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G.R. No.

169207 March 25, 2010


WPP MARKETING COMMUNICATIONS, INC., JOHN STEEDMAN, MARK WEBSTER, and NOMINADA LANSANG,
Petitioners,
vs.
JOCELYN M. GALERA, Respondent.
Petitioner is Jocelyn Galera (GALERA), a [sic] American citizen who was recruited from the United States of America by private
respondent John Steedman, Chairman-WPP Worldwide and Chief Executive Officer of Mindshare, Co., a corporation based in Hong
Kong, China, to work in the Philippines for private respondent WPP Marketing Communications, Inc. (WPP), a corporation registered and
operating under the laws of Philippines. GALERA accepted the offer and she signed an Employment Contract entitled "Confirmation of
Appointment and Statement of Terms and Conditions" (Annex B to Petition for Certiorari).
Employment of GALERA with private respondent WPP became effective on September 1, 1999 solely on the instruction of the CEO and
upon signing of the contract, without any further action from the Board of Directors of private respondent WPP.
Four months had passed when private respondent WPP filed before the Bureau of Immigration an application for petitioner GALERA to
receive a working visa, wherein she was designated as Vice President of WPP. Petitioner alleged that she was constrained to sign the
application in order that she could remain in the Philippines and retain her employment.
Then, on December 14, 2000, petitioner GALERA alleged she was verbally notified by private respondent STEEDMAN that her services
had been terminated from private respondent WPP. A termination letter followed the next day.
LA: Edgardo M. Madriaga (Arbiter Madriaga) held WPP, Steedman, Webster, and Lansang liable for illegal dismissal and damages. Arbiter
Madriaga stated that Galera was not only illegally dismissed but was also not accorded due process.
NLRC: The First Division of the NLRC reversed the ruling of Arbiter Madriaga. In its Decision
7
promulgated on 19 February 2003, the
NLRC stressed that Galera was WPPs Vice-President, and therefore, a corporate officer at the time she was removed by the Board of
Directors on 14 December 2000. The NLRC stated thus:
It matters not that her having been elected by the Board to an added position of being a member of the Board of Directors did not take
effect as her May 31, 2000 election to such added position was conditioned to be effective upon approval by SEC of the Amended By-
Laws, an approval which took place only in February 21, 2001, i.e., after her removal on December 14, 2000. What counts is, at the time of
her removal, she continued to be WPPs Vice-President, a corporate officer, on hold over capacity.
Ms. Galeras claim that she was not a corporate officer at the time of her removal because her May 31, 2000 election as Vice President for
Media, under WPPs Amended By-Laws, was subject to the approval by the Securities and Exchange Commission and that the SEC
approved the Amended By-Laws only in February 2001. Such claim is unavailing. Even if Ms. Galeras subsequent election as Vice
President for Media on May 31, 2000 was subject to approval by the SEC, she continued to hold her previous position as Vice President
under the December 31, 1999 election until such time that her successor is duly elected and qualified. It is a basic principle in corporation
law, which principle is also embodied in WPPs by-laws, that a corporate officer continues to hold his position as such until his successor
has been duly elected and qualified. When Ms. Galera was elected as Vice President on December 31, 1999, she was supposed to have held
that position until her successor has been duly elected and qualified. The record shows that Ms. Galera was not replaced by anyone.
Such being the case, the imperatives of law require that we hold that the Arbiter below had no jurisdiction over Galeras case as, again, she
was a corporate officer at the time of her removal.
CA: Reversed and set aside the decision of the NLRC. The appellate court explained:
A corporation, through its board of directors, could only act in the manner and within the formalities, if any, prescribed by its charter or by
the general law. If the action of the Board is ultra vires such is motu proprio void ab initio and without legal effect whatsoever. The by-laws of a
corporation are its own private laws which substantially have the same effect as the laws of the corporation. They are, in effect, written into
the charter. In this sense, they beome part of the fundamental law of the corporation with which the corporation and its directors and
officers must comply.
Even if petitioner GALERA had been appointed by the Board of Directors on December 31, 1999, private respondent WPPs By-Laws
provided for only one Vice-President, a position already occupied by private respondent Webster. The same defect also stains the Board of
Directors appointment of petitioner GALERA as a Director of the corporation, because at that time the By-Laws provided for only five
directors. In addition, the By-laws only empowered the Board of Directors to appoint a general manager and/or assistant general manager
as corporate officers in addition to a chairman, president, vice-president and treasurer. There is no mention of a corporate officer entitled
"Managing Director."
SC:
Whether Galera is an Employee or a Corporate Officer
Galera, on the belief that she is an employee, filed her complaint before the Labor Arbiter. On the other hand, WPP, Steedman, Webster
and Lansang contend that Galera is a corporate officer; hence, any controversy regarding her dismissal is under the jurisdiction of the
Regional Trial Court. We agree with Galera.
Corporate officers are given such character either by the Corporation Code or by the corporations by-laws. Under Section 25 of the
Corporation Code, the corporate officers are the president, secretary, treasurer and such other officers as may be provided i n the by-laws.
19

Other officers are sometimes created by the charter or by-laws of a corporation, or the board of directors may be empowered under the
by-laws of a corporation to create additional offices as may be necessary.
An examination of WPPs by-laws resulted in a finding that Galeras appointment as a corporate officer (Vice-President with the
operational title of Managing Director of Mindshare) during a special meeting of WPPs Board of Directors is an appointment to a non-
existent corporate office. WPPs by-laws provided for only one Vice-President. At the time of Galeras appointment on 31 December 1999,
WPP already had one Vice-President in the person of Webster. Galera cannot be said to be a director of WPP also because all five
directorship positions provided in the by-laws are already occupied. Finally, WPP cannot rely on its Amended By-Laws to support its
argument that Galera is a corporate officer. The Amended By-Laws provided for more than one Vice-President and for two additional
directors. Even though WPPs stockholders voted for the amendment on 31 May 2000, the SEC approved the amendments only on 16
February 2001. Galera was dismissed on 14 December 2000. WPP, Steedman, Webster, and Lansang did not present any evidence that
Galeras dismissal took effect with the action of WPPs Board of Directors.1avvphi1
The appellate court further justified that Galera was an employee and not a corporate officer by subjecting WPP and Galeras relationship
to the four-fold test: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employers power to control the employee with respect to the means and methods by which the work is to be accomplished. The appellate
court found:
Whether the Labor Arbiter and the NLRC
have jurisdiction over the present case
Galera being an employee, then the Labor Arbiter and the NLRC have jurisdiction over the present case. Article 217 of the Labor Code
provides:
Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original
and exclusive jurisdiction to hear and decide x x x the following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work
and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and other maternity benefits, all other claims, arising
from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding
five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation of collective bargaining agreements and those arising from the interpretation or
enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration as may be provided in said agreements.
In contrast, Section 5.2 of Republic Act No. 8799, or the Securities Regulation Code, states:
The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the
courts of general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority
may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. The Commission shall retai n jurisdiction
over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one year from the
enactment of this Code. The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30
June 2000 until finally disposed.
The pertinent portions of Section 5 of Presidential Decree No. 902-A, mentioned above, states:
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, partnerships or
associations.


G.R. No. 144767 March 21, 2002
DILY DANY NACPIL, petitioner,
vs.
INTERNATIONAL BROADCASTING CORPORATION, respondent.
Petitioner states that he was Assistant General Manager for Finance/Administration and Comptroller of private respondent
Intercontinental Broadcasting Corporation (IBC) from 1996 until April 1997. According to petitioner, when Emiliano Templo was
appointed to replace IBC President Tomas Gomez III sometime in March 1997, the former told the Board of Directors that as soon as he
assumes the IBC presidency, he would terminate the services of petitioner. Apparently, Templo blamed petitioner, along with a certain Mr.
Basilio and Mr. Gomez, for the prior mismanagement of IBC. Upon his assumption of the IBC presidency, Templo allegedly harassed,
insulted, humiliated and pressured petitioner into resigning until the latter was forced to retire. However, Templo refused to pay him his
retirement benefits, allegedly because he had not yet secured the clearances from the Presidential Commission on Good Government and
the Commission on Audit. Furthermore, Templo allegedly refused to recognize petitioner's employment, claiming that petitioner was not
the Assistant General Manager/Comptroller of IBC but merely usurped the powers of the Comptroller. Hence, in 1997, petitioner filed
with the Labor Arbiter a complaint for illegal dismissal and non-payment of benefits.1wphi1.nt
Instead of filing its position paper, IBC filed a motion to dismiss alleging that the Labor Arbiter had no jurisdiction over the case. IBC
contended that petitioner was a corporate officer who was duly elected by the Board of Directors of IBC; hence, the case qualifies as an
intra-corporate dispute falling within the jurisdiction of the Securities and Exchange Commission (SEC). However, the motion was denied
by the Labor Arbiter in an Order dated April 22, 1998.
2

LA & NLRC: Decision stating that petitioner had been illegally dismissed.
SC: The Court finds that the Labor Arbiter had no jurisdiction over the case.
Under Presidential Decree No. 902-A (the Revised Securities Act), the law in force when the complaint for illegal dismissal was instituted
by petitioner in 1997, the following cases fall under the exclusive of the SEC:
xxx
c) Controversies in the election or appointment of directors, trustees, officers, or managers of such corporations,
partnerships or associations;
d) Petitions of corporations, partnerships, or associations to be declared in the state of suspension of payments in cases where the
corporation, partnership or association possesses property to cover all of its debts but foresees the impossibility of meeting them
when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its
liabilities, but is under the Management Committee created pursuant to this decree. (Emphasis supplied.)
The Court has consistently held that there are two elements to be considered in determining whether the SEC has jurisdiction over the
controversy, to wit: (1) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy.
8

Petitioner argues that he is not a corporate officer of the IBC but an employee thereof since he had not been elected nor appointed as
Comptroller and Assistant Manager by the IBC's Board of Directors. He points out that he had actually been appointed as such on January
11, 1995 by the IBC's General Manager, Ceferino Basilio. In support of his argument, petitioner underscores the fact that the IBC's By-
Laws does not even include the position of comptroller in its roster of corporate officers.
9
He therefore contends that his dismissal is a
controversy falling within the jurisdiction of the labor courts.
10

Petitioner's argument is untenable. Even assuming that he was in fact appointed by the General Manager, such appointment was
subsequently approved by the Board of Directors of the IBC.
11
That the position of Comptroller is not expressly mentioned among the
officers of the IBC in the By-Laws is of no moment, because the IBC's Board of Directors is empowered under Section 25 of the
Corporation Code
12
and under the corporation's By-Laws to appoint such other officers as it may deem necessary. The By-Laws of the IBC
categorically provides:
XII. OFFICERS
The officers of the corporation shall consist of a President, a Vice-President, a Secretary-Treasurer, a General Manager, and such
other officers as the Board of Directors may from time to time does fit to provide for. Said officers shall be elected by
majority vote of the Board of Directors and shall have such powers and duties as shall hereinafter provide (Emphasis
supplied).
13

The Court has held that in most cases the "by-laws may and usually do provide for such other officers,"
14
and that where a corporate office
is not specifically indicated in the roster of corporate offices in the by-laws of a corporation, the board of directors may also be empowered
under the by-laws to create additional officers as may be necessary.
15

An "office" has been defined as a creation of the charter of a corporation, while an "officer" as a person elected by the directors or
stockholders. On the other hand, an "employee" occupies no office and is generally employed not by action of the directors and
stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee.
16

As petitioner's appointment as comptroller required the approval and formal action of the IBC's Board of Directors to become valid,
17
it is
clear therefore holds that petitioner is a corporate officer whose dismissal may be the subject of a controversy cognizable by the SEC under
Section 5(c) of P.D. 902-A which includes controversies involving both election and appointment of corporate directors, trustees,
officers, and managers.
18
Had petitioner been an ordinary employee, such board action would not have been required.
Thus, the Court of Appeals correctly held that:
Since complainant's appointment was approved unanimously by the Board of Directors of the corporation, he is therefore
considered a corporate officer and his claim of illegal dismissal is a controversy that falls under the jurisdiction of the SEC as
contemplated by Section 5 of P.D. 902-A. The rule is that dismissal or non-appointment of a corporate officer is clearly an intra-
corporate matter and jurisdiction over the case properly belongs to the SEC, not to the NLRC.
19

As to petitioner's argument that the nature of his functions is recommendatory thereby making him a mere managerial officer, the Court
has previously held that the relationship of a person to a corporation, whether as officer or agent or employee is not determined by the
nature of the services performed, but instead by the incidents of the relationship as they actually exist.
20

It is likewise of no consequence that petitioner's complaint for illegal dismissal includes money claims, for such claims are actually part of
the perquisites of his position in, and therefore linked with his relations with, the corporation. The inclusion of such money claims does
not convert the issue into a simple labor problem. Clearly, the issues raised by petitioner against the IBC are matters that come within the
area of corporate affairs and management, and constitute a corporate controversy in contemplation of the Corporation Code.
21

Petitioner further argues that the IBC failed to perfect its appeal from the Labor Arbiter's Decision for its non-payment of the appeal bond
as required under Article 223 of the Labor Code, since compliance with the requirement of posting of a cash or surety bond in an amount
equivalent to the monetary award in the judgment appealed from has been held to be both mandatory and jurisdictional.
22
Hence, the
Decision of the Labor Arbiter had long become final and executory and thus, the Court of Appeals acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in giving due course to the IBC's petition for certiorari, and in deciding the case on the merits.
The IBC's failure to post an appeal bond within the period mandated under Article 223 of the Labor Code has been rendered immaterial by
the fact that the Labor Arbiter did not have jurisdiction over the case since as stated earlier, the same is in the nature of an intra-corporate
controversy. The Court has consistently held that where there is a finding that any decision was rendered without jurisdiction, the action
shall be dismissed. Such defense can be interposed at any time, during appeal or even after final judgment.
23
It is a well-settled rule that
jurisdiction is conferred only by the Constitution or by law. It cannot be fixed by the will of the parties; it cannot be acquired through,
enlarged or diminished by, any act or omission of the parties.
24

Considering the foregoing, the Court holds that no error was committed by the Court of Appeals in dismissing the case filed before the
Labor Arbiter, without prejudice to the filing of an appropriate action in the proper court. 1wphi1.nt
It must be noted that under Section 5.2 of the Securities Regulation Code (Republic Act No. 8799) which was signed into law by then
President Joseph Ejercito Estrada on July 19, 2000, the SEC's jurisdiction over all cases enumerated in Section 5 of P.D. 902-A has been
transferred to the Regional Trial Courts.
25



G.R. No. 181866 March 18, 2010
EMMANUEL S. HUGO, LOURENTE V. CRUZ, DIOSDADO S. DOLORES, RAMON B. DE LOS REYES, ORLANDO B.
FLORES, ROGELIO R. MARTIN, JOSE ROBERTO A. PAMINTUAN, MELVIN R. GOMEZ, REYNALDO P. SOLISA,
EMMANUEL A. PALADO, JR., ANSELMO V. TALAGTAG, JR., ANTHONY C. RONQUILLO, ARTHUR G.
CONCEPCION, ORLANDO MALAYBA, LEANDRO C. PAGURAYAN III, MARVIN L. GABRIEL, FERNANDO V. DIAZ,
ALFREDO CHAN, JUAN G. OBIAS, JR., EMIL P. BELCHEZ, RODELIO H. LASTIMA, and AUGUSTO LAGOS,
Petitioners,
vs.
LIGHT RAIL TRANSIT AUTHORITY, Respondent.
To effectively carry out its mandate, LRTA entered into a ten-year Agreement for the Management and Operation of the Metro Manila
Light Rail Transit System (the Agreement) from June 8, 1984 until June 8, 1994 with Metro Transit Organization, Inc. (METRO).
2
One of
the stipulations in the Agreement was
METRO shall be free to employ such employees and officers as it shall deem necessary in order to carry out the requirements of the
Agreement. Such employees and officers shall be the employees of METRO and not of LRTA. METRO shall prepare a compensation
schedule for the salaries and fringe benefits of its personnel (Article 3, par. 3.05).
3
(emphasis and underscoring supplied)
METRO thus hired its own employees including herein petitioners-members of the Pinag-isang Lakas ng Manggagawa sa METRO, Inc.-
National Federation of Labor, otherwise known as PIGLAS-METRO, INC.-NFL-KMU (the Union), the certified exclusive collective
bargaining representative of METROs rank-and-file employees.
LRTA later purchased the shares of stocks of METRO via Deed of Sale of June 9, 1989. The two entities, however, continued with their
distinct and separate juridical personalities such that when the ten-year Agreement expired on June 8, 1994, they renewed the same.
4

On July 25, 2000, on account of a deadlock in the negotiation for the forging of a new collective bargaining agreement between METRO
and the Union, petitioners filed a Notice of Strike before the National Conciliation and Mediation Board, National Capital Region (NCR).
On even date, the Union went on strike, completely paralyzing the operations of the light rail transit system.
Then Secretary of Labor Bienvenido E. Laguesma assumed jurisdiction over the conflict and directed the striking employees including
herein petitioners to immediately return to work and METRO to accept them back under the same terms and conditions of employment
prevailing prior to the strike.
By LRTAs claim, the striking employees including petitioners defied the return-to-work order. Contradicting such claim, petitioners alleged
that upon learning of the order, they attempted to comply with it but the security guards of METRO barred them from entering their
workplace for security reasons, the latter being afraid that they (the striking employees) might sabotage the vital machineries and equipment
of the light rail transit system.
5

When the Agreement expired on July 31, 2000, LRTA did not renew it. It instead took over the management and operations of the light
rail transit system, hiring new personnel for the purpose. METRO thus considered the employment of all its personnel terminated effective
September 30, 2000.
On February 28, 2002, petitioners filed a complaint
6
for illegal dismissal and unfair labor practice with prayer for reinstatement and
damages against METRO and LRTA before the NCR Arbitration Branch, National Labor Relations Commission (NLRC), docketed as
NLRC Case No. NCR-30-02-01191-02.
In impleading LRTA in their complaint, petitioners alleged that the "non-renewal of the [Agreement] is but an ingenious, albeit unlawful,
scheme carried out by the respondents to get rid of personnel they perceived as activists and troublemakers, thus, terminating the
complainants without any just or lawful cause."
7

LRTA filed a motion to dismiss
8
the complaint on the ground that the Labor Arbiter and the NLRC have no jurisdiction over it, for, by
petitioners own admission, there was no employer-employee relationship between it and petitioners.
LA: Granted the motion of LRTA and accordingly dismissed petitioners complaint for lack of jurisdiction.
NLRC: Reversed the Labor Arbiters dismissal of petitioners complaint and rendered a new one "declaring that the Labor Arbiter and this
Commission can exercise jurisdiction over the person of Respondent LRTA," LRTA being considered an "indirect employer" on account
of the Agreement; and that LRTA is a "necessary party" which ought to be joined as party for a complete determination of petitioners
claims that the non-renewal of the Agreement by LRTA and the cessation of business by METRO were carried out with the intent to cover
up the illegal dismissal of petitioners.
SC: The Labor Arbiter and the NLRC do not have jurisdiction over LRTA. Petitioners themselves admitted in their complaint that LRTA
"is a government agency organized and existing pursuant to an original charter (Executive Order No. 603)," and that they are employees of
METRO.
Light Rail Transit Authority v. Venus, Jr.,
17
which has a similar factual backdrop, holds that LRTA, being a government-owned or
controlled corporation created by an original charter, is beyond the reach of the Department of Labor and Employment which has
jurisdiction over workers in the private sector, viz:
. . . [E]mployees of petitioner METRO cannot be considered as employees of petitioner LRTA. The employees hired by METRO are
covered by the Labor Code and are under the jurisdiction of the Department of Labor and Employment, whereas the employees of
petitioner LRTA, a government-owned and controlled corporation with original charter, are covered by civil service rules. Herein private
respondent workers cannot have the best of two worlds, e.g., be considered government employees of petitioner LRTA, yet allowed to
strike as private employees under our labor laws. x x x.
x x x x
. . . [I]t is inappropriate to pierce the corporate veil of petitioner METRO. x x x.
In the instant case, petitioner METRO, formerly Meralco Transit Organization, Inc., was originally owned by the Manila Electric Company
and registered with the Securities and Exchange Commission more than a decade before the labor dispute. It then entered into a ten-year
agreement with petitioner LRTA in 1984. And, even if petitioner LRTA eventually purchased METRO in 1989, both parties maintained
their separate and distinct juridical personality and allowed the agreement to proceed. In 1990, this Court, in Light Rail Transit Authority v.
Commission on Audit (G.R. No. 88365, January 9, 1990), even upheld the validity of the said agreement. Consequently, the agreement was
extended beyond its ten-year period. In 1995, METROs separate juridical identity was again recognized when it entered into a collective
bargaining agreement with the workers union. All these years, METROs distinct corporate personality continued quiescently, separate and
apart from the juridical personality of petitioner LRTA.
The labor dispute only arose in 2000, after a deadlock occurred during the collective bargaining between petitioner METRO and the
workers union. This alone is not a justification to pierce the corporate veil of petitioner METRO and make petitioner LRTA liable to
private respondent workers. There are no badges of fraud or any wrongdoing to pierce the corporate veil of petitioner METRO.
x x x x
In sum, petitioner LRTA cannot be held liable to the employees of petitioner METRO.
18
(emphasis and underscoring supplied)
IN FINE, the Labor Arbiters decision against LRTA was rendered without jurisdiction, hence, it is void, thus rendering it improper for the
remand of the case to the NLRC, as ordered by the appellate court, for it (NLRC) to give due course to LRTAs appeal.
A final word. It bears emphasis that this Courts present Decision treats only with respect to the Labor Arbiters decision against
respondent LRTA.


[G.R. No. 152121. July 29, 2003]
EDUARDO G. EVIOTA, petitioner, vs. THE HON. COURT OF APPEALS, THE HON. JOSE BAUTISTA, Presiding Judge of Branch
136, Regional Trial Court of Makati, and STANDARD CHARTERED BANK, respondents.
Sometime on January 26, 1998, the respondent Standard Chartered Bank and petitioner Eduardo G. Eviota executed a contract of
employment under which the petitioner was employed by the respondent bank as Compensation and Benefits Manager, VP (M21).
However, the petitioner abruptly resigned from the respondent bank barely a month after his employment and rejoined his former
employer.
On June 19, 1998, the respondent bank filed a complaint against the petitioner with the RTC of Makati City. The respondent bank alleged
inter alia in its complaint that:
1. It is a foreign banking institution authorized to do business in the Philippines, with principal offices at the 5
th
Floor, Bankmer
Bldg., 6756 Ayala Avenue, Makati City.
2. Defendant Eduardo Eviota (Eviota) is a former employee of the Bank, and may be served with summons and other court
processes at 8 Maple Street, Cottonwoods, Antipolo, Metro Manila.
3. On December 22, 1997, Eviota began negotiating with the Bank on his possible employment with the latter. Taken up during
these negotiations were not only his compensation and benefit package, but also the nature and demands of his prospective position. The
Bank made sure that Eviota was fully aware of all the terms and conditions of his possible job with the Bank.
4. On January 26, 1998, Eviota indicated his conformity with the Banks Offer of Employment by signing a written copy of such
offer dated January 22, 1998 (the Employment Contract). A copy of the Employment Contract between Eviota and the Bank is hereto
attached as Annex A.
5. Acting on the Employment Contract and on Eviotas uninhibited display of interest in assuming his position, the Bank promptly
proceeded to carry out the terms of the Employment Contract as well as to facilitate his integration into the workforce. Among others,
the Bank: (a) renovated and refurbished the room which was to serve as Eviotas office; (b) purchased a 1998 Honda CR-V (Motor No.
PEWED7P101101; Chassis No. PADRD 1830WV00108) for Eviotas use; (c) purchased a desktop IBM computer for Eviotas use; (d)
arranged the takeout of Eviotas loans with Eviotas former employer; (e) released Eviotas signing bonus in the net amount of
P300,000.00; (f) booked Eviotas participation in a Singapore conference on Y2K project scheduled on March 10 and 11, 1998; and (g)
introduced Eviota to the local and regional staff and officers of the Bank via personal introductions and electronic mail.
7. On February 25, 1998, Eviota assumed his position as Compensation and Benefits Manager with the Bank and began to discharge
his duties. At one Human Resources (HR) Committee meeting held on March 3, 1998, Eviota energetically presented to senior
management his projects for the year, thus raising the latters expectations. The same day, Eviota instructed the Banks HR Administrator
to book him a flight for Singapore, where he was scheduled to participate in a Y2K project on March 10 and 11, 1998. Confident of
Eviotas professed commitment to the Bank, the latter made the aforementioned airline booking for him. In addition, the Bank allowed
Eviota access to certain sensitive and confidential information and documents concerning the Banks operations.
8. After leading the Bank to believe that he had come to stay, Eviota suddenly resigned his employment with immediate effect to re-
join his previous employer. His resignation, which did not comply with the 30-day prior notice rule under the law and under the
Employment Contract, was so unexpected that it disrupted plans already in the pipeline (e.g., the development of a salary/matrix grid and
salary structure, and the processing of merit promotion recommendations), aborted meetings previously scheduled among Bank officers,
and forced the Bank to hire the services of a third party to perform the job he was hired to do. For the services of this third party, the
Bank had to pay a total of P208,807.50. A copy of a receipt for the above expenses is hereto attached as Annex C (See also, Annex B).
9. Aside from causing no small degree of chaos within the Bank by reason of his sudden resignation, Eviota made off with a
computer diskette and other papers and documents containing confidential information on employee compensation and other Bank
matters, such as the salary schedule of all Corporate and Institutional Banking officers and photocopies of schedules of benefits provided
expatriates being employed by the Bank.
10. With the benefit of hindsight, the Bank realizes that it was simply used by Eviota as a mere leverage for his selfish efforts at
negotiating better terms of employment with his previous employer. Worse, there is evidence to show that in his attempts to justify his
hasty departure from the Bank and conceal the real reason for his move, Eviota has resorted to falsehoods derogatory to the reputation of
the Bank. In particular, he has been maliciously purveying the canard that he had hurriedly left the Bank because it had fai led to provide
him support. His untruthful remarks have falsely depicted the Bank as a contract violator and an undesirable employer, thus damaging the
Banks reputation and business standing in the highly competitive banking community, and undermining its ability to recruit and retain the
best personnel in the labor market.
11. On March 16, 1998, the Bank made a written demand on Eviota to return the aforementioned computer diskette and other
confidential documents and papers, reimburse the Bank for the various expenses incurred on his account as a result of his resignation (with
legal interest), and pay damages in the amount of at least P500,000.00 for the inconvenience and work/program disruptions suffered by the
Bank.
A copy of the Banks demand letter dated March 16, 1998 is hereto attached as Annex D.
12. In partial compliance with said demand, Eviota made arrangements with his previous employer to reimburse the Bank for the
expenses incurred in connection with the Banks purchase of the Honda CR-V for his use. The Bank informed Eviota that in addition to
the Honda CR-Vs purchase price of P848,000.00 (of which Eviota initially shouldered P48,000.00), incidental costs in the form of
Processing Fees (P1,000.00), FPD/MCAR/98-155684 (P1,232.53) and Fund Transfer Price (P18,646.84) were incurred, bringing the total
cost of the Honda CR-V to P868,881.38. On April 29, 1998, the Bank received two managers checks in the aggregate amount of
P868,881.38, representing costs incurred in connection with the purchase of the Honda CR-V, inclusive of processing fees and other
incidental costs. Previously, Eviota had returned his P300,000.00 signing bonus, less the P48,000.00 he had advanced for the Honda CR-
Vs purchase price.
13. Eviota never complied with the Banks demand that he reimburse the latter for the other expenses incurred on his account,
amounting to P360,562.12 (see, Annex B).1[3]
XXX
The petitioner filed a motion to dismiss the complaint on the ground that the action for damages of the respondent bank was within the
exclusive jurisdiction of the Labor Arbiter under paragraph 4, Article 217 of the Labor Code of the Philippines, as amended. The
petitioner averred that the respondent banks claim for damages arose out of or were in connection with his employer-employee
relationship with the respondent bank or some aspect or incident of such relationship. The respondent bank opposed the motion, claiming
that its action for damages was within the exclusive jurisdiction of the trial court. Although its claims for damages incidentally involved an
employer-employee relationship, the said claims are actually predicated on the petitioners acts and omissions which are separately,
specifically and distinctly governed by the New Civil Code.
SC:
ART. 217. Jurisdiction of Labor Arbiters and the Commission.(a) Except as otherwise provided under this Code the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide within thirty (30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or
non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and
other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations.
Case law has it that the nature of an action and the subject matter thereof, as well as which court has jurisdiction over the same, are
determined by the material allegations of the complaint and the reliefs prayed for in relation to the law involved.



Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of the labor
arbiter. A money claim by a worker against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter only if there is
a reasonable causal connection between the claim asserted and employee-employer relation. Absent such a link, the complaint will be
cognizable by the regular courts of justice.2[8]
Actions between employees and employer where the employer-employee relationship is merely incidental and the cause of action precedes
from a different source of obligation is within the exclusive jurisdiction of the regular court.3[9] In Georg Grotjahn GMBH & Co. v.
Isnani,4[10] we held that the jurisdiction of the Labor Arbiter under Article 217 of the Labor Code, as amended, is limited to disputes
arising from an employer-employee relationship which can only be resolved by reference to the Labor Code of the Philippines, other labor
laws or their collective bargaining agreements. In Singapore Airlines Limited v. Pao,5[11] the complaint of the employer against the employee
for damages for wanton justice and refusal without just cause to report for duty, and for having maliciously and with bad faith violated the
terms and conditions of their agreement for a course of conversion training at the expense of the employer, we ruled that jurisdiction over
the action belongs to the civil court:
On appeal to this court, we held that jurisdiction over the controversy belongs to the civil courts. We stated that the action was for breach
of a contractual obligation, which is intrinsically a civil dispute. We further stated that while seemingly the cause of action arose from
employer-employee relations, the employers claim for damages is grounded on wanton failure and refusal without just cause to report to
duty coupled with the averment that the employee maliciously and with bad faith violated the terms and conditions of the contract to the
damage of the employer. Such averments removed the controversy from the coverage of the Labor Code of the Philippines and brought it
within the purview of the Civil Law.
Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217, to be cognizable by the Labor Arbiter, must
have a reasonable causal connection with any of the claims provided for in that article. Only if there is such a connection with the other
claims can the claim for damages be considered as arising from employer-employee relations.6[12]
The claims were the natural consequences flowing from a breach of an obligation, intrinsically civil in nature.
In Medina v. Castro-Bartolome,7[13] we held that a complaint of an employee for damages against the employer for slanderous remarks made
against him was within the exclusive jurisdiction of the regular courts of justice because the cause of action of the plaintiff was for damages
for tortious acts allegedly committed by the employer. The fact that there was between the parties an employer-employee relationship does
not negate the jurisdiction of the trial court.













In Singapore Airlines Ltd. v. Pao,8[14] we held that:
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 Dai-Chi Electronics Manufacturing Corporation v. Villarama, Jr.,9[15] the petitioner sued its employee Adonis Limjuco for breach of contract
which reads:
That for a period of two (2) years after termination of service from EMPLOYER, EMPLOYEE shall not in any manner be connected,
and/or employed, be a consultant and/or be an informative body directly or indirectly, with any business firm, entity or undertaking
engaged in a business similar to or in competition with that of the EMPLOYER.10[16]
The petitioner alleged in its complaint with the trial court that:
Petitioner claimed that private respondent became an employee of Angel Sound Philippines Corporation, a corporation engaged i n the
same line of business as that of petitioner, within two years from January 30, 1992, the date of private respondents resignation from
petitioners employ. Petitioner further alleged that private respondent is holding the position of Head of the Material Management Control
Department, the same position he held while in the employ of petitioner.11[17]
The trial court dismissed the case for lack of jurisdiction over the subject matter because the cause of action for damages arose out of the
parties employer-employee relationship. We reversed the order of the trial court and held, thus:
Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to recover damages agreed upon in the contract as
redress for private respondents breach of his contractual obligation to its damage and prejudice (Rollo, p. 57). Such cause of action is
within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so when we consider that the
stipulation refers to the post-employment relations of the parties.12[18]
It is evident that the causes of action of the private respondent against the petitioner do not involve the provisions of the Labor Code of
the Philippines and other labor laws but the New Civil Code. Thus, the said causes of action are intrinsically civil. There is no causal
relationship between the causes of action of the private respondents causes of action against the petitioner and their employer-employee
relationship. The fact that the private respondent was the erstwhile employer of the petitioner under an existing employment contract
before the latter abandoned his employment is merely incidental. In fact, the petitioner had already been replaced by the private
respondent before the action was filed against the petitioner.












G.R. No. 121227 August 17, 1998
VICENTE SAN JOSE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and OCEAN TERMINAL SERVICES, INC., respondent.
While the rule prescribing the requisite motion for reconsideration is not absolute and recognizes some exceptions, there is no showing
that the case at bar constitutes an exception. Nevertheless, we gave due course to the petition to enable the Court to reiterate and clarify
the jurisdictional boundaries between Labor Arbiters and Voluntary Arbitrator or Panel of Voluntary Arbitrators over money claims, and
to render substantial and speedy justice to subject aged stevedore retiree who first presented his claim for retirement benefit in April 1991,
or seven years ago.
Labor law practitioners and all lawyers, for that matter, should be fully conversant with the requirements for the institution of certiorari
proceedings under Rule 65 of the Revised Rules of Court. For instance, it is necessary that a Motion for Reconsideration of the Decision of
the National Labor Relations Commission must first be resorted to. The ruling in Corazon Jamer v. National Labor Relations Commission, G.R.
No. 112630, September 5, 1997, comes to the fore and should be well understood and observed. An ordinary allegation ". . . and there
is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law" (Rule 65, Sec. 1, Revised Rules of Court) is not a
foolproof substitute for a Motion for Reconsideration, absence of which can be fatal to a Petition for Certiorari. Petitioner cannot and
should not rely on the liberality of the Court simply because he is a working man.
In the Jamer case, this court said:
. . . This premature action of petitioners constitutes a fatal infirmity as ruled in a long line of decisions, most recently is
the case of Building Care Corporation v. National Labor Relations Commission
The filing of such motion is intended to afford public respondent an opportunity to correct any actual
or fancied error attributed to it by way of a re-examination of the legal and factual aspects of the case.
Petitioner's inaction or negligence under the circumstances is tantamount to a deprivation of the right
and opportunity of the respondent commission to cleanse itself of an error unwittingly committed or
to vindicate itself of an act unfairly imputed. . . .
Likewise, a motion for reconsideration is an adequate remedy; hence certiorari proceedings, as in this case, will not
prosper.
As stated in the Decision of the Labor Arbiter in NLRC-NCR-Case No. 00-03-0201-93, dated January 19, 1994, the facts of this case are
undisputed. The Labor Arbiter reported, thus:
Complainant, in his position paper (Record, pages 11 to 14) states that he was hired sometime in July 1980 as a
stevedore continuously until he was advised in April 1991 to retire from service considering that he already reached 65
years old (sic); that accordingly, he did apply for retirement and was paid P3,156.39 for retirement pay . . . (Rollo, pp. 15,
26-27, 58-59).
Decision of the Labor Arbiter in NLRC-NCR-
Case No. 00-03-02101-93, January 9, 1994
(Rollo, pp. 15017, at pp. 16-17).
The Labor Arbiter decided the case solely on the merits of the complaint. Nowhere in the Decision is made mention of or reference to the
issue of jurisdiction of the Labor Arbiter (Rollo, pp. 15-17). But the issue of jurisdiction is the bedrock of the Petition because, as earlier
intimated, the Decision of the National Labor Relations Commission, hereinbelow quoted, reversed the Labor Arbiter's Decision on the
issue of jurisdiction. Reads subject Decision of the Labor Arbiter:
Respondents, in their Reply to complainant's position paper, allege (Record, pages 18 to 21) that complainant's latest
basic salary was P120.34 per day; that he only worked on rotation basis and not seven days a week due to numerous
stevedores who can not all be given assignments at the same time; that all stevedores only for paid every time they were
assigned or actually performed stevedoring; that the computation used in arriving at the amount of P3,156.30 was the
same computation applied to the other stevedores; that the use of divisor 303 is not applicable because complainant
performed stevedoring job only on call, so while he was connected with the company for the past 11 years, he did not
actually render 11 years of service; that the burden of proving that complainant's latest salary was P200.00 rests upon
him; that he already voluntarily signed a waiver of quitclaim; that if indeed respondent took advantage of his illiteracy
into signing his quitclaim, he would have immediately filed this complaint but nay, for it took him two (2) years to do so.
The issue therefore is whether or not complainant is entitled to the claimed differential of separation pay.
We find for the complainant. He is entitled to differential.
We cannot sustain a computation of length of service based on the ECC contribution records. Likewise, the allegation
that complainant rendered service for only five days a month for the past 11 years is statistically improbable, aside from
the fact that the best evidence thereof are complainant's daily time records which respondent are (sic) duty bound to keep
and make available anytime in case of this.
The late filing has no bearing. The prescription period is three years. It is suffice (sic) that the filing falls within the
period.
Whether or not complainant worked on rotation basis is a burden which lies upon the employer. The presumption is
that the normal working period is eight (8) hours a day and six (6) days a week, or 26 days a month, unless proven
otherwise.
Also, the burden of proving the amount of salaries paid to employees rests upon the employer not on the employee. It
can be easily proven by payrolls, vouchers, etc. which the employers are likewise duty bound to keep and present. There
being non, we have to sustain complainant's assertion that his latest salary rate was P200 a day or P5,200 a month.
Therefore, his retrenchment pay differential is P25,443.70 broken down as follows:
SC:
2. Jurisdictional Issue
The jurisdiction of Labor Arbiters and Voluntary Arbitrator or Panel of Voluntary Arbitrators is clearly defined and specifically delineated
in the Labor Code. The pertinent provisions of the Labor Code, read:
A. Jurisdiction of Labor Arbiters
Art. 217. Jurisdiction of Labor Arbiter and the Commission. (a) Except as otherwise provided under this Code the
Labor Arbiter shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours
of work and other terms and conditions of employment;
4. claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and
lockouts; and,
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising
from employer-employee relations, including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000) regardless of whether accompanied with a claim for reinstatement.
xxx xxx xxx
(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the
interpretation or enforcement of company procedure/policies shall be disposed of by the Labor Arbiter by referring the
same to the grievance machinery and voluntary arbitrator so maybe provided in said agreement.
B. Jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. The Voluntary Arbitrator or panel
of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising
from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies referred to in the immediately preceding article.
Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer
be treated as unfair labor practice and shall be resolved as grievances under the collective bargaining agreement. For
purposes of this Article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious
refusal to comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall
not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or
panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or
Voluntary Arbitration provided in the Collective Bargaining Agreement.
Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon
agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and
bargaining deadlocks.
The aforecited provisions of law cannot be read in isolation or separately. They must be read as a whole and each Article of the Code
reconciled one with the other. An analysis of the provisions of Articles 217, 261, and 262 indicates, that:
1. The jurisdiction of the Labor Arbiter and Voluntary Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in Articles
217, 261 and 262, can possibly include money claims in one form or another.
2. The cases where the Labor Arbiters have original and exclusive jurisdiction are enumerated in Article 217, and that of the Voluntary
Arbitrator or Panel of Voluntary Arbitrators in Article 261.
3. The original and exclusive jurisdiction of Labor Arbiters is qualified by an exception as indicated in the introductory sentence of Article
217 (a), to wit:
Art. 217. Jurisdiction of Labor Arbiters . . . (a) Except as otherwise provided under this Code the Labor Arbiter shall
have original and exclusive jurisdiction to hear and decide . . . the following cases involving all workers. . . .
The phrase "Except as otherwise provided under this Code" refers to the following exceptions:
A. Art. 217. Jurisdiction of Labor Arbiters . . .
xxx xxx xxx
(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the
interpretation or enforcement of company procedure/policies shall be disposed of by the Labor Arbiter by referring the
same to the grievance machinery and voluntary arbitrator as may be provided in said agreement.
B. Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon
agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and
bargaining deadlocks.
Parenthetically, the original and exclusive jurisdiction of the Labor Arbiter under Article 217 (c), for money claims is limited only
to those arising from statutes or contracts other than a Collective Bargaining Agreement. The Voluntary Arbitrator or Panel of
Voluntary Arbitrators will have original and exclusive jurisdiction over money claims "arising from the interpretation or
implementation of the Collective Bargaining Agreement and, those arising from the interpretation or enforcement of company
personnel policies", under Article 261.
4. The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is provided for in Arts. 261 and 262 of the Labor Code as
indicated above.
1. A close reading of Article 261 indicates that the original and exclusive jurisdiction of Voluntary Arbitrator or Panel of Voluntary
Arbitrators is limited only to:
. . . unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and
those arising from the interpretation or enforcement of company personnel policies . . . Accordingly, violations of a
collective bargaining agreement, except those which are gross in character, shall no longer be treated as unfair labor
practice and shall be resolved as grievances under the Collective Bargaining Agreement. . . . .
2. Voluntary Arbitrators or Panel of Voluntary Arbitrators, however, can exercise jurisdiction over any and all disputes between an
employer and a union and/or individual worker as provided for in Article 262.
Art. 262. Jurisdiction over other labor disputes. The voluntary arbitrator or panel of voluntary arbitrators, upon
agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and
bargaining deadlocks.
It must be emphasized that the jurisdiction of the Voluntary Arbitrator or Panel of Voluntary Arbitrators under Article 262 must be
voluntarily conferred upon by both labor and management. The labor disputes referred to in the same Article 262 can include all those
disputes mentioned in Article 217 over which the Labor Arbiter has original and exclusive jurisdiction.
As shown in the above contextual and wholistic analysis of Articles 217, 261, and 262 of the Labor Code, the National Labor Relations
Commission correctly ruled that the Labor Arbiter had no jurisdiction to hear and decide petitioner's money-claim-underpayment of
retirement benefits, as the controversy between the parties involved an issue "arising from the interpretation or implementation" of a
provision of the collective bargaining agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators has original and exclusive
jurisdiction over the controversy under Article 261 of the Labor Code, and not the Labor Arbiter.
3. Merits of the Case
The Court will not remand the case to the Voluntary Arbitrator or Panel of Voluntary Arbitrators for hearing. This case has dragged on far
too long eight (8) years. Any further delay would be a denial of speedy justice to an aged retired stevedore. There is further the
possibility that any Decision by the Voluntary Arbitrator or Panel of Voluntary Arbitrators will be appealed to the Court of Appeals, and
finally to this Court. Hence, the Court will rule on the merits of the case.
We adopt as our own the retirement benefit computation formula of the Labor Arbiter, and the reasons therefor as stated in the decision
abovequoted.
The simple statement of the Labor Arbiter that "we cannot sustain a computation of length of service based on ECC contribution
records", was not amply explained by the Labor Arbiter; however, there is legal and factual basis for the same. It is unrealistic to expect a
lowly stevedore to know what reports his employer submits to the Employee's Compensation Commission under Book IV, Health, Safety
and Welfare Benefits, Title II, Employees Compensation and State Insurance Fund, of the Labor Code, simply because the insurance fund
is solely funded by the employer and the rate of employer's contribution varies according to time and actuarial computations. (See Articles
183-184; Labor Code). The worker has no ready access to this employer's record. In fact, it is farthest from his mind to inquire into the
amount of employer's contribution, much less whether the employer remits the contributions. The worker is at all times entitl ed to benefits
upon the occurrence of the defined contingency even when the employer fails to remit the contributions. (See Article 196 (b), Labor Code).