purposes of said corporation. Private respondents also point out that the BSP is registered as a private employer with the Social Security System and that all its staff members and employees are covered by the Social Security Act, indicating that the BSP had lost its personality or standing as a public corporation. It is further alleged that the BSP's assets and liabilities, official transactions and financial statements have never been subjected to audit by the government auditing office, i.e., the Commission on Audit, being audited rather by the private auditing firm of Sycip Gorres Velayo and Co. Private respondents finally state that the appointments of BSP officers and staff were not approved or confirmed by the Civil Service Commission. The views of the Office of the Solicitor General and the Office of the Government Corporate Counsel on the above issue appeared to be generally similar. The Solicitor General's Office, although it had appeared for the NLRC and filed a Comment on the latter's behalf on the merits of the Petition for Certiorari, submitted that the BSP is a government-owned or controlled corporation, having been created by virtue of Commonwealth Act No. 111 entitled "An Act to Create a Public Corporation to be known as the Boy Scouts of the Philippines and to Define its Powers and Purposes." The Solicitor General stressed that the BSP was created in order to "promote, through organization, and cooperation with other agencies the ability of boys to do things for themselves and others, to train them in scoutcraft, and to teach them patriotism, courage, self-reliance, and kindred virtues, using the methods which are 5 now in common use by boy scouts." He further noted that the BSP's objectives and purposes are "solely of a benevolent character and not for pecuniary profit by its 16 members. The Solicitor General also underscored the extent of government participation in the BSP under its charter as reflected in the composition of its governing body: The governing body of the said corporation shall consist of a National Executive Board composed of (a) thePresident of the Philippines or his

representative; (b) the charter and life members of the Boy Scouts of the Philippines; (c) the Chairman of the Board of Trustees of the Philippine Scouting Foundation; (d) the Regional Chairman of the Scout Regions of the Philippines; (e) the Secretary of Education and Culture, the Secretary of Social Welfare, the Secretary of National Defense, the Secretary of Labor, the Secretary of Finance, the Secretary of Youth and Sports, and the Secretary of local Government and Community Development; (f) an equal number of individuals from the private sector; (g) the National President of the Girl Scouts of the Philippines; (h) one Scout of Senior age from each Scout Region to represent the boy membership; and (i) three representatives of the cultural minorities. Except for the Regional Chairman who shall be elected by the Regional Scout Councils during their annual meetings, and the Scouts of their respective regions, all members of the National Executive Board shall be either by appointment or cooption, subject to ratification and confirmation by the Chief Scout, 17 who shall be the Head of State. . . . (Emphasis supplied) The Government Corporate Counsel, like the Solicitor General, describes the BSP as a "public corporation" but, unlike the Solicitor General, suggests that the BSP is more of a "quasi corporation" than a "public corporation." The BSP, unlike most public corporations which are created for a political purpose, is not vested with political or governmental powers to be exercised for the public good or public welfare in connection with the administration of civil government. The Government Corporate Counsel submits, more specifically, that the BSP falls within the ambit of the term "government-owned or controlled corporation" as defined in Section 2 of P.D. No. 2029 (approved on 4 February 1986) which reads as follows: A government-owned or controlled corporation is a stock or a non-stock corporation, whether performing governmental or proprietary functions, which is directly chartered by special law or if organized under the general corporation law is owned or controlled by the government directly, or indirectly through a parent corporation or subsidiary corporation, to the extent of at least a majority of its outstanding capital stock or its outstanding voting capital stock. xxx xxx xxx (Emphasis supplied) Examining the relevant statutory provisions and the arguments outlined above, the Court considers that the following need to be considered in arriving at the appropriate legal characterization of the BSP for purposes of determining whether its officials and staff members are embraced in the Civil Service. Firstly, BSP's functions as set out in its statutory charter do have a public aspect. BSP's functions do relate to the fostering of the public virtues of citizenship and patriotism and the general improvement of the moral spirit and fiber of our youth. The social value of activities like those to which the BSP dedicates itself by statutory mandate have in fact, been accorded constitutional recognition. Article II of the 1987 Constitution includes in the "Declaration of Principles and State Policies," the following:

Sec. 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. At the same time, BSP's sanctions do not relate to the governance of any part of territory of the Philippines; BSP is not a public corporation in the same sense that municipal corporations or local governments are public corporations. BSP's functions can not also be described as proprietary functions in the same sense that the functions or activities of government-owned or controlled corporations like the National Development Company or the National Steel Corporation can be described as proprietary or "business-like" in character. Nevertheless, the public character of BSP's functions and activities must be conceded, for they pertain to the educational, civic and social development of the youth which constitutes a very substantial and important part of the nation. The second aspect that the Court must take into account relates to the governance of the BSP. The composition of the National Executive Board of the BSP includes, as noted from Section 5 of its charter quoted earlier, includes seven (7) Secretaries of Executive Departments. The seven (7) Secretaries (now six [6] in view of the abolition of the Department of Youth and Sports and merger thereof into the Department of Education, Culture and Sports) by themselves do not constitute a majority of the members of the National Executive Board. We must note at the same time that the appointments of members of the National Executive Board, except only the appointments of the Regional Chairman and Scouts of Senior age from the various Scout Regions, are subject to ratification and confirmation by the Chief Scout, who is the President of the Philippines. Vacancies to the Board are filled by a majority vote of the remaining members thereof, but again subject to 18 ratification and confirmation by the Chief Scout. We must assume that such confirmation or ratification involves the exercise of choice or discretion on the part of ratifying or confirming power. It does appears therefore that there is substantial governmental (i.e., Presidential) participation or intervention in the choice of the majority of the members of the National Executive Board of the BSP. The third aspect relates to the character of the assets and funds of the BSP. The original assets of the BSP were acquired by purchase or gift or other equitable arrangement with the Boy Scouts of America, of which the BSP was part before the establishment of the Commonwealth of the Philippines. The BSP charter, however, does not indicate that such assets were public or statal in character or had originated from the Government or the State. According to petitioner BSP, its operating funds used for carrying out its purposes and programs, are derived principally from membership dues paid by the Boy Scouts themselves and from property rentals. In this respect, the BSP appears similar to private non-stock, nonprofit corporations, although its charter expressly envisages donations and contributions to it 19 from the Government and any of its agencies and instrumentalities. We note only that BSP funds have not apparently heretofore been regarded as public funds by the Commission on Audit, considering that such funds have not been audited by the Commission. While the BSP may be seen to be a mixed type of entity, combining aspects of both public and private entities, we believe that considering the character of its purposes and its

functions, the statutory designation of the BSP as "a public corporation" and the substantial participation of the Government in the selection of members of the National Executive Board of the BSP, the BSP, as presently constituted under its charter, is a government-controlled corporation within the meaning of Article IX. (B) (2) (1) of the Constitution. We are fortified in this conclusion when we note that the Administrative Code of 1987 designates the BSP as one of the attached agencies of the Department of Education, Culture 20 and Sports ("DECS"). An "agency of the Government" is defined as referring to any of the various units of the Government including a department, bureau, office, instrumentality, government-owned or-controlled corporation, or local government or distinct unit 21 therein. "Government instrumentality" is in turn defined in the 1987 Administrative Code in the following manner: Instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy usually through a charter. This term includesregulatory agencies, chartered institutions and government-owned or controlled 22 corporations. (Emphasis supplied) The same Code describes a "chartered institution" in the following terms: Chartered institution refers to any agency organized or operating under a special charter, and vested by law with functions relating to specific constitutional policies or objectives. This term includes the state universities and colleges, and the monetary authority of the 23 State. (Emphasis supplied) We believe that the BSP is appropriately regarded as "a government instrumentality" under the 1987 Administrative Code. It thus appears that the BSP may be regarded as both a "government controlled corporation with an original charter" and as an "instrumentality" of the Government within the meaning of Article IX (B) (2) (1) of the Constitution. It follows that the employees of petitioner BSP are embraced within the Civil Service and are accordingly governed by the Civil Service Law and Regulations. It remains only to note that even before the effectivity of the 1987 Constitution employees of the BSP already fell within the scope of the Civil Service. In National Housing Corporation 24 v. Juco, decided in 1985, the Court, speaking through Mr. Justice Gutierrez, held: There should no longer be any question at this time that employees of government-owned or controlled corporations are governed by the civil service law and civil service rules and regulations.

Section 1, Article XII-B of the [19731 Constitution specifically provides: The Civil Service embraces every branch, agency, subdivision and instrumentality of the Government, including every government-owned or controlled corporation. . . . The 1935 Constitution had a similar provision in its Section 1, Article XII which stated: A Civil Service embracing all branches and subdivisions of the Government shall be provided by law. The inclusion of "government-owned or controlled corporations" within the embrace of the civil service shows a deliberate effort of the framers to plug an earlier loophole which allowed government-owned or controlled corporations to avoid the full consequences of the all encompassing coverage of the civil service system. The same explicit intent is shown by the addition of "agency" and "instrumentality" to branches and subdivisions of the Government. All offices and firms of the government are covered. The amendments introduced in 1973 are not idle exercises or meaningless gestures. They carry the strong message that civil service coverage is broad and all-embracing insofar as employment in the government in any of its governmental or corporate 25 arms is concerned. The complaint in NLRC Case No. 1637-84 having been filed on 13 November 1984, when the 26 1973 Constitution was still in force, our ruling in Juco applies in the case at bar. In view of the foregoing, we hold that both the Labor Arbiter and public respondent NLRC had no jurisdiction over the complaint filed by private respondents in NLRC Case No. 163784; neither labor agency had before it any matter which could validly have been passed upon by it in the exercise of original or appellate jurisdiction. The appealed Decision and Resolution in this case, having been rendered without jurisdiction, vested no rights and imposed no liabilities upon any of the parties here involved. That neither party had expressly raised the issue of jurisdiction in the pleadings poses no obstacle to this ruling of the Court, which may motu proprio take cognizance of the issue of existence or absence of jurisdiction 27 and pass upon the same. ACCORDINGLY, the Decision of the Labor Arbiter dated 31 July 1985, and the Decision dated 27 February 1987 and Resolution dated 16 October 1987, issued by public respondent NLRC, in NLRC Case No. 1637-84, are hereby SET ASIDE. All other orders and resolutions rendered in this case by the Labor Arbiter and the NLRC are likewise SET ASIDE. No pronouncement as to costs. Fernan, C.J., Gutierrez, Jr., Bidin and Davide Jr., JJ., concur.

G.R. Nos. 81852-53 March 5, 1993 ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER MANUEL P. ASUNCION, ABUNDIO IBASCO, ANTONIO MAGSIPOC, CARLOS VILLARANTE and BIENVENIDO RAMIREZ, respondents. Potenciano A. Flores, Jr. for the petitioner. Gilbert P. Lorenzo for respondents A. Ibasco and A. Magsipoc. Renato Ramos for respondent Carlos Villarante.

Respondents' Comment, p. 169, Rollo) expelling private respondents from the union. SMB held in trust the amount of P1,098.00 pertaining to each private respondent. On January 8, 1987, private respondents Antonio Magsipoc and Abundio Ibasco filed a complaint (Annex I, Petition, p. 59, Rollo) docketed as NLRC-NCR Case No. 1-092-87, before the Arbitration Branch, National Capital Region, National Labor Relations Commission for illegal and exorbitant deduction and illegal expulsion from the union. In February, 1987, a similar complaint docketed as NLRC Case No. 00-02-00731-87 was filed by private respondents Carlos Villarante and Bienvenido Ramirez. On January 29, 1987, petitioner filed a motion to dismiss (Annex A, Petition, pp. 34-35, Rollo) Case No. 1-092-87 on the ground of lack of jurisdiction of NLRC. On February 4, 1987, respondent Labor Arbiter Manuel Asuncion issued an order (Annex B, Petition, pp. 3637, Rollo) denying the motion to dismiss. It appears that the two cases were consolidated, and respondent Labor Arbiter proceeded to take cognizance of the cases and directed the parties to file their position papers. Only private respondents filed their position paper with petitioner continuing to refuse to submit to the jurisdiction of the Labor Arbiter. On May 29, 1987, respondent Labor Arbiter rendered a decision (Annex C, Petition, pp. 3943, Rollo) finding the questioned assessment illegal and ordering petitioner and SMB to return the amount of P1,098.00 to each of private respondents; declaring the expulsion of private respondents from the union null and void; and ordering petitioner to desist from expelling the members who objected to the deduction of the questioned assessment from their CBA differentials. Petitioner seasonably filed a notice of appeal (Annex K, Petition, p. 61, Rollo) with respondent National Labor Relations Commission. On October 12, 1987, the NLRC issued a resolution (Annex D, Petition, pp. 44-46, Rollo) affirming the decision of respondent Labor Arbiter and dismissing the appeal. Petitioner filed a motion for reconsideration but the same was denied in a resolution dated January 11, 1988. (Annex E, Petition, p. 47, Rollo). Hence, the instant recourse under the following assigned errors: 1. The NLRC committed reversible error in assuming jurisdiction over the person of petitioner union; 2. The NLRC committed a reversible error in assuming jurisdiction over the nature of the action; 3. The NLRC committed reversible error in declaring the sum from which the special assessment is made, is a wage, that it is a deduction from a wage and that it is an attorney's fee. (pp. 12-13, Rollo) The second assigned error raising as it does the central issue of jurisdiction, attention must be focused on the same. It is fundamental that jurisdiction over the subject matter is conferred by law (Tijam vs. Sibonghanoy, 23 SCRA 29 [1968]) and is determined by the

MELO, J.: Before us is a petition for certiorari seeking the annulment of the order dated February 4, 1987, of respondent Labor Arbiter, the decision dated May 29, 1987 rendered by said respondent, and the resolutions dated October 12, 1987, and January 11, 1988, of the respondent National Labor Relations Commission. The relevant facts as established by the record are as follows: Petitioner, a duly-registered labor union, is the sole and exclusive bargaining representative of all daily-paid workers of the Metro Manila plants of San Miguel Corporation, hereinafter referred to as SMC. On December 3, 1986, petitioner and SMB entered into a Memorandum of Agreement on Collective Bargaining Agreement (CBA). The National Council of petitioner called a general meeting on December 7, 1986 for the ratification of the CBA. On the morning of December 7, 1986, the National Council held a special meeting wherein the members present unanimously passed "Resolusyon Blg. 265, Serye 1986" (Annex G, Petition, p. 52, Rollo). It was agreed at said meeting to submit the resolution to the general membership for approval. Two thousand two hundred forty three (2,243) members attended the general meeting. Said Resolusyon Blg. 265 was submitted to the general assembly for approval. Two Thousand one hundred seven (2,107) members voted in favor and thirty six (36) voted against the resolution. In said general membership meeting the 1986 CBA was ratified by the members. Under said resolution, each member of the union was assessed P1,098.00 to be deducted from the lump sum of P10,980.00 which each employee was to receive under the CBA. Private respondents protested the deduction and refused to sign the authorization slip for the deduction. Petitioner passed a resolution on January 6, 1987, (Annex 9, Private

allegations of the complaint, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein (Serrano vs. Muoz (Hi) Motors, Inc., 21 SCRA 1085 [1967]). A perusal of the complaint (Annex I, Petition, p. 59, Rollo) clearly shows that the subjectmatter concerns: (a) the assessment and deduction of 10% from private respondents' CBA differential pay which were denounced by private respondents as illegal and exorbitant and made against their will, and (b) private respondents' expulsion from the union. The assessment and deduction of 10% from each employee's differential pay were imposed by petitioner through Resolusyon Blg. 265 and the expulsion was adopted by petitioner through Resolusyon Blg. 15, dated January 6, 1987, both of which were denounced by private respondents as illegal and violative of their rights as union members. Clearly this is an intraunion dispute a dispute between a labor union and its members. "Internal Union Dispute" includes all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of a union, including any violation of the rights and conditions of union membership provided for in the Code (Book V, Rule I, Section l(a), Omnibus Rules Implementing The Labor Code). Article 226 of the Labor Code of the Philippines vests on the Bureau of Labor Relations and the Labor Relations Divisions jurisdiction to act on all inter-union or intra-union conflicts. Said Article thus provides: Art. 226. Bureau of Labor Relations The Bureau of Labor Relations and the Labor Relations Division in the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all work places whether agricultural or non-agricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be subject of grievance procedure and/or voluntary arbitration. Unquestionably, therefore, NLRC Case No. 1-092-87 and Case No. 00-02-00731-87, the subject of which is an intra-union dispute, fall under the original and exclusive jurisdiction of the Bureau of Labor Relations, and respondent Labor Arbiter and NLRC have no jurisdiction over said cases. In view of the foregoing conclusion, there is no further need to discuss the other errors assigned by petitioner. WHEREFORE, the order dated February 4, 1987 issued by respondent Labor Arbiter, the decision rendered on May 29, 1987, by said respondent, the resolution dated October 12, 1987, of respondent NLRC affirming the decision of respondent Labor Arbiter and the resolution dated January 11, 1988, of respondent NLRC are hereby ANNULLED and SET ASIDE. Respondent Labor Arbiter is hereby ordered to dismiss NLRC Case No. 1-072-87 and

NLRC Case No. 00-02-00731-87, without prejudice to private respondents' filing the same with the Bureau of Labor Relations. SO ORDERED. Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur. Gutierrez, Jr., J., is on leave.

G.R. No. 89621 September 24, 1991 PEPSI COLA DISTRIBUTORS OF THE PHILIPPINES, INC., represented by its Plant General Manager ANTHONY B. SIAN, ELEAZAR LIMBAB, IRENEO BALTAZAR & JORGE HERAYA, petitioners, vs. HON. LOLITA O. GAL-LANG, SALVADOR NOVILLA, ALEJANDRO OLIVA, WILFREDO CABAAS & FULGENCIO LEGO, respondents. Aurelio D. Menzon for petitioners. Mario P. Nicolasora co-counsel for petitioners. Papiano L. Santo for private respondents.

The petitioners invoke Article 217 of the Labor Code and a number of decisions of this Court to support their position that the private respondents civil complaint for damages falls under the jurisdiction of the labor arbiter. They particularly cite the case of Getz Corporation v. 1 Court of Appeals, where it was held that a court of first instance had no jurisdiction over the complaint filed by a dismissed employee "for unpaid salary and other employment benefits, termination pay and moral and exemplary damages." We hold at the outset that the case is not in point because what was involved there was a claim arising from the alleged illegal dismissal of an employee, who chose to complain to the regular court and not to the labor arbiter. Obviously, the claim arose from employeeemployer relations and so came under Article 217 of the Labor Code which then provided as follows: ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties for decision, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases;

CRUZ, J.:p The question now before us has been categorically resolved in earlier decisions of the Court that a little more diligent research would have disclosed to the petitioners. On the basis of those cases and the facts now before us, the petition must be denied. The private respondents were employees of the petitioner who were suspected of complicity in the irregular disposition of empty Pepsi Cola bottles. On July 16, 1987, the petitioners filed a criminal complaint for theft against them but this was later withdrawn and substituted with a criminal complaint for falsification of private documents. On November 26, 1987, after a preliminary investigation conducted by the Municipal Trial Court of Tanauan, Leyte, the complaint was dismissed. The dismissal was affirmed on April 8, 1988, by the Office of the Provincial Prosecutor. Meantime, allegedly after an administrative investigation, the private respondents were dismissed by the petitioner company on November 23, 1987. As a result, they lodged a complaint for illegal dismissal with the Regional Arbitration Branch of the NLRC in Tacloban City on December 1, 1987, and decisions manded reinstatement with damages. In addition, they instituted in the Regional Trial Court of Leyte, on April 4, 1988, a separate civil complaint against the petitioners for damages arising from what they claimed to be their malicious prosecution. The petitioners moved to dismiss the civil complaint on the ground that the trial court had no jurisdiction over the case because it involved employee-employer relations that were exclusively cognizable by the labor arbiter. The motion was granted on February 6, 1989. On July 6, 1989, however, the respondent judge, acting on the motion for reconsideration, reinstated the complaint, saying it was "distinct from the labor case for damages now pending before the labor courts." The petitioners then came to this Court for relief.

2. Those that workers may file involving wages, hours of work and other terms and conditions of employment; 3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for employees' compensation, social security, medicare and maternity benefits; 4. Cases involving household services; and 5. Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes and lockouts. (b) The Commission shall have exclusive appellate jurisdiction over all 2 cases decided by labor Arbiters. It must be stressed that not every controversy involving workers and their employers can be resolved only by the labor arbiters. This will be so only if there is a "reasonable causal connection" between the claim asserted and employee-employer relations to put the case under the provisions of Article 217. Absent such a link, the complaint will be cognizable by the regular courts of justice in the exercise of their civil and criminal jurisdiction. In Medina v. Castro-Bartolome, two employees filed in the Court of First Instance of Rizal a civil complaint for damages against their employer for slanderous remarks made against
3

them by the company president. On the order dismissing the case because it came under the jurisdiction of the labor arbiters, Justice Vicente Abad Santos said for the Court: It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the Civil Code and not the Labor Code. It results that the orders under review are based on a wrong premise. In Singapore Airlines Ltd. v. Pao, where the plaintiff was suing for damages for alleged violation by the defendant of an "Agreement for a Course of Conversion Training at the Expense of Singapore Airlines Limited," the jurisdiction of the Court of First Instance of Rizal over the case was questioned. The Court, citing the earlier case of Quisaba v. Sta. Ines Melale 5 Veneer and Plywood, Inc., declared through Justice Herrera: Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute. In Molave Sales, Inc. v. Laron, the same Justice held for the Court that the claim of the plaintiff against its sales manager for payment of certain accounts pertaining to his purchase of vehicles and automotive parts, repairs of such vehicles, and cash advances from the corporation was properly cognizable by the Regional Trial Court of Dagupan City and not the labor arbiter, because "although a controversy is between an employer and an employee, the Labor Arbiters have nojurisdiction if the Labor Code is not involved." The latest ruling on this issue is found in San Miguel Corporation v. NLRC, where the above cases are cited and the changes in Article 217 are recounted. That case involved a claim of an employee for a P60,000.00 prize for a proposal made by him which he alleged had been accepted and implemented by the defendant corporation in the processing of one of its beer products. The claim was filed with the labor arbiter, who dismissed it for lack of jurisdiction but was reversed by the NLRC on appeal. In setting aside the appealed decision and dismissing the complaint, the Court observed through Justice Feliciano: It is the character of the principal relief sought that appears essential, in this connection. Where such principal relief is to be granted under labor legislation or a collective bargaining agreement, the case should fall within the jurisdiction of the Labor Arbiter and the NLRC, even though a claim for damages might be asserted as an incident to such claim. xxx xxx xxx
7 6 4

Where the claim to the principal relief sought is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such situations, resolution of the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of employment, but rather in the application of the general civil law. Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears. xxx xxx xxx While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe of money claims that might be asserted by workers against their employers has been absorbed into the original and exclusive jurisdiction of Labor Arbiters. xxx xxx xxx For it cannot be presumed that money claims of workers which do not arise out of or in connection with their employer-employee relationship, and which would therefore fall within the general jurisdiction of the regular courts of justice, were intended by the legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the 'money claims of workers" referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employer- employee relationship, or some aspect or incident of such relationship. Put a little differently, that money claims of workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal connection with the employer-employee relationship (Ibid.). The case now before the Court involves a complaint for damages for malicious prosecution which was filed with the Regional Trial Court of Leyte by the employees of the defendant company. It does not appear that there is a "reasonable causal connection" between the complaint and the relations of the parties as employer and employees. The complaint did not arise from such relations and in fact could have arisen independently of an employment relationship between the parties. No such relationship or any unfair labor practice is asserted. What the employees are alleging is that the petitioners acted with bad faith when they filed the criminal complaint which the Municipal Trial Court said was intended "to harass the poor employees" and the dismissal of which was affirmed by the Provincial Prosecutor "for lack of evidence to establish even a slightest probability that all the respondents herein have committed the crime imputed against them." This is a matter which

the labor arbiter has no competence to resolve as the applicable law is not the Labor Code but the Revised Penal Code. "Talents differ, all is well and wisely put," so observed the philosopher-poet. So it must be in the case we here decide. WHEREFORE, the order dated July 6, 1989, is AFFIRMED and the petition DENIED, with costs against the petitioner. SO ORDERED. Narvasa (Chairman), Grio-Aquino and Medialdea, JJ., concur.
8

[G.R. No. 149578. April 10, 2003]

During channeling activities upon the vessels departure from Yokohama sometime on November 6, 1992, CAPT. TOLOSA was drenched with rainwater. The following day, November 7, 1992, he had a slight fever and in the succeeding twelve (12) days, his health rapidly deteriorated resulting in his death on November 18, 1992. According to Pedro Garate, Chief Mate of the Vessel, in his statement submitted to the U.S. Coast Guard on November 23, 1992 upon arrival in Long Beach, California CAPT. TOLOSA experienced high fever between November 11-15, 1992 and suffered from loose bowel movement (LBM) beginning November 9, 1992. By November 11, 1992, his temperature was 39.5 although his LBM had slightly stopped. The next day, his temperature rose to 39.8 and had lost his appetite. In the evening of that day, November 13, 1992, he slipped in the toilet and suffered scratches at the back of his waist. First aid was applied and CAPT. TOLOSA was henceforth confined to his quarters with an able seaman to watch him 24 hours a day until November 15, 1992, when his conditioned worsened. On the same day, November 15, 1992, the Chief Engineer initiated the move and contacted ASIA BULK which left CAPT. TOLOSAs fate in the hands of Pedro Garate and Mario Asis, Second Mate of the same vessel who was in-charge of the primary medical care of its officers and crew. Contact with the U.S. Coast Guard in Honolulu, Hawaii (USCGHH) was likewise initiated to seek medical advice. On November 17, 1992, CAPT. TOLOSA was losing resistance and his condition was getting serious. At 2215 GMT, a telex was sent to ASIA BULK requesting for the immediate evacuation of CAPT. TOLOSA and thereafter an airlift was set on November 19, 1992. However, on November 18, 1992, at 0753 GMT, CAPT. TOLOSA was officially recorded as having breathed his last. Because of the death of CAPT. TOLOSA, his wife, EVELYN, as petitioner, filed a Complaint/Position Paper before the POEA (POEA Case No. 93-06-1080) against QwanaKaiun, thru its resident-agent, Mr. Fumio Nakagawa, ASIA BULK, Pedro Garate and Mario Asis, as respondents. After initial hearings and submissions of pleadings, the case was however transferred to the Department of Labor and Employment, National Labor Relations Commission (NLRC), when the amendatory legislation expanding its jurisdiction, and removing overseas employment related claims from the ambit of POEA jurisdiction. The case was then raffled to Labor Arbiter, Vladimir Sampang. xxx xxx xxx

EVELYN TOLOSA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, QWANA KAIUN (through its resident-agent, FUMIO NAKAGAWA), ASIA BULK TRANSPORT PHILS. INC., PEDRO GARATE and MARIO ASIS, respondents. DECISION PANGANIBAN, J.: As a rule, labor arbiters and the National Labor Relations Commission have no power or authority to grant reliefs from claims that do not arise from employer-employee relations. They have no jurisdiction over torts that have no reasonable causal connection to any of the claims provided for in the Labor Code, other labor statutes, or collective bargaining agreements.

The Case
[1]

The Petition for Review before us assails the April 18, 2001 Decision of the Court of [2] Appeals (CA) in CA-GR SP No. 57660, as well as the April 17, 2001 CA Resolution denying petitioners Motion for Reconsideration. The dispositive portion of the challenged Decision reads as follows: WHEREFORE, premises considered, the instant petition for certiorari is hereby DENIED and accordingly DISMISSED, without prejudice to the right of herein petitioner to file a suit [3] before the proper court, if she so desires. No pronouncement as to costs.

The Facts

The appellate court narrated the facts of the case in this manner: Evelyn Tolosa (hereafter EVELYN), was the widow of Captain Virgilio Tolosa (hereafter CAPT. TOLOSA) who was hired by Qwana-Kaiun, through its manning agent, Asia Bulk Transport Phils. Inc., (ASIA BULK for brevity), to be the master of the Vessel named M/V Lady Dona. CAPT. TOLOSA had a monthly compensation of US$1700, plus US$400.00 monthly overtime allowance. His contract officially began on November 1, 1992, as supported by his contract of employment when he assumed command of the vessel in Yokohama, Japan. The vessel departed for Long Beach California, passing by Hawaii in the middle of the voyage. At the time of embarkation, CAPT. TOLOSA was allegedly shown to be in good health.

After considering the pleadings and evidences, on July 8, 1997, the Labor Arbiter Vladimir P. L. Sampang, in conformity with petitioners plea to hold respondents solidarily liable, granted all the damages, (plus legal interest), as prayed for by the petitioner. The dispositive portion of his Decision reads:

WHEREFORE, premises considered, the respondents are hereby ordered to jointly and solidarily pay complainants the following: 1. US$176,400.00 (US$2,100.00 x 12 months x 7 years) or P4,586,400.00 (at P26.00 per US$1.00) by way of lost income; 2. interest at the legal rate of six percent (6%) per annum or P1,238,328.00 (from November 1992 to May 1997 or 4 years); 3. moral damages of P200,000.00;

Sustaining the NLRC, the CA ruled that the labor commission had no jurisdiction over the subject matter of the action filed by petitioner. Her cause did not arise from an employer-employee relation, but from a quasi delict or tort. Further, there is no reasonable causal connection between her suit for damages and her claim under Article 217 (a)(4) of the Labor Code, which allows an award of damages incident to an employer-employee relation. Hence, this Petition.
[5]

Issues

Petitioner raises the following issues for our consideration: 4. exemplary damages of P100,000.00; and 5. 10% of the total award, or P612,472.80, as attorneys fees. xxx xxx xxx I Whether or not the NLRC has jurisdiction over the case. II Whether or not Evelyn is entitled to the monetary awards granted by the labor arbiter.
[6]

On appeal, private respondents raised before the National Labor Relations Commission (NLRC) the following grounds: (a) the action before the Arbiter, as he himself concedes, is a complaint based on torts due to negligence. It is the regular courts of law which have jurisdiction over the action; (b) Labor Arbiters have jurisdiction over claims for damages arising from employer-employee relationship (Art. 217, Section (a) (3));

After reviewing petitioners Memorandum, we find that we are specifically being asked to determine 1) whether the labor arbiter and the NLRC had jurisdiction over petitioners action, and 2) whether the monetary award granted by the labor arbiter has already reached finality.

The Courts Ruling (c) In this case, gross negligence is imputed to respondents Garate and Asis, who have no employer-employee relationship with the late Capt. Virgilio Tolosa; (d) The labor arbiter has no jurisdiction over the controversy; xxx xxx xxx First Issue: Jurisdiction over the Action

The Petition has no merit.

Despite other peripheral issues raised by the parties in their respective pleadings, the NLRC on September 10, 1998, vacated the appealed decision dated July 8, 1997 of the Labor Arbiter and dismissed petitioners case for lack of jurisdiction over the subject matter of the [4] action pursuant to the provisions of the Labor Code, as amended. (Citations omitted)

Petitioner argues that her cause of action is not predicated on a quasi delict or tort, but on the failure of private respondents -- as employers of her husband (Captain Tolosa) -- to provide him with timely, adequate and competent medical services under Article 161 of the Labor Code: ART 161. Assistance of employer. -- It shall be the duty of any employer to provide all the necessary assistance to ensure the adequate and immediate medical and dental attendance and treatment to an injured or sick employee in case of emergency.

Ruling of the Court of Appeals

Likewise, she contends that Article 217 (a) (4) of the Labor Code vests labor arbiters and the NLRC with jurisdiction to award all kinds of damages in cases arising from employeremployee relations. Petitioner also alleges that the reasonable causal connection rule should be applied [8] in her favor. Citing San Miguel Corporation v. Etcuban, she insists that a reasonable causal connection between the claim asserted and the employer-employee relation confers jurisdiction upon labor tribunals. She adds that she has satisfied the required conditions: 1) the dispute arose from an employer-employee relation, considering that the claim was for damages based on the failure of private respondents to comply with their obligation under Article 161 of the Labor Code; and 2) the dispute can be resolved by reference to the Labor Code, because the material issue is whether private respondents complied with their legal obligation to provide timely, adequate and competent medical services to guarantee Captain [9] Tolosas occupational safety. We disagree. We affirm the CAs ruling that the NLRC and the labor arbiter had no jurisdiction over petitioners claim for damages, because that ruling was based on a qua si [10] delict or tort per Article 2176 of the Civil Code. Time and time again, we have held that the allegations in the complaint determine the [11] nature of the action and, consequently, the jurisdiction of the courts. After carefully examining the complaint/position paper of petitioner, we are convinced that the allegations therein are in the nature of an action based on a quasi delict or tort. It is evident that she sued Pedro Garate and Mario Asis for gross negligence. Petitioners complaint/position paper refers to and extensively discusses the negligent acts of shipmates Garate and Asis, who had no employer-employee relation with Captain Tolosa. Specifically, the paper alleges the following tortious acts: x x x *R+espondent Asis was the medical officer of the Vessel, who failed to regularly monitor Capt. Tolosas condition, and who needed the USCG to prod him to take the latters vital signs. In fact, he failed to keep a medical record, like a patients card or folder, of Capt. [12] Tolosas illness. Respondents, however, failed Capt. Tolosa because Garate never initiated actions to save [13] him. x x x In fact, Garate rarely checked personally on Capt. Tolosas condition, to wit: x x x Noticeably, the History (Annex D) fails to mention any instance when Garate consulted the other officers, much less Capt. Tolosa, regarding the possibility of deviation. To save Capt. Tolosas life was surely a just cause for the change in course, which the other officers would have concurred in had they been consulted by respondent Garate which he grossly neglected to do. Garates poor judgement, since he was the officer effectively in command of the vessel, prevented him from undertaking these emergency measures, the neglect of which resulted in [14] Capt. Tolosas untimely demise.

[7]

The labor arbiter himself classified petitioners case as a complaint for damages, blacklisting and watchlisting (pending inquiry) for gross negligence resulting in the death of [15] complainants husband, Capt. Virgilio Tolosa. We stress that the case does not involve the adjudication of a labor dispute, but the recovery of damages based on a quasi delict. The jurisdiction of labor tribunals is limited to disputes arising from employer-employee relations, as we ruled in Georg Grotjahn GMBH & [16] Co. v. Isnani: Not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining [17] agreement. The pivotal question is whether the Labor Code has any relevance to the relief sought by petitioner. From her paper, it is evident that the primary reliefs she seeks are as follows: (a) loss of earning capacity denominated therein as actual damages or lost income and (b) blacklisting. The loss she claims does not refer to the actual earnings of the deceased, but to his earning capacity based on a life expectancy of 65 years. This amount is recoverable if [18] the action is based on a quasi delict as provided for in Article 2206 of the Civil Code, but not in the Labor Code. While it is true that labor arbiters and the NLRC have jurisdiction to award not only [19] reliefs provided by labor laws, but also damages governed by the Civil Code, these reliefs must still be based on an action that has a reasonable causal connection with the Labor [20] Code, other labor statutes, or collective bargaining agreements. The central issue is determined essentially from the relief sought in the [21] complaint. In San Miguel Corporation v. NLRC, this Court held: It is the character of the principal relief sought that appears essential in this connection. Where such principal relief is to be granted under labor legislation or a collective bargaining agreement, the case should fall within the jurisdiction of the Labor Arbiter and the [22] NLRC, even though a claim for damages might be asserted as an incident to such claim. The labor arbiter found private respondents to be grossly negligent. He ruled that Captain Tolosa, who died at age 58, could expect to live up to 65 years and to have an earning capacity of US$176,400. It must be noted that a workers loss of earning capacity and blacklisting are not to be equated with wages, overtime compensation or separation pay, and other labor benefits that are generally cognized in labor disputes. The loss of earning capacity is a relief or claim resulting from a quasi delict or a similar cause within the realm of civil law. Claims for damages under paragraph 4 of Article 217 must have a reasonable causal connection with any of the claims provided for in the article in order to be cognizable by the labor arbiter. Only if there is such a connection with the other claims can the claim for

damages be considered as arising from employer-employee relations. In the present case, petitioners claim for damages is not related to any other claim under Article 217, other labor statutes, or collective bargaining agreements. Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code, which does not grant or specify a claim or relief. This provision is only a safety and health standard under Book IV of the same Code. The enforcement of this labor standard rests with the labor [24] secretary. Thus, claims for an employers violation thereof are beyond the jurisdiction of the labor arbiter. In other words, petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages before the labor arbiter. It is not the NLRC but the regular courts that have jurisdiction over actions for damages, in which the employer-employee relation is merely incidental, and in which the [25] cause of action proceeds from a different source of obligation such as a tort. Since petitioners claim for damages is predicated on a quasi delict or tort that has no reasonable causal connection with any of the claims provided for in Article 217, other labor statutes, or [26] collective bargaining agreements, jurisdiction over the action lies with the regular courts -not with the NLRC or the labor arbiters.

[23]

Second Issue: Finality of the Monetary Award

Petitioner contends that the labor arbiters monetary award has already reached finality, since private respondents were not able to file a timely appeal before the NLRC. This argument cannot be passed upon in this appeal, because it was not raised in the tribunals a quo. Well-settled is the rule that issues not raised below cannot be raised for the first time on appeal. Thus, points of law, theories, and arguments not brought to the attention of the Court of Appeals need not -- and ordinarily will not -- be considered [27] by this Court. Petitioners allegation cannot be accepted by this Court on its face; to do so [28] would be tantamount to a denial of respondents right to due process. Furthermore, whether respondents were able to appeal on time is a question of fact that cannot be entertained in a petition for review under Rule 45 of the Rules of Court. In general, the jurisdiction of this Court in cases brought before it from the Court of Appeals is [29] limited to a review of errors of law allegedly committed by the court a quo. WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution AFFIRMED. Costs against petitioner. SO ORDERED. Puno, (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

[G.R. No. 124382. August 16, 1999]

In his written explanation dated 11 October 1991, petitioner reasoned out that he should not be made accountable for the unremitted collections since it was private respondents Pastor Gideon Buhat and Mr. Eufronio Ibesate who authorized his wife to collect the tithes and offerings since he was very sick to do the collecting at that time. Thereafter, on 16 October 1991, at around 7:30 a.m., petitioner went to the office of Pastor Buhat, the president of the Negros Mission. During said call, petitioner tried to persuade Pastor Buhat to convene the Executive Committee for the purpose of settling the dispute between him and the private respondent, Pastor David Rodrigo. The dispute between Pastor Rodrigo and petitioner arose from an incident in which petitioner assisted his friend, Danny Diamada, to collect from Pastor Rodrigo the unpaid balance for the repair [5] of the latters motor vehicle which he failed to pay to Diamada. Due to the assistance of petitioner in collecting Pastor Rodrigos debt, the latter harbored ill-feelings against petitioner. When news reached petitioner that Pastor Rodrigo was about to file a complaint against him with the Negros Mission, he immediately proceeded to the office of Pastor Buhat on the date abovementioned and asked the latter to convene the Executive Committee. Pastor Buhat denied the request of petitioner since some committee members were out of town and there was no quorum. Thereafter, the two exchanged heated arguments. Petitioner then left the office of Pastor Buhat. While on his way out, petitioner overheard Pastor Buhat saying, Pastor daw inisog na ina iya (Pastor you are talking [6] tough). Irked by such remark, petitioner returned to the office of Pastor Buhat, and tried to overturn the latters table, though unsuccessfully, since it was heavy. Thereafter, petitioner banged the attache case of Pastor Buhat on the table, scattered the books in his [7] office, and threw the phone. Fortunately, private respondents Pastors Yonilo Leopoldo and Claudio Montao were around and they pacified both Pastor Buhat and petitioner. On 17 October 1991, petitioner received a letter inviting him and his wife to attend the Executive Committee meeting at the Negros Mission Conference Room on 21 October 1991, at nine in the morning. To be discussed in the meeting were the non-remittance of church collection and the events that transpired on 16 October 1991. A fact-finding committee was created to investigate petitioner. For two (2) days, from October 21 and 22, the fact-finding committee conducted an investigation of petitioner. Sensing that the result of the investigation might be one-sided, petitioner immediately wrote Pastor Rueben Moralde, president of the SDA and chairman of the fact-finding committee, requesting that certain members of the fact-finding committee be excluded in the investigation and [9] resolution of the case. Out of the six (6) members requested to inhibit themselves from the investigation and decision-making, only two (2) were actually excluded, namely: Pastor Buhat and Pastor Rodrigo. Subsequently, on 29 October 1991, petitioner received a letter of [10] dismissal citing misappropriation of denominational funds, willful breach of trust, serious misconduct, gross and habitual neglect of duties, and commission of an offense against the person of employers duly authorized representative, as grounds for the termination of his services. Reacting against the adverse decision of the SDA, petitioner filed a complaint on 14 November 1991, before the Labor Arbiter for illegal dismissal against the SDA and its officers and prayed for reinstatement with backwages and benefits, moral and exemplary damages and other labor law benefits. On 15 February 1993, Labor Arbiter Cesar D. Sideo rendered a decision in favor of petitioner, the dispositive portion of which reads thus:
[11] [8]

[4]

PASTOR DIONISIO V. AUSTRIA, petitioner, vs. HON. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), CEBU CITY, CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTH-DAY ADVENTIST, ELDER HECTOR V. GAYARES, PASTORS REUBEN MORALDE, OSCAR L. ALOLOR, WILLIAM U. DONATO, JOEL WALES, ELY SACAY, GIDEON BUHAT, ISACHAR GARSULA, ELISEO DOBLE, PROFIRIO BALACY, DAVID RODRIGO, LORETO MAYPA, MR. RUFO GASAPO, MR. EUFRONIO IBESATE, MRS. TESSIE BALACY, MR. ZOSIMO KARA-AN, and MR. ELEUTERIO LOBITANA, respondents. DECISION KAPUNAN, J.: Subject to the instant petition for certiorari under Rule 65 of the Rules of Court is the [1] Resolution of public respondent National Labor Relations Commission (the NLRC), rendered on 23 January 1996, in NLRC Case No. V-0120-93, entitled Pastor Dionisio V. Austria vs. Central Philippine Union Mission Corporation of Seventh Day Adventists, et. al., which dismissed the case for illegal dismissal filed by the petitioner against private respondents for lack of jurisdiction. Private Respondent Central Philippine Union Mission Corporation of the Seventh-Day Adventists (hereinafter referred to as the SDA) is a religious corporation duly organized and existing under Philippine law and is represented in this case by the other private respondents, officers of the SDA. Petitioner, on the other hand, was a Pastor of the SDA until 31 October 1991, when his services were terminated. The records show that petitioner Pastor Dionisio V. Austria worked with the SDA for [2] twenty eight (28) years from 1963 to 1991. He began his work with the SDA on 15 July 1963 as a literature evangelist, selling literature of the SDA over the island of Negros. From then on, petitioner worked his way up the ladder and got promoted several times. In January, 1968, petitioner became the Assistant Publishing Director in the West Visayan Mission of the SDA. In July, 1972, he was elevated to the position of Pastor in the West Visayan Mission covering the island of Panay, and the provinces of Romblon and Guimaras. Petitioner held the same position up to 1988. Finally, in 1989, petitioner was promoted as District Pastor of the Negros Mission of the SDA and was assigned at Sagay, Balintawak and Toboso, Negros Occidental, with twelve (12) churches under his jurisdiction. In January, 1991, petitioner was transferred to Bacolod City. He held the position of district pastor until his services were terminated on 31 October 1991. On various occasions from August up to October, 1991, petitioner received several [3] communications from Mr. Eufronio Ibesate, the treasurer of the Negros Mission asking him to admit accountability and responsibility for the church tithes and offerings collected by his wife, Mrs. Thelma Austria, in his district which amounted to P15,078.10, and to remit the same to the Negros Mission.

WHEREFORE, PREMISES CONSIDERED, respondents CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTH-DAY ADVENTISTS (CPUMCSDA) and its officers, respondents herein, are hereby ordered to immediately reinstate complainant Pastor Dionisio Austria to his former position as Pastor of Brgy. Taculing, Progreso and Banago, Bacolod City, without loss of seniority and other rights and backwages in the amount of ONE HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED THIRTY PESOS (P115,830.00) without deductions and qualificatioons. Respondent CPUMCSDA is further ordered to pay complainant the following: A. B. C. 13th month pay Allowance Service Incentive Leave Pay Moral Damages E. Exemplary Damages P21,060.00 P 4,770.83

In view of the reversal of the original decision of the NLRC, the SDA filed a motion for reconsideration of the above resolution. Notable in the motion for reconsideration filed by private respondents is their invocation, for the first time on appeal, that the Labor Arbiter has no jurisdiction over the complaint filed by petitioner due to the constitutional provision on the separation of church and state since the case allegedly involved and ecclesiastical affair to which the State cannot interfere. The NLRC, without ruling on the merits of the case, reversed itself once again, sustained the argument posed by private respondents and, accordingly, dismissed the complaint of petitioner. The dispositive portion of the NLRC resolution dated 23 January 1996, subject of the present petition, is as follows: WHEREFORE, in view of all the foregoing, the instant motion for reconsideration is hereby granted. Accordingly, this case is hereby DISMISSED for lack of jurisdiction. SO ORDERED.
[15]

P 3,461.85 Hence, the recourse to this Court by petitioner. P50,000.00

D.

P25,000.00 P22,012.27

F.

Attorneys Fee
[12]

After the filing of the petition, the Court ordered the Office of the Solicitor General (the OSG) to file its comment on behalf of public respondent NLRC. Interestingly, the OSG filed [16] a manifestation and motion in lieu of comment setting forth its stand that it cannot sustain the resolution of the NLRC. In its manifestation, the OSG submits that the termination of petitioner of his employment may be questioned before the NLRC as the same is secular in nature, not ecclesiastical. After the submission of memoranda of all the parties, the case was submitted for decision. The issues to be resolved in this petition are: 1) Whether or not the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint filed by petitioner against the SDA; 2) Whether or not the termination of the services of petitioner is an ecclesiastical affair, and, as such, involves the separation of church and state; and 3) Whether or not such termination is valid. The first two issues shall be resolved jointly, since they are related. Private respondents contend that by virtue of the doctrine of separation of church and state, the Labor Arbiter and the NLRC have no jurisdiction to entertain the complaint filed by petitioner. Since the matter at bar allegedly involves the discipline of a religious minister, it is to be considered a purely ecclesiastical affair to which the State has no right to interfere. The contention of private respondents deserves scant consideration. The principle of separation of church and state finds no application in this case. The rationale of the principle of the separation of church and state is summed up in the [17] familiar saying, Strong fences make good neighbors. The idea advocated by this principle is to delineate the boundaries between the two institutions and thus avoid encroachments

SO ORDERED.

The SDA, through its officers, appealed the decision of the Labor Arbiter to the National Labor Relations Commission, Fourth Division, Cebu City. In a decision, dated 26 August 1994, the NLRC vacated the findings of the Labor Arbiter. The decretal portion of the NLRC decision states: WHEREFORE, the Decision appealed from is hereby VACATED and a new one ENTERED dismissing this case for want of merit. SO ORDERED.
[13]

Petitioner filed a motion for reconsideration of the above-named decision. On 18 July 1995, the NLRC issued a Resolution reversing its original decision. The dispositive portion of the resolution reads: WHEREFORE, premises considered, Our decision dated August 26, 1994 is VACATED and the decision of the Labor Arbiter dated February 15, 1993 is REINSTATED. SO ORDERED.
[14]

by one against the other because of a misunderstanding of the limits of their respective [18] exclusive jurisdictions. The demarcation line calls on the entities to render therefore unto [19] Ceasar the things that are Ceasars and unto God the things that are Gods. While the State is prohibited from interfering in purely ecclesiastical affairs, the Church is likewise [20] barred from meddling in purely secular matters. The case at bar does not concern an ecclesiastical or purely religious affair as to bar the State from taking cognizance of the same. An ecclesiastical affair is one that concerns doctrine, creed, or form or worship of the church, or the adoption and enforcement within a religious association of needful laws and regulations for the government of the membership, and the power of excluding from such associations those deemed unworthy of [21] membership. Based on this definition, an ecclesiastical affair involves the relationship between the church and its members and relate to matters of faith, religious doctrines, worship and governance of the congregation. To be concrete, examples of this so-called ecclesiastical affairs to which the State cannot meddle are proceedings for excommunication, ordinations of religious ministers, administration of sacraments and other activities with which attached religious significance. The case at bar does not even remotely concern any of the abovecited examples. While the matter at hand relates to the church and its religious minister it does not ipso facto give the case a religious significance. Simply stated, what is involved here is the relationship of the church as an employer and the minister as an employee. It is purely secular and has no relation whatsoever with the practice of faith, worship or doctrines of the church. In this case, petitioner was not excommunicated or expelled from the membership of the SDA but was terminated from employment. Indeed, the matter of terminating an employee, which is purely secular in nature, is different from the ecclesiastical act of expelling a member from the religious congregation. As pointed out by the OSG in its memorandum, the grounds invoked for petitioners dismissal, namely: misappropriation of denominational funds, willful breach of trust, serious misconduct, gross and habitual neglect of duties and commission of an offense against the person of his employers duly authorize representative, are all based on Article 282 of the [22] Labor Code which enumerates the just causes for termination of employment. By this alone, it is palpable that the reason for petitioners dismissal from the service is not religious in nature. Coupled with this is the act of the SDA in furnishing NLRC with a copy of petitioners letter of termination. As aptly stated by the OSG, this again is an eloquent admission by private respondents that NLRC has jurisdiction over the case. Aside from these, [23] SDA admitted in a certification issued by its officer, Mr. Ibesate, that petitioner has been its employee for twenty-eight (28) years. SDA even registered petitioner with the Social Security System (SSS) as its employee. As a matter of fact, the workers records of petitioner have been submitted by private respondents as part of their exhibits. From all of these it is clear that when the SDA terminated the services of petitioner, it was merely exercising its management prerogative to fire an employee which it believes to be unfit for the job. As such, the State, through the Labor Arbiter and the NLRC, has the right to take cognizance of the case and to determine whether the SDA, as employer, rightfully exercised its management prerogative to dismiss an employee. This is in consonance with the mandate of the Constitution to afford full protection to labor. Under the Labor Code, the provision which governs the dismissal of employees, is comprehensive enough to include religious corporations, such as the SDA, in its coverage. Article 278 of the Labor Code on post-employment states that the provisions of this Title shall apply to all establishments or undertakings, whether for profit or not.

Obviously, the cited article does not make any exception in favor of a religious corporation. This is made more evident by the fact that the Rules Implementing the Labor Code, particularly, Section 1, Rule 1, Book VI on the Termination of Employment and Retirement, categorically includes religious institutions in the coverage of the law, to wit: Section 1. Coverage. This Rule shall apply to all establishments and undertakings, whether operated for profit or not, including educational, medical, charitable and religious institutions and organizations, in cases of regular employment with the exception of the Government and its political subdivisions including government-owned or controlled [24] corporations. With this clear mandate, the SDA cannot hide behind the mantle of protection of the doctrine of separation of church and state to avoid its responsibilities as an employer under the Labor Code. Finally, as correctly pointed out by petitioner, private respondents are estopped from raising the issue of lack of jurisdiction for the first time on appeal. It is already too late in the day for private respondents to question the jurisdiction of the NLRC and the Labor Arbiter since the SDA had fully participated in the trials and hearings of the case from start to finish. The Court has already ruled that the active participation of a party against whom the action was brought, coupled with his failure to object to the jurisdiction of the court or quasijudicial body where the action is pending, is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case and will bar said party from later on [25] impugning the court or bodys jurisdiction. Thus, the active participation of private respondents in the proceedings before the Labor Arbiter and the NLRC mooted the question on jurisdiction. The jurisdictional question now settled, we shall now proceed to determine whether the dismissal of petitioner was valid. At the outset, we note that as a general rule, findings of fact of administrative bodies like the NLRC are binding upon this Court. A review of such findings is justified, however, in instances when the findings of the NLRC differ from those of the labor arbiter, as in this [26] case. When the findings of NLRC do not agree with those of the Labor Arbiter, this Court must of necessity review the records to determine which findings should be preferred as [27] more comformable to the evidentiary facts. We turn now to the crux of the matter. In termination cases, the settled rule is that the burden of proving that the termination was for a valid or authorized cause rests on the [28] employer. Thus, private respondents must not merely rely on the weaknesses of petitioners evidence but must stand on the merits of their own defense. The issue being the legality of petitioners dismissal, the same must be measured against the requisites for a valid dismissal, namely: (a) the employee must be afforded due process, i.e., he must be given an opportunity to be heard and to defend himself, and; (b) the [29] dismissal must be for a valid cause as provided in Article 282 of the Labor Code. Without the concurrence of this twin requirements, the termination would, in the eyes of the law, be [30] illegal.

Before the services of an employee can be validly terminated, Article 277 (b) of the Labor Code and Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code further require the employer to furnish the employee with two (2) written notices, to wit: (a) a written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; and, (b) a written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. The first notice, which may be considered as the proper charge, serves to apprise the [31] employee of the particular acts or omissions for which his dismissal is sought. The second notice on the other hand seeks to inform the employee of the employers decision to dismiss [32] him. This decision, however, must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge and ample opportunity to be heard and defend himself with the assistance of a representative, if he so [33] desires. This is in consonance with the express provision of the law on the protection to [34] labor and the broader dictates of procedural due process. Non-compliance therewith is fatal because these requirements are conditions sine quo non before dismissal may be validly [35] effected. Private respondent failed to substantially comply with the above requirements. With [36] regard to the first notice, the letter, dated 17 October 1991, which notified petitioner and his wife to attend the meeting on 21 October 1991, cannot be construed as the written charge required by law. A perusal of the said letter reveals that it never categorically stated the particular acts or omissions on which petitioners impending termination was grounded. In fact, the letter never even mentioned that petitioner would be subject to investigation. The letter merely mentioned that petitioner and his wife were invited to a meeting wherein what would be discussed were the alleged unremitted church tithes and the events that transpired on 16 October 1991. Thus, petitioner was surprised to find out that the alleged meeting turned out to be an investigation. From the tenor of the letter, it cannot be presumed that petitioner was actually on the verge of dismissal. The alleged grounds for the dismissal of petitioner from the service were only revealed to him when the actual letter of dismissal was finally issued. For this reason, it cannot be said that petitioner was given enough opportunity to properly prepare for his defense. While admittedly, private respondents complied with the second requirement, the notice of termination, this does not cure the initial defect of lack of the proper written charge required by law. In the letter of termination, dated 29 October 1991, private respondents enumerated the following as grounds for the dismissal of petitioner, namely: misappropriation of denominational funds, willful breach of trust, serious misconduct, gross and habitual neglect of duties, and commission of an offense against the person of employers duly authorized representative. Breach of trust and misappropriation of denominational funds refer to the alleged failure of petitioner to remit to the treasurer of the Negros Mission tithes, collections and offerings amounting to P15,078.10 which were collected by his wife, Mrs. Thelma Austria, in the churches under his jurisdiction. On the other hand, serious misconduct and commission of an offense against the person of the employers duly authorized representative pertain to the 16 October 1991 incident wherein petitioner allegedly committed an act of violence in the office of Pastor Gideon Buhat. The final ground invoked by private respondents is gross and habitual neglect of duties allegedly committed by petitioner.
[37]

We cannot sustain the validity of dismissal based on the ground of breach of trust. Private respondents allege that they have lost their confidence in petitioner for his failure, despite demands, to remit the tithes and offerings amounting to P15,078.10, which were collected in his district. A careful study of the voluminous records of the case reveals that there is simply no basis for the alleged loss of confidence and breach of trust. Settled is the rule that under Article 282 (c) of the Labor Code, the breach of trust must be willful. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or [38] inadvertently. It must rest on substantial grounds and not on the employers arbitrariness, whims, caprices or suspicion; otherwise, the employee would eternally remain at the mercy [39] [40] of the employer. It should be genuine and not simulated. This ground has never been intended to afford an occasion for abuse, because of its subjective nature. The records show that there were only six (6) instances when petitioner personally collected and received from [41] the church treasurers the tithes, collections, and donations for the church. The stenographic notes on the testimony of Naomi Geniebla, the Negros Mission Church Auditor and a witness for private respondents, show that Pastor Austria was able to remit all his [42] collections to the treasurer of the Negros Mission. Though private respondents were able to establish that petitioner collected and received tithes and donations several times, they were not able to establish that petitioner failed to remit the same to the Negros Mission, and that he pocketed the amount and used it for his personal purpose. In fact, as admitted by their own witness, Naomi Geniebla, petitioner remitted the amounts which he collected to the Negros Mission for which corresponding receipts were issued to him. Thus, the allegations of private respondents that petitioner breached their trust have no leg to stand on. In a vain attempt to support their claim of breach of trust, private respondents try to pin on petitioner the alleged non-remittance of the tithes collected by his wife. This argument deserves little consideration. First of all, as proven by convincing and substantial evidence consisting of the testimonies of the witnesses for private respondents who are church treasurers, it was Mrs. Thelma Austria who actually collected the tithes and donations from them, and, who failed to remit the same to the treasurer of the Negros Mission. The testimony of these church treasurers were corroborated and confirmed by Ms. Geniebla and Mr. Ibesate, officers of the SDA. Hence, in the absence of conspiracy and collusion, which private respondents failed to demonstrate, between petitioner and his wife, petitioner cannot be made accountable for the alleged infraction committed by his wife. After all, they still have separate and distinct personalities. For this reason, the Labor Arbiter found it difficult to see the basis for the alleged loss of confidence and breach of trust. The Court does not find any cogent reason, therefore, to digress from the findings of the Labor Arbiter which is fully supported by the evidence on record. With respect to the grounds of serious misconduct and commission of an offense against the person of the employers duly authorized representative, we find the same unmeritorious and, as such, do not warrant petitioners dismissal from the service. Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in [43] character, and implies wrongful intent and not mere error in judgment. For misconduct to be considered serious it must be of such grave and aggravated character and not merely [44] trivial or unimportant. Based on this standard, we believe that the act of petitioner in

banging the attache case on the table, throwing the telephone and scattering the books in the office of Pastor Buhat, although improper, cannot be considered as grave enough to be considered as serious misconduct. After all, as correctly observed by the Labor Arbiter, though petitioner committed damage to property, he did not physically assault Pastor Buhat or any other pastor present during the incident of 16 October 1991. In fact, the alleged offense committed upon the person of the employers representatives was never really established or proven by private respondents. Hence, there is no basis for the allegation that petitioners act constituted serious misconduct or that the same was an offense against the person of the employers duly authorized representative. As such, the cited actuation of petitioner does not justify the ultimate penalty of dismissal from employment. While the Constitution does not condone wrongdoing by the employee, it nevertheless urges a moderation of the sanctions that may be applied to him in light of the many disadvantages [45] that weigh heavily on him like an albatross on his neck. Where a penalty less punitive would suffice, whatever missteps may have been committed by the worker ought not be [46] visited with a consequence so severe such as dismissal from employment. For the foregoing reasons, we believe that the minor infraction committed by petitioner does not merit the ultimate penalty of dismissal. The final ground alleged by private respondents in terminating petitioner, gross and habitual neglect of duties, does not requires an exhaustive discussion. Suffice it to say that all private respondents had were allegations but not proof. Aside from merely citing the said ground, private respondents failed to prove culpability on the part of petitioner. In fact, the evidence on record shows otherwise. Petitioners rise from the ranks disclose that he was [47] actually a hard-worker. Private respondents evidence, which consisted of petitioners Workers Reports, revealed how petitioner travelled to different churches to attend to the faithful under his care. Indeed, he labored hard for the SDA, but, in return, he was rewarded with a dismissal from the service for a non-existent cause. In view of the foregoing, we sustain the finding of the Labor Arbiter that petitioner was terminated from service without just or lawful cause. Having been illegally dismissed, petitioner is entitled to reinstatement to his former position without loss of seniority [48] right and the payment of full backwages without any deduction corresponding to the [49] period from his illegal dismissal up to actual reinstatement. WHEREFORE, the petition for certiorari is GRANTED. The challenged Resolution of public respondent National Labor Relations Commission, rendered on 23 January 1996, is NULLIFIED and SET ASIDE. The Decision of the Labor Arbiter, dated 15 February 1993, is reinstated and hereby AFFIRMED. SO ORDERED. Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.