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LABOR 26-36

26. ART 217 (A) (4), LABOR ARBITER V REGULAR COURTS


INDOPHIL TEXTILE MILLS V ADVIENTO
THIRD DIVISION
[G.R. No. 171212. August 4, 2014.]
INDOPHIL TEXTILE MILLS, INC., petitioner, vs. ENGR.
SALVADOR ADVIENTO, respondent.
DECISION
PERALTA, J p:
Before the Court is a petition for review on certiorari under Rule 45 of
the Revised Rules of Court which seeks to review, reverse and setaside the Decision 1 of the Court of Appeals (CA), dated May 30,
2005, and its Resolution 2 dated January 10, 2006 in the case
entitled Indophil Textile Mills, Inc. v. Hon. Rolando R. Velasco and
Engr. Salvador Adviento, docketed as CA-G.R. SP No. 83099.
The facts are not disputed.
Petitioner Indophil Textile Mills, Inc. is a domestic corporation
engaged in the business of manufacturing thread for weaving. 3 On
August 21, 1990, petitioner hired respondent Engr. Salvador
Adviento as Civil Engineer to maintain its facilities in Lambakin,
Marilao, Bulacan. 4
On August 7, 2002, respondent consulted a physician due to
recurring weakness and dizziness. 5 Few days later, he was
diagnosed with Chronic Poly Sinusitis, and thereafter, with moderate,
severe and persistent Allergic Rhinitis. 6 Accordingly, respondent
was advised by his doctor to totally avoid house dust mite and
textile dust as it will transmute into health problems. 7
Distressed, respondent filed a complaint against petitioner
with the National Labor Relations Commission (NLRC), San
Fernando, Pampanga, for alleged illegal dismissal and for the
payment of backwages, separation pay, actual damages and
attorney's fees. The said case, docketed as NLRC Case No. RAB-III-

05-5834-03, is still pending resolution with the NLRC at the time


the instant petition was filed. 8
Subsequently, respondent filed another Complaint 9 with the
Regional Trial Court (RTC) of Aparri, Cagayan, alleging that he
contracted such occupational disease by reason of the gross
negligence of petitioner to provide him with a safe, healthy and
workable environment.
In his Complaint, respondent alleged that as part of his job
description, he conducts regular maintenance check on petitioner's
facilities including its dye house area, which is very hot and emits
foul chemical odor with no adequate safety measures introduced by
petitioner. 10 According to respondent, the air washer dampers and
all roof exhaust vests are blown into open air, carrying dust thereto.
11 Concerned, respondent recommended to management to place
roof insulation to minimize, if not, eradicate the health hazards
attendant in the work place. 12 However, said recommendation was
turned down by management due to high cost. 13 IDCScA
Respondent further suggested to petitioner's management that the
engineering office be relocated because of its dent prone location,
such that even if the door of the office is sealed, accumulated dust
creeps in outside the office. 14 This was further aggravated by the
installation of new filters fronting the office. 15 However, no action
was taken by management. 16
According to respondent, these health hazards have been the
persistent complaints of most, if not all, workers of petitioner. 17
Nevertheless, said complaints fell on deaf ears as petitioner callously
ignored the health problems of its workers and even tended to be
apathetic to their plight, including respondent. 18
Respondent averred that, being the only breadwinner in the family,
he made several attempts to apply for a new job, but to his dismay
and frustration, employers who knew of his present health condition
discriminated against him and turned down his application. 19 By
reason thereof, respondent suffered intense moral suffering, mental
anguish, serious anxiety and wounded feelings, praying for the
recovery of the following: (1) Five Million Pesos (P5,000,000.00) as
moral damages; (2) Two Million Pesos (P2,000,000.00) as exemplary
damages; and (3) Seven Million Three Thousand and Eight Pesos
(P7,003,008.00) as compensatory damages. 20 Claiming to be a
pauper litigant, respondent was not required to pay any filing fee. 21
cCTaSH

In reply, petitioner filed a Motion to Dismiss 22 on the ground that:


(1) the RTC has no jurisdiction over the subject matter of the
complaint because the same falls under the original and exclusive
jurisdiction of the Labor Arbiter (LA) under Article 217 (a) (4) of the
Labor Code; and (2) there is another action pending with the
Regional Arbitration Branch III of the NLRC in San Fernando City,
Pampanga, involving the same parties for the same cause.
On December 29, 2003, the RTC issued a Resolution 23 denying the
aforesaid Motion and sustaining its jurisdiction over the instant case.
It held that petitioner's alleged failure to provide its employees with
a safe, healthy and workable environment is an act of negligence, a
case of quasi-delict. As such, it is not within the jurisdiction of the LA
under Article 217 of the Labor Code.On the matter of dismissal
based on lis pendencia, the RTC ruled that the complaint before the
NLRC has a different cause of action which is for illegal dismissal and
prayer for backwages, actual damages, attorney's fees and
separation pay due to illegal dismissal while in the present case, the
cause of action is for quasi-delict. 24 The fallo of the Resolution is
quoted below:
WHEREFORE, finding the motion to dismiss to be without
merit, the Court denies the motion to dismiss.
SO ORDERED. 25
On February 9, 2004, petitioner filed a motion for reconsideration
thereto, which was likewise denied in an Order issued on even date.
Expectedly, petitioner then filed a Petition for Certiorari with the CA
on the ground that the RTC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in upholding that it has
jurisdiction over the subject matter of the complaint despite the
broad and clear terms of Article 217 of the Labor Code,as amended.
26
After the submission by the parties of their respective Memoranda,
the CA rendered a Decision 27 dated May 30, 2005 dismissing
petitioner's Petition for lack of merit, the dispositive portion of which
states: HAaScT
WHEREFORE, premises considered, petition for certiorari
is hereby DISMISSED for lack of merit.
SO ORDERED. 28
From the aforesaid Decision, petitioner filed a Motion for
Reconsideration which was nevertheless denied for lack of merit in
the CA's Resolution 29 dated January 10, 2006.

Hence, petitioner interposed the instant petition upon the solitary


ground that "THE HONORABLE COURT OF APPEALS HAS DECIDED A
QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND
WITH APPLICABLE DECISIONS OF THE HONORABLE SUPREME
COURT". 30 Simply, the issue presented before us is whether or not
the RTC has jurisdiction over the subject matter of respondent's
complaint praying for moral damages, exemplary damages,
compensatory damages, anchored on petitioner's alleged gross
negligence in failing to provide a safe and healthy working
environment for respondent.
The delineation between the jurisdiction of regular courts and labor
courts over cases involving workers and their employers has always
been a matter of dispute. 31 It is up to the Courts to lay the line
after careful scrutiny of the factual milieu of each case. Here, we find
that jurisdiction rests on the regular courts.
In its attempt to overturn the assailed Decision and Resolution of the
CA, petitioner argues that respondent's claim for damages is
anchored on the alleged gross negligence of petitioner as an
employer to provide its employees, including herein respondent, with
a safe, healthy and workable environment; hence, it arose from an
employer-employee relationship. 32 The fact of respondent's
employment with petitioner as a civil engineer is a necessary
element of his cause of action because without the same,
respondent cannot claim to have a right to a safe, healthy and
workable environment. 33 Thus, exclusive jurisdiction over the same
should be vested in the Labor Arbiter and the NLRC pursuant to
Article 217 (a) (4) of the Labor Code of the Philippines (Labor Code),
as amended. 34 HaAIES
We are not convinced.
The jurisdiction of the LA and the NLRC is outlined in Article 217 of
the Labor Code,as amended by Section 9 of Republic Act (R.A.) No.
6715, to wit:
ART. 217. Jurisdiction of Labor Arbiters 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 nonagricultural:

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
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 (P5,000.00)
regardless of whether accompanied with a claim
for reinstatement.
xxx xxx xxx. 35
While we have upheld the present trend to refer worker-employer
controversies to labor courts in light of the aforequoted provision, we
have also recognized that not all claims involving employees can be
resolved solely by our labor courts, specifically when the law
provides otherwise. 36 For this reason, we have formulated the
"reasonable causal connection rule", wherein if there is a reasonable
causal connection between the claim asserted and the employeremployee relations, then the case is within the jurisdiction of the
labor courts; and in the absence thereof, it is the regular courts that
have jurisdiction. 37 Such distinction is apt since 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. 38 DaTHAc

In fact, as early as Medina vs. Hon. Castro-Bartolome, 39 in negating


the jurisdiction of the LA, although the parties involved were an
employer and two employees, the Court succinctly held that:
The pivotal question to Our mind is whether or not the
Labor Code has any relevance to the reliefs sought by the
plaintiffs. For if the Labor Code has no relevance,
any discussion concerning the statutes amending it
and whether or not they have retroactive effect is
unnecessary.
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. 40
Similarly, we ruled in the recent case of Portillo v. Rudolf Lietz, Inc.
41 that not all disputes between an employer and his employees fall
within the jurisdiction of the labor tribunals such that when the claim
for damages is grounded on the "wanton failure and refusal" without
just cause of an employee to report for duty despite repeated notices
served upon him of the disapproval of his application for leave of
absence, the same falls within the purview of Civil Law, to wit:
As early as Singapore Airlines Limited v. Pao, we
established that not all disputes between an
employer and his employee(s) fall within the
jurisdiction of the labor tribunals. We differentiated
between abandonment per se and the manner and
consequent effects of such abandonment and ruled that
the first, is a labor case, while the second, is a civil law
case. HSacEI
Upon the facts and issues involved, jurisdiction
over the present controversy must be held to
belong to the civil Courts. While seemingly petitioner's
claim for damages arises from employer-employee
relations, and the latest amendment to Article 217 of the
Labor Code under PD No. 1691 and BP Blg. 130 provides
that all other claims arising from employer-employee
relationship are cognizable by Labor Arbiters [citation
omitted], in essence, petitioner's claim for damages
is grounded on the "wanton failure and refusal"

without just cause of private respondent Cruz to


report for duty despite repeated notices served
upon him of the disapproval of his application for
leave of absence without pay. This, coupled with
the further averment that Cruz "maliciously and
with bad faith" violated the terms and conditions of
the conversion training course agreement to the
damage of petitioner removes the present
controversy from the coverage of the Labor Code
and brings it within the purview of Civil Law.
Clearly, the complaint was anchored not on the
abandonment per se by private respondent Cruz of his job
as the latter was not required in the Complaint to report
back to work but on the manner and consequent
effects of such abandonment of work translated in
terms of the damages which petitioner had to
suffer. . . . . 42
Indeed, jurisprudence has evolved the rule that claims for damages
under Article 217 (a) (4) of the Labor Code,to be cognizable by the
LA, must have a reasonable causal connection with any of the claims
provided for in that article. 43 Only if there is such a connection with
the other claims can a claim for damages be considered as arising
from employer-employee relations. 44
In the case at bench, we find that such connection is nil.
True, the maintenance of a safe and healthy workplace is ordinarily a
subject of labor cases. More, the acts complained of appear to
constitute matters involving employee-employer relations since
respondent used to be the Civil Engineer of petitioner. However, it
should be stressed that respondent's claim for damages is
specifically grounded on petitioner's gross negligence to provide a
safe, healthy and workable environment for its employees a case
of quasi-delict. This is easily ascertained from a plain and cursory
reading of the Complaint, 45 which enumerates the acts and/or
omissions of petitioner relative to the conditions in the workplace, to
wit: IaHDcT
1. Petitioner's textile mills have excessive flying textile
dust and waste in its operations and no effort was
exerted by petitioner to minimize or totally eradicate
it;
2. Petitioner failed to provide adequate and sufficient dust
suction facilities;

3. Textile machines are cleaned with air compressors


aggravating the dusty work place;
4. Petitioner has no physician specializing in respiratoryrelated illness considering it is a textile company;
5. Petitioner has no device to detect the presence or
density of dust which is airborne;
6. The chemical and color room are not equipped with
proper safety chemical nose mask; and SHacCD
7. The power and boiler plant emit too much smoke with
solid particles blown to the air from the smoke stack
of the power plant emitting a brown rust color which
engulfs the entire compound. 46
In addition, respondent alleged that despite his earnest efforts to
suggest to management to place roof insulation to minimize, if not,
eradicate the health hazards attendant in the workplace, the same
was not heeded. 47
It is a basic tenet that jurisdiction over the subject matter is
determined upon the allegations made in the complaint, irrespective
of whether or not the plaintiff is entitled to recover upon the claim
asserted therein, which is a matter resolved only after and as a
result of a trial. 48 Neither can jurisdiction of a court be made to
depend upon the defenses made by a defendant in his answer or
motion to dismiss. 49 In this case, a perusal of the complaint would
reveal that the subject matter is one of claim for damages arising
from quasi-delict, which is within the ambit of the regular court's
jurisdiction.
The pertinent provision of Article 2176 of the Civil Code which
governs quasi-delict provides that: cHESAD
Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called quasi-delict. 50
Thus, to sustain a claim liability under quasi-delict, the following
requisites must concur: (a) damages suffered by the plaintiff; (b)
fault or negligence of the defendant, or some other person for whose
acts he must respond; and (c) the connection of cause and effect
between the fault or negligence of the defendant and the damages
incurred by the plaintiff. 51

In the case at bar, respondent alleges that due to the continued and
prolonged exposure to textile dust seriously inimical to his health, he
suffered work-contracted disease which is now irreversible and
incurable, and deprived him of job opportunities. 52 Clearly, injury
and damages were allegedly suffered by respondent, an element of
quasi-delict. Secondly, the previous contract of employment between
petitioner and respondent cannot be used to counter the element of
"no pre-existing contractual relation" since petitioner's alleged gross
negligence in maintaining a hazardous work environment cannot be
considered a mere breach of such contract of employment, but falls
squarely within the elements of quasi-delict under Article 2176 of the
Civil Code since the negligence is direct, substantive and
independent. 53 Hence, we ruled in Yusen Air and Sea Services
Phils., Inc. v. Villamor 54 that: TSADaI
When, as here, the cause of action is based on a quasidelict or tort, which has no reasonable causal connection
with any of the claims provided for in Article 217,
jurisdiction over the action is with the regular courts. 55
It also bears stressing that respondent is not praying for any relief
under the Labor Code of the Philippines. He neither claims for
reinstatement nor backwages or separation pay resulting from an
illegal termination. The cause of action herein pertains to the
consequence of petitioner's omission which led to a work-related
disease suffered by respondent, causing harm or damage to his
person. Such cause of action is within the realm of Civil Law, and
jurisdiction over the controversy belongs to the regular courts. 56
Our ruling in Portillo, is instructive, thus:
There is no causal connection between private
respondent's claim for damages and the respondent
employers' claim for damages for the alleged "Goodwill
Clause" violation. Portillo's claim for unpaid salaries did
not have anything to do with her alleged violation of the
employment contract as, in fact, her separation from
employment is not "rooted" in the alleged contractual
violation. She resigned from her employment. She was not
dismissed. Portillo's entitlement to the unpaid salaries is
not even contested. Indeed, Lietz Inc.'s argument about
legal compensation necessarily admits that it owes the
money claimed by Portillo. 57 HEIcDT
Further, it cannot be gainsaid that the claim for damages occurred
after the employer-employee relationship of petitioner and

respondent has ceased. Given that respondent no longer demands


for any relief under the Labor Code as well as the rules and
regulations pertinent thereto, Article 217 (a) (4) of the Labor Code is
inapplicable to the instant case, as emphatically held in Portillo, to
wit:
It is clear, therefore, that while Portillo's claim for unpaid
salaries is a money claim that arises out of or in
connection with an employer-employee relationship, Lietz
Inc.'s claim against Portillo for violation of the
goodwill clause is a money claim based on an act
done after the cessation of the employment
relationship. And, while the jurisdiction over
Portillo's claim is vested in the labor arbiter, the
jurisdiction over Lietz Inc.'s claim rests on the
regular courts. Thus: DaACIH
As it is, petitioner does not ask for any relief
under the Labor Code. It merely seeks to
recover damages based on the parties'
contract of employment as redress for
respondent's breach thereof. Such cause of
action is within the realm of Civil Law, and
jurisdiction over the controversy belongs to
the regular courts. More so must this be in the
present case, what with the reality that the
stipulation refers to the post-employment
relations of the parties. 58
Where the 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, such claim falls outside the area of competence of
expertise ordinarily ascribed to the LA and the NLRC. 59 ICcDaA
Guided by the aforequoted doctrines, we find no reason to reverse
the findings of the CA. The RTC has jurisdiction over the subject
matter of respondent's complaint praying for moral damages,
exemplary damages, compensatory damages, anchored on
petitioner's alleged gross negligence in failing to provide a safe and
healthy working environment for respondent.
WHEREFORE, the petition is DENIED. The Decision of the Court of
Appeals, dated May 30, 2005, and its Resolution dated January 10,
2006 in CA-G.R. SP No. 83099 are hereby AFFIRMED.
SO ORDERED.

Velasco, Jr., Villarama, Jr., * Mendoza and Leonen, JJ., concur.


||| (Indophil Textile Mills, Inc. v. Adviento, G.R. No. 171212, [August
4, 2014])

27. Art 217


PAREDES V FEED THE CHILDREN PHILS
THIRD DIVISION
[G.R. No. 184397. September 9, 2015.]
ROSALINDA G. PAREDES, petitioner, vs. FEED THE
CHILDREN PHILIPPINES, INC. and/or DR. VIRGINIA
LAO,
HERCULES
PARADIANG
and
BENJAMIN
ESCOBIA, respondents.
DECISION
PERALTA, J p:
For this Court's resolution is a petition for review on certiorari,
dated October 23, 2008, of petitioner Rosalinda G. Paredes,

seeking to reverse and set aside the Decision 1 dated March 25,
2008 and Resolution 2 dated August 28, 2008 of the Court of
Appeals (CA). The assailed Decision annulled and set aside the
rulings of the National Labor Relations Commission (NLRC) Fourth
Division, Cebu City and affirmed the rulings of the Labor Arbiter
(LA), which held that petitioner voluntarily resigned and was not
constructively dismissed.
The antecedents are as follows:
Respondent Feed the Children Philippines, Inc. (FTCP) is a
non-stock, non-profit, and non-government organization duly
incorporated under the Philippine laws in 1989. Its objective is to
provide food, clothing, educational supplies and other necessities
of indigent children worldwide. 3 Respondents Dr. Virginia Lao,
Hercules Paradiang and Benjamin Escobia were members of the
FTCP Board of Trustees (Board) and Executive Committee
(Execom) of FTCP. 4
Petitioner Rosalinda Paredes was FTCP's National Director. Her
functions and duties include project management, fund accessing,
income generation, financial management, and administration of
the organization. She also signed all the FTCP checks and
approved all requisitions and disbursements of FTCP funds. 5 As
per FTCP's By-laws, it was also her duty to execute all resolutions
and/or decisions of the Board. 6
Petitioner was first hired by FTCP in 1999 as Country Director.
Her contract was renewed several times until her last contract for
the period from October 1, 2004 to September 30, 2007. Her initial
salary was US$1000.00 and then later, she was paid P70,000.00
aside from other benefits and allowances. 7
On August 12, 2005, forty-two (42) FTCP employees signed a
petition letter addressed to the Board expressing their complaints
against alleged detestable practices of petitioner, to wit: seeking
exemption from policies which she herself had approved;
withholding organization funds despite approval of its release;
procuring health insurance for herself without paying her share of
the premium; and receiving additional fees contrary to the terms
of her contract. 8
The next day, August 13, 2005, the staff of FTCP called Lao to
a meeting to submit their petition. They included Atty. Edgar
Chatto, then Chairman of the Board, in the meeting when they
realized that it was only her and Escobia who were present. The
group was edgy and demanded for outright solution. However, the

three Board members told them that they should follow a process.
9
Petitioner learned from Atty. Chatto that Program Manager
Primitivo Fostanes and his co-employees prepared a petition
questioning her leadership and management of FTCP. She filed an
administrative complaint against Fostanes on August 24, 2005,
but the same was not acted upon. 10
When the Board convened for a meeting on August 28, 2005,
petitioner was not allowed to participate. She was only allowed to
join the meeting after three hours. As ex officio member of the
Board and as head of the secretariat, she was always present in
every meeting to discuss her reports, programs and proposals. 11
During the meeting, the Board discussed the animosity
between the petitioner and the staff of FTCP and how they would
address the issue since they have inadequate grievance
mechanism for issues involving top management. 12 According to
Lao, petitioner became combative in issuing memos and filing of
administrative charges. 13 Atty. Chatto recounted that when
petitioner heard about the protesting senior management and
staff, her initial reaction was to resign but then she asked that the
complaints be put in writing. 14 After their discussion, they called
the representatives of the complaining staff and petitioner to air
their side.
Consequently, the Board decided that: Acting Board Chair Lao
will issue a back-to-work memorandum and status quo to ensure
that all the scheduled tasks be accomplished; there will be a
Supervisory Team, composing of Lao and Escobia, that will draw a
definite work plan and be compensated; the Supervisory Team will
not replace the functions of the National Director; and FTCP will
hire an independent professional management and financial
auditor. 15 CAIHTE
Petitioner sent letters to the Board inquiring about the scope
of audit. When the Board did not respond, her lawyers demanded
Lao to address petitioner's concerns regarding the management
and financial audit and that the manual of operations be strictly
followed. 16 In another letter, her lawyers informed individual
respondents that petitioner raised the legality and propriety of the
conduct of the audit, thus, they requested that they desist from
conducting the audit. The letter also indicated that failure to do so
would implead them as respondents in a preliminary injunction
case that they would file. 17

While she was at an orientation for local government officials


of Surigao del Norte at the Bohol Tropics Resort on October 24,
2005, petitioner received a phone call from her staff at FTCP that
the auditors from SRD & Co. were already at their office. Lao also
called to instruct her that she should meet the auditors and
accommodate them. She refrained from obeying the order and
was adamant that she should receive her requested information
first. 18
On October 26, 2005, the FTCP management executive
committee, headed by petitioner, informed the Board that they
were not afraid of the audit. They wanted due process as provided
by the by-laws, manual of operations, and manual of financial
policies and accounting procedures approved by the Board itself.
They also inquired about the meetings and processes of the
Execom that they were not aware of. Lastly, they asked for a
dialogue to settle their differences. 19
On the same date, petitioner wrote an electronic mail (e-mail)
to Dr. Larry Jones, the founder of feed the Children International,
Inc. and reported that Paradiang and two members of the Board
initiated a surprise and secret audit. She expressed that the
management was upset to the manner of conducting the audit.
She also insinuated that Paradiang was always after her despite
steering the organization to development. She intimated that she
would legally protect herself should she be illegally dismissed and
that they would seek relief from the harassment by Paradiang. 20
The Board resolved to suspend petitioner because of her
indifferent attitude and unjustified refusal to submit to an audit.
21 Before it could be implemented, respondent FTCP received her
resignation letter. 22 In her resignation letter, she wrote that she
can only serve the organization up to December 31, 2005. She
found it no longer tenable to work with the Board since she had
differences with majority of the members regarding resolutions,
policies and procedures. 23 aScITE
On October 29, 2005, the Board accepted her resignation
with the condition that its effectivity be moved to November 30,
2005. She was not obliged to report for work and FTCP was willing
to pay her salary for the month of November to aid her while she
looked for other employment. 24
Petitioner wrote to the members of management and foreign
funders informing them that she was no longer connected with
FTCP. She moved out all her belongings and even brought FTCP's
documents. 25

On November 2, 2005, petitioner filed a Complaint for illegal


dismissal, claiming that she was forced to resign, thus, was
constructively dismissed, and impleaded Lao, Paradiang and
Escobia in their personal capacities. 26
Upon failure of the parties to settle amicably, the mandatory
conference was terminated.
In her position paper, petitioner alleged that she was not
included in the Supervisory Team which performed her functions
and issued memorandum directly to her subordinates. She also
alleged that she was excluded from Execom meetings. 27
Respondents, on the other hand, claimed that petitioner was
signatory to all the bank checks of respondent FTCP and approved
all requisitions and disbursements. She received an excess of
US$1,000.00 for her salary and did not return the same. They
alleged that petitioner voluntarily resigned from her position and
removed all her belongings from the FTCP. 28
The LA ruled in favor of the respondents, the dispositive
portion of the Decision 29 reads:
WHEREFORE, foregoing considered, the case is
hereby DISMISSED for lack of merit and judgment is
hereby rendered ordering complainant Rosalinda G.
Paredes to pay the following:
1. One Hundred Forty-Three Thousand Six
Hundred [F]orty-Six and 73/100 (P143,646.73)
representing her accountabilities to respondent
FTCP in Philippine Currency;
2. One Thousand Dollars ($1,000.00) to
respondent FTCP representing complainant's
accountability in US Currency;
3. Five Hundred Thousand Pesos (P500,000.00)
each to respondents Dr. Virginia Lao, Benjamin
Escobia and Hercules Paradiang for moral
damages;
4. One Million Pesos (P1,000,000.00)
respondent FTCP for damages incurred;

to

5. One Hundred Thousand Pesos (P100,000.00)


to respondents collectively for exemplary
damages; and
6. Attorney's Fees to 10% of the total award.

SO ORDERED. 30
Undaunted, petitioner appealed the decision to the NLRC. In
its Decision 31 dated March 28, 2007, the NLRC reversed and set
aside the decision of the LA and ruled in her favor, the dispositive
portion of which states:
WHEREFORE, premises considered, the decision of
the Labor Arbiter dated 08 November 2006 is REVERSED
and SET aside and a new one is entered, to wit:
1. Ordering respondent Feed the Children Philippines,
Inc. to pay the complainant of her salaries and
allowances corresponding to the unexpired portion of her
contract in the aggregate amount of One Million Six
Hundred Eighty-Five Thousand Nine hundred and 00/100
(P1,685,900.00), broken down as follows:
Salaries corresponding to the
unexpired portion
P1,610,000.0
of the contract
0
Transportation
b.
29,900.00
allowances
Representation
c.
46,000.00
allowances

P1,685,900.0
Total
0;
========
===
a.

and
2. Ordering respondent Feed the Children Philippines,
Inc. to pay complainant of moral damages in the amount
of One Hundred Thousand Pesos (P100,000.00); and
exemplary damages in the amount of One Hundred
Thousand Pesos (P100,000.00).
Respondents Dr. Virginia Lao, Hercules Paradiang
and Benjamin Escobia are absolved from any liability for
lack of legal basis.
SO ORDERED. 32 HEITAD

In a Resolution 33 dated June 14, 2007, the NLRC dismissed


the motion for reconsideration of the respondents. Thus,
respondents filed before the CA a petition for certiorari. The CA
ruled for the respondents. The fallo of said decision reads:
WHEREFORE, the Decision dated March 28, 2007
and the Resolution dated June 14, 2007, of the National
Labor Relations Commission (NLRC), Fourth Division,
Cebu City, in NLRC Case No. V-000074-2007, are
NULLIFIED and a new one rendered as follows:
1. Declaring private respondent to
voluntarily
resigned
from
employment/consultancy with FTCP;

have
her

2. Directing private respondent to pay FTCP


a. Thirty-four thousand four hundred
thirty-eight pesos and 37/100 (P34,438.37) for
her unpaid loans;
b. One hundred nine thousand two
hundred eight pesos and 36/100 (P109,208.36)
respecting her disbursement and withdrawals
from the FTCP Provident Fund.
Costs against private respondent.
SO ORDERED. 34
The CA did not find any valid reason to disturb its decision,
hence, it denied petitioner's Motion for Reconsideration. 35
In this recourse, petitioner raises the following issues for this
Court's consideration:
I. The CA contravenes the law and jurisprudence when it
granted the petition for certiorari that raised questions
factual in nature and when it sweepingly applied the
ruling in St. Martin Funeral Homes to justify its act of
delving into the findings of the NLRC which were outside
the scope of extraordinary remedy of certiorari.
II. The CA grossly contradicts the law and jurisprudence
on constructive dismissal and ignored, misunderstood or
misinterpreted cogent facts and circumstances which, if
considered, would change the outcome of the case when
it ruled that petitioner voluntarily resigned and was not
constructively dismissed.

III. The CA effectively reverses the law and jurisprudence


on damages and recognized money claims in labor cases
when it condemned petitioner to pay respondents'
claims for damages that were not duly proven by the
latter and that clearly did not arise from an employeremployee relationship.
IV. The CA violates the Constitution, the law and the
prevailing jurisprudence when it resolved the lingering
doubts that remain in the present case, as those arising
from evidence and from interpretation of agreements
and writings, against labor.
The present petition is partly meritorious.
It is elementary that this Court is not a trier of facts, and only
errors of law are generally reviewed in petitions for review on
certiorari. Judicial review of labor cases does not go beyond the
evaluation of the sufficiency of the evidence upon which its labor
officials' findings rest. As such, the findings of facts and conclusion
of the NLRC are generally accorded not only great weight and
respect but even clothed with finality and deemed binding on this
Court as long as they are supported by substantial evidence. 36
However, if the factual findings of the LA and the NLRC are
conflicting, as in this case, the reviewing court may delve into the
records and examine for itself the questioned findings. 37 The
exception, rather than the general rule, applies in the present case
since the LA and the CA found facts supporting the conclusion that
petitioner was not constructively dismissed, while the NLRC's
factual findings contradicted the LA's findings. Under this
situation, such conflicting factual findings are not binding on us,
and we retain the authority to pass on the evidence presented and
draw conclusions therefrom.
After judicious review on the records of the case, this Court
deems it proper to disregard the findings of fact of the NLRC. This
Court finds that the NLRC committed grave abuse of discretion
when it ruled for the petitioner without substantial evidence to
support its findings of facts and conclusion.
Petitioner, relying in the principle of finality and
conclusiveness of the decisions of labor tribunals, faults the CA for
reversing the findings of the NLRC and affirming the factual
findings of the LA that she voluntarily resigned. She averred that
the CA erred when it applied the ruling in the case of St. Martin
Funeral Homes v. NLRC 38 to justify its inquiring into the findings
of the NLRC which was outside the scope of extraordinary remedy

of certiorari. She posited that NLRC's findings cannot be delved


into without first declaring the decision itself to have been issued
with grave abuse of discretion. 39
Courts generally accord great respect and finality to factual
findings of administrative agencies, like labor tribunals, in the
exercise of their quasi-judicial function. However, this doctrine
espousing comity to administrative findings of facts are not
infallible and cannot preclude the courts from reviewing and, when
proper, disregarding these findings of facts when shown that the
administrative body committed grave abuse of discretion. 40
It is settled that in a special civil action for certiorari under
Rule 65, the issues are limited to errors of jurisdiction or grave
abuse of discretion. However, in labor cases elevated to it via
petition for certiorari, the CA is empowered to evaluate the
materiality and significance of the evidence alleged to have been
capriciously, whimsically, or arbitrarily disregarded by the NLRC in
relation to all other evidence on record. 41 ATICcS
The CA can grant this prerogative writ when the factual
findings complained of are not supported by the evidence on
record; when it is necessary to prevent a substantial wrong or to
do substantial justice; when the findings of the NLRC contradict
those of the LA; and when necessary to arrive at a just decision of
the case. 42 To make this finding, the CA necessarily has to view
the evidence if only to determine if the NLRC ruling had basis in
evidence. 43
Contrary to petitioner's contention, the CA, by express legal
mandate and pursuant to its equity jurisdiction, may review
factual findings and evidence of the parties to determine whether
the NLRC gravely abused its discretion in its findings. 44 Since this
Court finds that the findings of the LA and NLRC contradicting and
that the findings of NLRC are not supported by the evidence on
record, we rule that it is within the CA's power to review the
factual findings of the NLRC. Accordingly, this Court does not find
erroneous the course that the CA took in resolving that petitioner
was not constructively dismissed.
This Court, in turn, has the same authority to sift through the
factual findings of both the CA and the NLRC in the event of their
conflict. 45 This Court, therefore, is not precluded from reviewing
the factual issues when there are conflicting findings by the Labor
Arbiter, the NLRC and the Court of Appeals. 46
Since petitioner admittedly resigned, it is incumbent upon her
to prove that her resignation was involuntary and that it was

actually a case of constructive dismissal with clear, positive and


convincing evidence. 47
Petitioner alleged that she was forced to resign by Lao,
Paradiang and Escobia. For her, it was the overbearing and
prejudiced attitude towards her by individual respondents that
rendered her continued employment impossible, unreasonable or
unlikely. She maintained that the prevailing working environment
compelled her to disassociate with FTCP. She recounted that the
individual respondents deliberately excluded her from important
meetings despite being the chief executive officer and a fixture to
all Board meetings.
Petitioner cited the August 28, 2005 Board meeting and a
subsequent Execom meeting where she was apparently banished
as proof of respondents' discrimination. She emphasized in all her
pleadings that, aside from it being provided by the by-laws, she
believed that her presence at all Board meetings cannot be
dispensed with since it was through her effort that the Board of
Trustees became functional. For her, she was isolated and singled
out. She claimed that these circumstances clearly denoted that
the actions of the respondents were motivated by discrimination
and made in bad faith.
Case law holds that constructive dismissal occurs when there
is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely; when there is a demotion in
rank or diminution in pay or both; or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to
the employee. 48 The test is whether a reasonable person in the
employee's position would have felt compelled to give up his
position under the circumstances. 49
In this case, petitioner cannot be deemed constructively
dismissed. She failed to present clear and positive evidence that
respondent FTCP, through its Board of Trustees, committed acts of
discrimination, insensibility, or disdain towards her which rendered
her continued employment unbearable or forced her to terminate
her employment from the respondent. As settled, bare allegations
of constructive dismissal, when uncorroborated by the evidence
on record, cannot be given credence. 50
It is highly unlikely and incredible for someone of petitioner's
position and educational attainment to so easily succumb to
individual respondents' alleged harassment without defending
herself. In fact, records reveal that she wrote directly to Jones
when her contract was not to be renewed and whenever she felt

threatened. She vehemently opposed the audit and openly


disobeyed the Board when she was not informed of the scope.
She, along with other management staff, questioned the meetings
of the Execom that they were not informed. 51 It is also noted that
her husband is a lawyer and that she employed lawyers who sent
a series of demand letters to the Board to provide her the details
of the audit and even ordered the Board to desist from pursuing
the audit.
There was no urgency for petitioner to submit her resignation
letter. In fact, the day before it was given, she and other
management staff requested for a dialogue with the Board to
address the issue regarding the management and financial audit.
52 It is, therefore, improbable that her continued employment is
rendered impossible or unreasonable.
Records do not show any demotion in rank or a diminution in
pay made against her. Petitioner claimed that the fact that the
Supervisory Team performed her functions and issued
memorandum directly to her subordinates, and her being barred
from subsequent Execom meetings constituted constructive
dismissal. However, there was no evidence to corroborate her
claim of usurpation. She did not present evidence of the supposed
direct memorandum issued by the Supervisory Team to the staff.
Aside from the minutes of the September 29, 2005 meeting of the
Execom, there was no other proof of petitioner's exclusion from
other subsequent Execom meetings. TIADCc
We find that, apart from her self-serving and uncorroborated
allegations, petitioner did not present any substantial evidence of
constructive dismissal. She was not able to present a single
witness to corroborate her claims of harassment by Lao, Paradiang
and Escobia.
Petitioner supported her claim with the minutes of the August
28, 2005 meeting and another minutes of the meeting of the
Execom that she was excluded. She argued that her sudden
exclusion from board meetings despite established practice
constituted grave abuse of managerial rights of the respondent
FTCP.
We are not persuaded that her exclusion to the meeting
constituted discrimination or harassment. A careful perusal of the
minutes would reveal that the Board convened to deliberate on
the solution to the apparent conflict between petitioner and the
staff since they have insufficient grievance mechanism for issues
involving top management. She could not fault the Board to not

include her in that particular meeting since she was a party


involved and to avoid possible influence that she could have
exerted.
Petitioner presented documents like e-mail correspondences
with Paradiang about the non-renewal of her contract earlier in her
employment, e-mail correspondences to Jones about harassment
towards her and specifically mentioning Paradiang, demand letters
from her and her lawyers, her resignation letter, and the board
resolution accepting her resignation. These do not verify that
respondents committed discrimination or disdain towards her.
Hence, her allegations are self-serving and uncorroborated and
should not be given evidentiary weight.
On the other hand, respondent FTCP presented a letter 53
dated August 28, 2005 written by petitioner addressed to the
Board wherein she presented her side about the petition of the
employees against her. She also praised the Board for
strengthening the organization, for putting valuable policies in the
organization, and for opening the organization to new
partnerships.
In another letter 54 dated September 6, 2005, she reported
that on the same date as the August 28 Board meeting, she and
Fostanes met to discuss concerns and apologized for what
happened and other members of management also apologized
and accepted the reconciliation that she extended to them. She
also reported that during the September 5, 2005 General Staff
meeting, the issues were discussed, feelings and sentiments were
shared, and concluded with a firm commitment from everyone to
rebuild the good name of FTCP and work together to enhance its
system and maintain its integrity.
The letters did not mention nor hinted that petitioner
protested about being excluded from the meeting which she has
considered as a hearing against her. It did not even reveal that
there was undue prejudice from individual respondents. Records
are bereft of proof that she even attempted to address the Board
about the supposed discrimination or disdain by individual
respondents. It is only upon filing of the illegal dismissal case that
she alleged that she felt that she was discriminated against and
treated with disdain by respondents. cSEDTC
Respondents presented an affidavit and a police blotter 55
attesting that some employees who signed in the August 12 letterpetition were intimidated by the secretary of petitioner's lawyerhusband to sign a recantation. She refuted the same by alleging

that they could have not known that it was recantation when it
appeared in the blotter that they only saw the page they were
made to sign. Respondents also presented an affidavit 56
attesting that petitioner intimidated an employee by telling her
that she would file suits against those who defamed her when the
employee refused to recant her signature in the petition against
her.
For petitioner, the fact that the effectivity of her resignation
was moved to November showed the eagerness of Lao, Paradiang
and Escobia to get rid of her. 57
We held that the act of the employer moving the effectivity of
the resignation is not an act of harassment. The 30-day notice
requirement for an employee's resignation is actually for the
benefit of the employer who has the discretion to waive such
period. Its purpose is to afford the employer enough time to hire
another employee if needed and to see to it that there is proper
turn-over of the tasks which the resigning employee may be
handling. 58
Such rule requiring an employee to stay or complete the 30day period prior to the effectivity of his resignation becomes
discretionary on the part of management as an employee who
intends to resign may be allowed a shorter period before his
resignation becomes effective. 59
Thus, the act of respondents moving the effectivity date of
petitioner's resignation to a date earlier than what she had stated
cannot be deemed malicious. This cannot be viewed as an act of
harassment but merely the exercise of respondent's management
prerogative. We cannot expect employers to maintain in their
employ employees who intend to resign, just so the latter can
have continuous work as they look for a new source of income.
Petitioner alleged that the CA erred when it ruled that she
should pay respondents' claims for damages. She maintained that
they were not duly proven and that they clearly did not arise from
an employer-employee relationship.
This Court held that the "money claims of workers" referred to
in Article 217 60 of the Labor Code embraces money claims which
arise out of or in connection with the employer-employee
relationship, or some aspect or incident of such relationship. 61
Applying the rule of noscitur a sociis in clarifying the scope of
Article 217, it is evident that paragraphs 1 to 5 refer to cases or
disputes arising out of or in connection with an employer-

employee relationship. In other words, the money claims within


the original and exclusive jurisdiction of labor arbiters are those
which have some reasonable causal connection with the employeremployee relationship. 62
This claim is distinguished from cases of actions for damages
where the employer-employee relationship is merely incidental
and the cause of action proceeds from a different source of
obligation. Thus, the regular courts have jurisdiction where the
damages claimed for were based on: tort, malicious prosecution,
or breach of contract, as when the claimant seeks to recover a
debt from a former employee or seeks liquidated damages in the
enforcement of a prior employment contract. 63
By the designating clause "arising from the employeremployee relations," Article 217 applies with equal force to the
claim of an employer for actual damages against its dismissed
employee, where the basis for the claim arises from or is
necessarily connected with the fact of termination, and should be
entered as a counterclaim in the illegal dismissal case. 64
In this case, the CA erred in awarding P34,438.37 for
petitioner's unpaid debt to respondents. The claim for recovery of
a debt has no reasonable causal connection with any of the claims
provided for in Article 217. The fact that the transaction happened
at the time they were employer and employee did not negate the
civil jurisdiction of trial court. Hence, it is erroneous for the LA and
the CA to rule on such claim arising from a different source of
obligation and where the employer-employee relationship was
merely incidental.
Likewise, the CA erred in awarding P109,208.36 for the
reimbursement of the FTCP Provident Fund allegedly withdrawn by
petitioner. Although it was entered by the respondents in its
counterclaim, this claim does not arise from or is necessarily
connected with the fact of termination. It also had no reasonable
causal connection with employer-employee relationship.
Lastly, petitioner maintained that the CA erred when it
resolved the lingering doubt in the present case against labor. She
alleged that the CA violated the Constitution, the law, and
jurisprudence.
We held that the law and jurisprudence guarantee security of
tenure to every employee. However, in protecting the rights of the
workers, the law does not authorize the oppression or selfdestruction of the employer. Social justice does not mean that
every labor dispute shall automatically be decided in favor of

labor. Thus, the Constitution and the law equally recognize the
employer's right and prerogative to manage its operation
according to reasonable standards and norms of fair play. 65
It is settled that the law serves to equalize the unequal. The
labor force is a special class that is constitutionally protected
because of the inequality between capital and labor. This
constitutional protection presupposes that the labor force is weak.
However, the level of protection to labor should vary from case to
case; otherwise, the state might appear to be too paternalistic in
affording protection to labor. 66 Petitioner could not expect to
have the same level of ardent protection that the laws bestow
upon a lowly laborer be given to her, a high ranking officer of
respondent FTCP. As proven, she was considered on equal footing
with her employer and even had the occasion to demand the
renewal of her contract by sending an e-mail to the organization's
founder. 67 SDAaTC
We cannot subscribe to petitioner's allegation that the CA
ruled against labor when it resolved the factual issues of the case.
As discussed, it is well within the powers and jurisdiction of the CA
to evaluate the evidence alleged to have been capriciously,
whimsically, or arbitrarily disregarded by the NLRC, or as in the
present case, for considering petitioner's bare allegations without
support of substantial evidence. This Court finds that the CA did
not violate the Constitution, the law and jurisprudence. Hence, the
resolution of the doubt as to whether petitioner voluntarily
resigned or was constructively dismissed based on the evidence
on record was proper and was not against labor.
WHEREFORE, the petition for review on certiorari, dated
October 23, 2008, of petitioner Rosalinda G. Paredes is hereby
PARTLY GRANTED. Accordingly, the ruling of the Court of Appeals
in its Decision dated March 25, 2008, that petitioner was not
constructively dismissed, is hereby AFFIRMED. However, the
awards of P34,438.37 and P109,208.36 for the unpaid debt of
petitioner and reimbursement of the FTCP Provident Fund,
respectively, are hereby SET ASIDE.
SO ORDERED.
Velasco, Jr., Villarama, Jr., Perez * and Jardeleza, JJ., concur.
||| (Paredes v. Feed the Children Phils., Inc., G.R. No. 184397 ,
[September 9, 2015])

28. Art 217


WORLD'S BEST GAS INC. V HENRY VITAL
FIRST DIVISION
[G.R. No. 211588. September 9, 2015.]
WORLD'S BEST GAS, INC., petitioner, vs. HENRY
VITAL, joined by his wife FLOSERFINA VITAL,
respondents.
DECISION
PERLAS-BERNABE, J p:

Before the Court is a petition for review on certiorari 1 filed


by petitioner World's Best Gas, Inc. (WBGI) assailing the Decision 2
dated September 30, 2013 and the Resolution 3 dated March 4,
2014 of the Court of Appeals (CA) in CA-G.R. SP No. 123497, which
affirmed the Decision 4 dated December 12, 2011 of the Regional
Trial Court of Bataan, Branch 2 (RTC) in Civil Case No. 8694 finding
WBGI liable to respondent Henry Vital (Vital) for his unpaid salaries
and separation pay.
The Facts
Vital was one of the incorporators of WBGI, holding
P500,000.00 worth of shares of stocks therein. 5 As a separate
business venture, Vital and his wife, respondent Floserfina Vital
(respondents), sourced Liquefied Petroleum Gas (LPG) from WBGI
and distributed the same through ERJ Enterprises owned by them.
6 As of respondents' last statement of account, their
outstanding balance with WBGI for unpaid LPG amounted
to P923,843.59. 7
On January 6, 1999, Vital was appointed as Internal Auditor
and Personnel Manager by WBGI's President/CEO and continued to
serve as such until his mandatory retirement on September 25,
2003. 8 Upon his retirement, WBGI's Board of Directors computed
Vital's retirement benefits at P82,500.00 by multiplying his
P15,000.00 monthly pay by 5.5 years, which was the number of
years he served as Internal Auditor and Personnel Manager. WBGI
also agreed to acquire Vital's P500,000.00 shares of stocks
at par value. 9
After offsetting the P500,000.00 due from WBGI's acquisition
of his shares of stocks against ERJ Enterprises' P923,843.59
outstanding balance to WBGI, Vital claimed that the unpaid
salaries and separation pay due him amounted to
P845,000.00 and P250,000.00, respectively, leaving a net
amount of P671,156.41 payable to him. WBGI rejected Vital's
claim and contended that after offsetting, Vital actually owed it
P369,156.19. 10
On January 4, 2006, Vital filed a complaint before the
National Labor Relations Commission (NLRC) Regional
Arbitration Branch III (RAB), docketed as NLRC Case No. RAB-III-019671-06, for non-payment of separation and retirement
benefits, underpayment of salaries/wages and 13th month
pay, illegal reduction of salary and benefits, and damages.
11

For its part, WBGI averred that the Labor Arbiter (LA) had no
jurisdiction over the complaint because Vital is not an employee,
but a mere incorporator and stockholder of WBGI, hence, no
employer-employee relationship exists between them. 12 AIDSTE
The LA Ruling
In a Decision 13 dated May 3, 2006, the LA found that the
issues between Vital and WBGI are intra-corporate in nature as
they arose between the relations of a stockholder and the
corporation, and not from an employee and employer relationship.
14 Thus, the LA dismissed the case for lack of jurisdiction, 15
prompting Vital to file his complaint 16 for payment of unpaid
salaries, separation and retirement benefits, and damages on July
19, 2007 before the RTC, docketed as Civil Case No. 8694. 17
The RTC Ruling
In a Decision 18 dated December 12, 2011, the RTC, acting as
a special commercial court, oppositely found that Vital was an
employee of WBGI and thereby, upheld his claim of P845,000.00
and P250,000.00 in unpaid salaries and separation pay. However,
the RTC offset these amounts, including the P500,000.00 due from
WBGI's acquisition of Vital's shares of stocks, against the
P923,843.59 payable to WBGI from ERJ Enterprises, thus, awarding
Vital the net amount of P671,156.41, with legal interest from date
of demand until full payment, P50,000.00 as attorney's fees and
costs of suit plus litigation expenses. 19
The RTC ratiocinated that since the positions of Internal
Auditor and Personnel Manager were not provided for in WBGI's
By-Laws, Vital was not a corporate officer but an employee
entitled to employment benefits. It also maintained that it had
jurisdiction to rule on the main intra-corporate controversy,
together with the question of damages and employment benefits.
20
Aggrieved, WBGI elevated the case to the CA on appeal. 21
The CA Ruling
In a Decision 22 dated September 30, 2013, the CA dismissed
the appeal, agreeing with the RTC's finding that Vital was an
employee of WGBI. While the CA observed that the RTC's award of
employment benefits to Vital was improper, as the same was
under the exclusive jurisdiction of the labor arbiters, it still ruled
on said claim, reasoning that it has the eventual authority to
review the labor courts' decision on the matter. 23

WBGI filed a motion for reconsideration 24 which was,


however, denied in a Resolution 25 dated March 4, 2014; hence,
the present petition.
The Issue before the Court
The main issue to be resolved is whether or not the CA erred
in ruling upon Vital's claim of P845,000.00 and P250,000.00 in
unpaid salaries and separation pay.
The Court's Ruling
The petition is partly meritorious.
At the outset, it should be pointed out that the instant case
actually involves three (3) distinct causes of action, namely, (1)
Vital's claim for P845,000.00 and P250,000.00 in unpaid salaries
and separation pay; (2) the P923,843.59 in arrearages payable to
WBGI from ERJ Enterprises, which was admitted by Vital but not
claimed by WBGI; and (3) Vital's claim of P500,000.00 due from
WBGI's acquisition of Vital's shares of stocks. All of the foregoing
were threshed out by the RTC in its December 12, 2011 Decision,
and effectively upheld by the CA on appeal. AaCTcI
However, the RTC's adjudication of the first cause of action
was improper since the same is one which arose from Vital and
WBGI's employer-employee relations, involving an amount
exceeding P5,000.00, hence, belonging to the jurisdiction of the
labor arbiters pursuant to Article 217 of the Labor Code:
Art. 217. Jurisdiction of the 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 nonagricultural:
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 acEHCD
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 (P5,000.00) regardless
of whether accompanied with a claim for
reinstatement.
xxx xxx xxx
Having no subject matter jurisdiction to resolve claims arising
from employer-employee relations, the RTC's ruling on Vital's claim
of P845,000.00 and P250,000.00 in unpaid salaries and separation
pay is, thus, null and void, and therefore, cannot perpetuate even
if affirmed on appeal, 26 rendering the CA's ratiocination that it
"has the eventual authority to review the labor courts' decision on
the matter" 27 direly infirm. As a result, WBGI's petition is
meritorious on this score. However, since the dismissal is
grounded on lack of jurisdiction, then the same should be
considered as a dismissal without prejudice. 28 As such, Vital
may re-file 29 the same claim, including those related
thereto (e.g., moral and exemplary damages, and,
attorney's fees) before the proper labor tribunal.
Contrary to its lack of jurisdiction over claims arising from
employer-employee relations, the RTC has: (a) general jurisdiction
to adjudicate on the P923,843.59 in arrearages payable to
WBGI from ERJ Enterprises, which was admitted by Vital
but not claimed by WBGI; 30 and (b) special jurisdiction, as a
special commercial court, to adjudicate on Vital's claim of
P500,000.00 from WBGI's acquisition of his shares of
stocks. 31 Indeed, even acting as a special commercial court, the
RTC's general jurisdiction to adjudicate on the first-mentioned
claim is retained.
With the RTC's jurisdiction established over the abovementioned causes of action, Vital's claim of P500,000.00 due
from WBGI's acquisition of his shares of stocks should therefore be

offset against the P923,843.59 in arrearages payable to WBGI


by ERJ Enterprises owned by respondents, as prayed for by him.
Hence, no amount can be adjudicated in Vital's favor, since it is
the respondents who, after due computation, would be left liable
to WBGI in the net amount of P423,843.59. This notwithstanding,
WBGI cannot recover this latter amount in this case since it
never interposed a permissive counterclaim therefor in its answer.
32 It is well-settled that courts cannot grant a relief not prayed for
in the pleadings or in excess of what is being sought by the party.
33 WBGI may, however, opt to file a separate collection
suit, including those related thereto (e.g., moral and
exemplary damages, and attorney's fees), to recover such
sum.
WHEREFORE, the petition is PARTLY GRANTED. The
Decision dated September 30, 2013 and the Resolution dated
March 4, 2014 of the Court of Appeals in CA-G.R. SP No. 123497
are hereby SET ASIDE. A new one is entered:
(a) DISMISSING respondent Henry Vital's (Vital) labor claims
of P845,000.00 and P250,000.00 in unpaid salaries and separation
pay against petitioner World's Best Gas, Inc.'s (WBGI), WITHOUT
PREJUDICE as stated in this Decision; and HSAcaE
(b) RECOGNIZING WBGI's liability to Vital in the amount of
P500,000.00 due from the acquisition of his shares of stocks. This
amount is, however, OFFSET against the P923,843.59 in
arrearages payable to WBGI by ERJ Enterprises owned by Vital and
his wife, respondent Floserfina Vital, leaving a net amount of
P423,843.59, which WBGI may claim in a separate case as stated
in this Decision.
SO ORDERED.
Sereno, C.J., Leonardo-de Castro, Bersamin and Perez, JJ.,
concur.
||| (World's Best Gas, Inc. v. Vital, G.R. No. 211588, [September 9,
2015])

29. Art 217 Conflict of Laws


CONTINENTAL MICRONESIA V BASSO
THIRD DIVISION
[G.R. Nos. 178382-83. September 23, 2015.]
CONTINENTAL MICRONESIA,
JOSEPH BASSO, respondent.

INC.,

petitioner,

vs.

DECISION
JARDELEZA, J p:
This is a Petition for Review on Certiorari 1 under Rule 45 of
the Revised Rules of Court assailing the Decision 2 dated May 23,
2006 and Resolution 3 dated June 19, 2007 of the Court of Appeals
in the consolidated cases CA-G.R. SP No. 83938 and CA-G.R. SP
No. 84281. These assailed Decision and Resolution set aside the
Decision 4 dated November 28, 2003 of the National Labor
Relations Commission (NLRC) declaring Joseph Basso's (Basso)
dismissal illegal, and ordering the payment of separation pay as
alternative to reinstatement and full backwages until the date of
the Decision. HTcADC

The Facts
Petitioner Continental Micronesia, Inc. (CMI) is a foreign
corporation organized and existing under the laws of and
domiciled in the United States of America (US). It is licensed to do
business in the Philippines. 5 Basso, a US citizen, resided in the
Philippines prior to his death. 6
During his visit to Manila in 1990, Mr. Keith R. Braden (Mr.
Braden), Managing Director-Asia of Continental Airlines, Inc.
(Continental), offered Basso the position of General Manager of
the Philippine Branch of Continental. Basso accepted the offer. 7
It was not until much later that Mr. Braden, who had since
returned to the US, sent Basso the employment contract 8 dated
February 1, 1991, which Mr. Braden had already signed. Basso
then signed the employment contract and returned it to Mr.
Braden as instructed.
On November 7, 1992, CMI took over the Philippine
operations of Continental, with Basso retaining his position as
General Manager. 9
On December 20, 1995, Basso received a letter from Mr.
Ralph Schulz (Mr. Schulz), who was then CMI's Vice President of
Marketing and Sales, informing Basso that he has agreed to work
in CMI as a consultant on an "as needed basis" effective February
1, 1996 to July 31, 1996. The letter also informed Basso that: (1)
he will not receive any monetary compensation but will continue
being covered by the insurance provided by CMI; (2) he will enjoy
travel privileges; and (3) CMI will advance Php1,140,000.00 for the
payment of housing lease for 12 months. 10
On January 11, 1996, Basso wrote a counter-proposal 11 to
Mr. Schulz regarding his employment status in CMI. On March 14,
1996, Basso wrote another letter addressed to Ms. Marty
Woodward (Ms. Woodward) of CMI's Human Resources Department
inquiring about the status of his employment. 12 On the same
day, Ms. Woodward responded that pursuant to the employment
contract dated February 1, 1991, Basso could be terminated at will
upon a thirty-day notice. This notice was allegedly the letter Basso
received from Mr. Schulz on December 20, 1995. Ms. Woodward
also reminded Basso of the telephone conversation between him,
Mr. Schulz and Ms. Woodward on December 19, 1995, where they
informed him of the company's decision to relieve him as General
Manager. Basso, instead, was offered the position of consultant to
CMI. Ms. Woodward also informed Basso that CMI rejected his
counter-proposal and, thus, terminated his employment effective

January 31, 1996. CMI offered Basso a severance pay, in


consideration of the Php1,140,000.00 housing advance that CMI
promised him. 13
Basso filed a Complaint for Illegal Dismissal with Moral and
Exemplary Damages against CMI on December 19, 1996. 14
Alleging the presence of foreign elements, CMI filed a Motion to
Dismiss 15 dated February 10, 1997 on the ground of lack of
jurisdiction over the person of CMI and the subject matter of the
controversy. In an Order 16 dated August 27, 1997, the Labor
Arbiter granted the Motion to Dismiss. Applying the doctrine of lex
loci contractus, the Labor Arbiter held that the terms and
provisions of the employment contract show that the parties did
not intend to apply our Labor Code (Presidential Decree No. 442).
The Labor Arbiter also held that no employer-employee
relationship existed between Basso and the branch office of CMI in
the Philippines, but between Basso and the foreign corporation
itself.
On appeal, the NLRC remanded the case to the Labor Arbiter
for the determination of certain facts to settle the issue on
jurisdiction. NLRC ruled that the issue on whether the principle of
lex loci contractus or lex loci celebrationis should apply has to be
further threshed out. 17
Labor Arbiter's Ruling
Labor Arbiter Madjayran H. Ajan in his Decision 18 dated
September 24, 1999 dismissed the case for lack of merit and
jurisdiction.
The Labor Arbiter agreed with CMI that the employment
contract was executed in the US "since the letter-offer was under
the Texas letterhead and the acceptance of Complainant was
returned there." 19 Thus, applying the doctrine of lex loci
celebrationis, US laws apply. Also, applying lex loci contractus, the
Labor Arbiter ruled that the parties did not intend to apply
Philippine laws, thus:
Although the contract does not state what law shall
apply, it is obvious that Philippine laws were not written
into it. More specifically, the Philippine law on taxes and
the Labor Code were not intended by the parties to
apply, otherwise Par. 7 on the payment by Complainant
U.S. Federal and Home State income taxes, and Pars.
22/23 on termination by 30-day prior notice, will not be
there. The contract was prepared in contemplation of

Texas or U.S. laws where Par. 7 is required and Pars.


22/23 is allowed. 20
The Labor Arbiter also ruled that Basso was terminated for a
valid cause based on the allegations of CMI that Basso committed
a series of acts that constitute breach of trust and loss of
confidence. 21
The Labor Arbiter, however, found CMI to have voluntarily
submitted to his office's jurisdiction. CMI participated in the
proceedings, submitted evidence on the merits of the case, and
sought affirmative relief through a motion to dismiss. 22
NLRC's Ruling
On appeal, the NLRC Third Division promulgated its Decision
23 dated November 28, 2003, the decretal portion of which reads:
WHEREFORE, the decision dated 24 September
1999 is VACATED and SET ASIDE. Respondent CMI is
ordered to pay complainant the amount of US$5,416.00
for failure to comply with the due notice requirement.
The other claims are dismissed.
SO ORDERED. 24
The NLRC did not agree with the pronouncement of the Labor
Arbiter that his office has no jurisdiction over the controversy. It
ruled that the Labor Arbiter acquired jurisdiction over the case
when CMI voluntarily submitted to his office's jurisdiction by
presenting evidence, advancing arguments in support of the
legality of its acts, and praying for reliefs on the merits of the
case. 25
On the merits, the NLRC agreed with the Labor Arbiter that
Basso was dismissed for just and valid causes on the ground of
breach of trust and loss of confidence. The NLRC ruled that under
the applicable rules on loss of trust and confidence of a
managerial employee, such as Basso, mere existence of a basis
for believing that such employee has breached the trust of his
employer suffices. However, the NLRC found that CMI denied
Basso the required due process notice in his dismissal. 26
Both CMI and Basso filed their respective Motions for
Reconsideration dated January 15, 2004 27 and January 8, 2004.
28 Both motions were dismissed in separate Resolutions dated
March 15, 2004 29 and February 27, 2004, 30 respectively.
Basso filed a Petition for Certiorari dated April 16, 2004 with
the Court of Appeals docketed as CA-G.R. SP No. 83938. 31 Basso

imputed grave abuse of discretion on the part of the NLRC in


ruling that he was validly dismissed. CMI filed its own Petition for
Certiorari dated May 13, 2004 docketed as CA-G.R. SP No. 84281,
32 alleging that the NLRC gravely abused its discretion when it
assumed jurisdiction over the person of CMI and the subject
matter of the case.
In its Resolution dated October 7, 2004, the Court of Appeals
consolidated the two cases 33 and ordered the parties to file their
respective Memoranda.
The Court of Appeal's Decision
The Court of Appeals promulgated the now assailed Decision
34 dated May 23, 2006, the relevant dispositive portion of which
reads:
WHEREFORE, the petition of Continental docketed
as CA-G.R. SP No. 84281 is DENIED DUE COURSE and
DISMISSED.
On the other hand the petition of Basso docketed as
CA-G.R. SP No. 83938 is GIVEN DUE COURSE and
GRANTED, and accordingly, the assailed Decision dated
November 28, 2003 and Resolution dated February 27,
2004 of the NLRC are SET ASIDE and VACATED. Instead
judgment is rendered hereby declaring the dismissal of
Basso illegal and ordering Continental to pay him
separation pay equivalent to one (1) month pay for every
year of service as an alternative to reinstatement.
Further, ordering Continental to pay Basso his full
backwages from the date of his said illegal dismissal
until date of this decision. The claim for moral and
exemplary damages as well as attorney's fees are
dismissed. 35
The Court of Appeals ruled that the Labor Arbiter and the
NLRC had jurisdiction over the subject matter of the case and over
the parties. The Court of Appeals explained that jurisdiction over
the subject matter of the action is determined by the allegations
of the complaint and the law. Since the case filed by Basso is a
termination dispute that is "undoubtedly cognizable by the labor
tribunals", the Labor Arbiter and the NLRC had jurisdiction to rule
on the merits of the case. On the issue of jurisdiction over the
person of the parties, who are foreigners, the Court of Appeals
ruled that jurisdiction over the person of Basso was acquired when
he filed the complaint for illegal dismissal, while jurisdiction over
the person of CMI was acquired through coercive process of

service of summons to its agent in the Philippines. The Court of


Appeals also agreed that the active participation of CMI in the
case rendered moot the issue on jurisdiction. aScITE
On the merits of the case, the Court of Appeals declared that
CMI illegally dismissed Basso. The Court of Appeals found that
CMI's allegations of loss of trust and confidence were not
established. CMI "failed to prove its claim of the incidents which
were its alleged bases for loss of trust or confidence." 36 While
managerial employees can be dismissed for loss of trust and
confidence, there must be a basis for such loss, beyond mere
whim or caprice.
After the parties filed their Motions for Reconsideration, 37
the Court of Appeals promulgated Resolution 38 dated June 19,
2007 denying CMI's motion, while partially granting Basso's as to
the computation of backwages.
Hence, this petition, which raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
REVIEWING THE FACTUAL FINDINGS OF THE NLRC
INSTEAD OF LIMITING ITS INQUIRY INTO WHETHER OR
NOT THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION.
II.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
RULING THAT THE LABOR ARBITER AND THE NLRC HAD
JURISDICTION TO HEAR AND TRY THE ILLEGAL DISMISSAL
CASE.
III.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
FINDING THAT BASSO WAS NOT VALIDLY DISMISSED ON
THE GROUND OF LOSS OF TRUST OR CONFIDENCE.
We begin with the second issue on the jurisdiction of the
Labor Arbiter and the NLRC in the illegal dismissal case. The first
and third issues will be discussed jointly.
The labor tribunals had jurisdiction
over the parties and the subject
matter of the case.
CMI maintains that there is a conflict-of-laws issue that must
be settled to determine proper jurisdiction over the parties and the

subject matter of the case. It also alleges that the existence of


foreign elements calls for the application of US laws and the
doctrines of lex loci celebrationis (the law of the place of the
ceremony), lex loci contractus (law of the place where a contract
is executed), and lex loci intentionis (the intention of the parties as
to the law that should govern their agreement). CMI also invokes
the application of the rule of forum non conveniens to determine
the propriety of the assumption of jurisdiction by the labor
tribunals.
We agree with CMI that there is a conflict-of-laws issue that
needs to be resolved first. Where the facts establish the existence
of foreign elements, the case presents a conflict-of-laws issue. 39
The foreign element in a case may appear in different forms, such
as in this case, where one of the parties is an alien and the other
is domiciled in another state.
In Hasegawa v. Kitamura, 40 we stated that in the judicial
resolution of conflict-of-laws problems, three consecutive phases
are involved: jurisdiction, choice of law, and recognition and
enforcement of judgments. In resolving the conflicts problem,
courts should ask the following questions:
1. "Under the law, do I have jurisdiction over the subject
matter and the parties to this case?
2. "If the answer is yes, is this a convenient forum to the
parties, in light of the facts?
3. "If the answer is yes, what is the conflicts rule for this
particular problem?
4. "If the conflicts rule points to a foreign law, has said
law been properly pleaded and proved by the one
invoking it?
5. "If so, is the application or enforcement of the foreign
law in the forum one of the basic exceptions to the
application of foreign law? In short, is there any strong
policy or vital interest of the forum that is at stake in this
case and which should preclude the application of
foreign law? 41
Jurisdiction is defined as the power and authority of the
courts to hear, try and decide cases. Jurisdiction over the subject
matter is conferred by the Constitution or by law and by the
material allegations in the complaint, regardless of whether or not
the plaintiff is entitled to recover all or some of the claims or
reliefs sought therein. 42 It cannot be acquired through a waiver

or enlarged by the omission of the parties or conferred by the


acquiescence of the court. 43 That the employment contract of
Basso was replete with references to US laws, and that it
originated from and was returned to the US, do not automatically
preclude our labor tribunals from exercising jurisdiction to hear
and try this case.
This case stemmed from an illegal dismissal complaint. The
Labor Code, under Article 217, clearly vests original and exclusive
jurisdiction to hear and decide cases involving termination
disputes to the Labor Arbiter. Hence, the Labor Arbiter and the
NLRC have jurisdiction over the subject matter of the case.
As regards jurisdiction over the parties, we agree with the
Court of Appeals that the Labor Arbiter acquired jurisdiction over
the person of Basso, notwithstanding his citizenship, when he filed
his complaint against CMI. On the other hand, jurisdiction over the
person of CMI was acquired through the coercive process of
service of summons. We note that CMI never denied that it was
served with summons. CMI has, in fact, voluntarily appeared and
participated in the proceedings before the courts. Though a
foreign corporation, CMI is licensed to do business in the
Philippines and has a local business address here. The purpose of
the law in requiring that foreign corporations doing business in the
country be licensed to do so, is to subject the foreign corporations
to the jurisdiction of our courts. 44
Considering that the Labor Arbiter and the NLRC have
jurisdiction over the parties and the subject matter of this case,
these tribunals may proceed to try the case even if the rules of
conflict-of-laws or the convenience of the parties point to a foreign
forum, this being an exercise of sovereign prerogative of the
country where the case is filed. 45
The next question is whether the local forum is the
convenient forum in light of the facts of the case. CMI contends
that a Philippine court is an inconvenient forum.
We disagree.
Under the doctrine of forum non conveniens, a Philippine
court in a conflict-of-laws case may assume jurisdiction if it
chooses to do so, provided, that the following requisites are met:
(1) that the Philippine Court is one to which the parties may
conveniently resort to; (2) that the Philippine Court is in a position
to make an intelligent decision as to the law and the facts; and (3)
that the Philippine Court has or is likely to have power to enforce
its decision. 46 All these requisites are present here.

Basso may conveniently resort to our labor tribunals as he


and CMI had physical presence in the Philippines during the
duration of the trial. CMI has a Philippine branch, while Basso,
before his death, was residing here. Thus, it could be reasonably
expected that no extraordinary measures were needed for the
parties to make arrangements in advocating their respective
cases.
The labor tribunals can make an intelligent decision as to the
law and facts. The incident subject of this case (i.e., dismissal of
Basso)
happened
in
the
Philippines,
the
surrounding
circumstances of which can be ascertained without having to
leave the Philippines. The acts that allegedly led to loss of trust
and confidence and Basso's eventual dismissal were committed in
the Philippines. As to the law, we hold that Philippine law is the
proper law of the forum, as we shall discuss shortly. Also, the labor
tribunals have the power to enforce their judgments because they
acquired jurisdiction over the persons of both parties. HEITAD
Our labor tribunals being the convenient fora, the next
question is what law should apply in resolving this case.
The choice-of-law issue in a conflict-of-laws case seeks to
answer the following important questions: (1) What legal system
should control a given situation where some of the significant facts
occurred in two or more states; and (2) to what extent should the
chosen legal system regulate the situation. 47 These questions
are entirely different from the question of jurisdiction that only
seeks to answer whether the courts of a state where the case is
initiated have jurisdiction to enter a judgment. 48 As such, the
power to exercise jurisdiction does not automatically give a state
constitutional authority to apply forum law. 49
CMI insists that US law is the applicable choice-of-law under
the principles of lex loci celebrationis and lex loci contractus. It
argues that the contract of employment originated from and was
returned to the US after Basso signed it, and hence, was perfected
there. CMI further claims that the references to US law in the
employment contract show the parties' intention to apply US law
and not ours. These references are:
a. Foreign station allowance of forty percent (40%) using the
"U.S. State Department Index, the base being
Washington, D.C."
b. Tax equalization that made Basso responsible for "federal
and any home state income taxes."

c. Hardship allowance of fifteen percent (15%) of base pay


based upon the "U.S. Department of State Indexes of
living costs abroad."
d. The employment arrangement is "one at will, terminable by
either party without any further liability on thirty days
prior written notice." 50
CMI asserts that the US law on labor relations particularly, the
US Railway Labor Act sanctions termination-at-will provisions in an
employment contract. Thus, CMI concludes that if such laws were
applied, there would have been no illegal dismissal to speak of
because the termination-at-will provision in Basso's employment
contract would have been perfectly valid.
We disagree.
In Saudi Arabian Airlines v. Court of Appeals, 51 we
emphasized that an essential element of conflict rules is the
indication of a "test" or "connecting factor" or "point of contact".
Choice-of-law rules invariably consist of a factual relationship
(such as property right, contract claim) and a connecting fact or
point of contact, such as the situs of the res, the place of
celebration, the place of performance, or the place of wrongdoing.
Pursuant to Saudi Arabian Airlines, we hold that the "test factors,"
"points of contact" or "connecting factors" in this case are the
following:
(1) The nationality, domicile or residence of Basso;
(2) The seat of CMI;
(3) The place where the employment contract has been
made, the locus actus;
(4) The place where the act is intended to come into effect,
e.g., the place of performance of contractual duties;
(5) The intention of the contracting parties as to the law that
should govern their agreement, the lex loci intentionis;
and
(6) The place where judicial or administrative proceedings are
instituted or done. 52
Applying the foregoing in this case, we conclude that
Philippine law is the applicable law. Basso, though a US citizen,
was a resident here from the time he was hired by CMI until his
death during the pendency of the case. CMI, while a foreign
corporation, has a license to do business in the Philippines and
maintains a branch here, where Basso was hired to work. The

contract of employment was negotiated in the Philippines. A


purely consensual contract, it was also perfected in the Philippines
when Basso accepted the terms and conditions of his employment
as offered by CMI. The place of performance relative to Basso's
contractual duties was in the Philippines. The alleged prohibited
acts of Basso that warranted his dismissal were committed in the
Philippines.
Clearly, the Philippines is the state with the most significant
relationship to the problem. Thus, we hold that CMI and Basso
intended Philippine law to govern, notwithstanding some
references made to US laws and the fact that this intention was
not expressly stated in the contract. We explained in Philippine
Export and Foreign Loan Guarantee Corporation v. V. P. Eusebio
Construction, Inc. 53 that the law selected may be implied from
such factors as substantial connection with the transaction, or the
nationality or domicile of the parties. 54 We cautioned, however,
that while Philippine courts would do well to adopt the first and
most basic rule in most legal systems, namely, to allow the parties
to select the law applicable to their contract, the selection is
subject to the limitation that it is not against the law, morals, or
public policy of the forum. 55
Similarly, in Bank of America, NT & SA v. American Realty
Corporation, 56 we ruled that a foreign law, judgment or contract
contrary to a sound and established public policy of the forum
shall not be applied. Thus:
Moreover, foreign law should not be applied when
its application would work undeniable injustice to the
citizens or residents of the forum. To give justice is the
most important function of law; hence, a law, or
judgment or contract that is obviously unjust negates the
fundamental principles of Conflict of Laws. 57
Termination-at-will is anathema to the public policies on labor
protection espoused by our laws and Constitution, which dictates
that no worker shall be dismissed except for just and authorized
causes provided by law and after due process having been
complied with. 58 Hence, the US Railway Labor Act, which
sanctions termination-at-will, should not be applied in this case.
Additionally, the rule is that there is no judicial notice of any
foreign law. As any other fact, it must be alleged and proved. 59 If
the foreign law is not properly pleaded or proved, the presumption
of identity or similarity of the foreign law to our own laws,
otherwise known as processual presumption, applies. Here, US law

may have been properly pleaded but it was not proved in the labor
tribunals.
Having disposed of the issue on jurisdiction, we now rule on
the first and third issues.
The Court of Appeals may review the
factual findings of the NLRC in a
Rule 65 petition.
CMI submits that the Court of Appeals overstepped the
boundaries of the limited scope of its certiorari jurisdiction when
instead of ruling on the existence of grave abuse of discretion, it
proceeded to pass upon the legality and propriety of Basso's
dismissal. Moreover, CMI asserts that it was error on the part of
the Court of Appeals to re-evaluate the evidence and
circumstances surrounding the dismissal of Basso.
We disagree.
The power of the Court of Appeals to review NLRC decisions
via a Petition for Certiorari under Rule 65 of the Revised Rules of
Court was settled in our decision in St. Martin Funeral Home v.
NLRC. 60 The general rule is that certiorari does not lie to review
errors of judgment of the trial court, as well as that of a quasijudicial tribunal. In certiorari proceedings, judicial review does not
go as far as to examine and assess the evidence of the parties and
to weigh their probative value. 61 However, this rule admits of
exceptions. In Globe Telecom, Inc. v. Florendo-Flores, 62 we
stated:
In the review of an NLRC decision through a special
civil action for certiorari, resolution is confined only to
issues of jurisdiction and grave abuse of discretion on
the part of the labor tribunal. Hence, the Court refrains
from reviewing factual assessments of lower courts and
agencies exercising adjudicative functions, such as the
NLRC. Occasionally, however, the Court is constrained to
delve into factual matters where, as in the instant case,
the findings of the NLRC contradict those of the Labor
Arbiter.
In this instance, the Court in the exercise of its
equity jurisdiction may look into the records of the case
and re-examine the questioned findings. As a corollary,
this Court is clothed with ample authority to review
matters, even if they are not assigned as errors in their
appeal, if it finds that their consideration is necessary to

arrive at a just decision of the case. The same principles


are now necessarily adhered to and are applied by the
Court of Appeals in its expanded jurisdiction over labor
cases elevated through a petition for certiorari; thus, we
see no error on its part when it made anew a factual
determination of the matters and on that basis reversed
the ruling of the NLRC. 63 (Citations omitted.)
Thus, the Court of Appeals may grant the petition when the
factual findings complained of are not supported by the evidence
on record; when it is necessary to prevent a substantial wrong or
to do substantial justice; when the findings of the NLRC contradict
those of the Labor Arbiter; and when necessary to arrive at a just
decision of the case. 64 To make these findings, the Court of
Appeals necessarily has to look at the evidence and make its own
factual determination. 65
Since the findings of the Labor Arbiter differ with that of the
NLRC, we find that the Court of Appeals correctly exercised its
power to review the evidence and the records of the illegal
dismissal case.
Basso was illegally dismissed.
It is of no moment that Basso was a managerial employee of
CMI. Managerial employees enjoy security of tenure and the right
of the management to dismiss must be balanced against the
managerial employee's right to security of tenure, which is not
one of the guaranties he gives up. 66
In Apo Cement Corporation v. Baptisma, 67 we ruled that for
an employer to validly dismiss an employee on the ground of loss
of trust and confidence under Article 282 (c) of the Labor Code,
the employer must observe the following guidelines: 1) loss of
confidence should not be simulated; 2) it should not be used as
subterfuge for causes which are improper, illegal or unjustified; 3)
it may not be arbitrarily asserted in the face of overwhelming
evidence to the contrary; and 4) it must be genuine, not a mere
afterthought to justify earlier action taken in bad faith. More
importantly, it must be based on a willful breach of trust and
founded on clearly established facts.
We agree with the Court of Appeals that the dismissal of
Basso was not founded on clearly established facts and evidence
sufficient to warrant dismissal from employment. While proof
beyond reasonable doubt is not required to establish loss of trust
and confidence, substantial evidence is required and on the
employer rests the burden to establish it. 68 There must be some

basis for the loss of trust, or that the employer has reasonable
ground to believe that the employee is responsible for misconduct,
which renders him unworthy of the trust and confidence
demanded by his position. 69
CMI alleges that Basso committed the following:
(1) Basso delegated too much responsibility to the General
Sales Agent and relied heavily on its judgments. 70
(2) Basso excessively issued promotional tickets to his friends
who had no direct business with CMI. 71
(3) The advertising agency that CMI contracted had to deal
directly with Guam because Basso was hardly available.
72 Mr. Schulz discovered that Basso exceeded the
advertising budget by $76,000.00 in 1994 and by
$20,000.00 in 1995. 73
(4) Basso spent more time and attention to his personal
businesses and was reputed to own nightclubs in the
Philippines. 74
(5) Basso used free tickets and advertising money to promote
his personal business, 75 such as a brochure that jointly
advertised one of Basso's nightclubs with CMI.
We find that CMI failed to discharge its burden to prove the
above acts. CMI merely submitted affidavits of its officers, without
any other corroborating evidence. Basso, on the other hand, had
adequately explained his side. On the advertising agency and
budget issues raised by CMI, he explained that these were blatant
lies as the advertising needs of CMI were centralized in its Guam
office and the Philippine office was not authorized to deal with
CMI's advertising agency, except on minor issues. 76 Basso
further stated that under CMI's existing policy, ninety percent
(90%) of the advertising decisions were delegated to the
advertising firm of McCann-Ericsson in Japan and only ten percent
(10%) were left to the Philippine office. 77 Basso also denied the
allegations of owning nightclubs and promoting his personal
businesses and explained that it was illegal for foreigners in the
Philippines to engage in retail trade in the first place. TIADCc
Apart from these accusations, CMI likewise presented the
findings of the audit team headed by Mr. Stephen D. Goepfert,
showing that "for the period of 1995 and 1996, personal passes
for Continental and other airline employees were noted (sic) to be
issued for which no service charge was collected." 78 The audit
cited the trip pass log of a total of 10 months. The trip log does

not show, however, that Basso caused all the ticket issuances.
More, half of the trips in the log occurred from March to July of
1996, 79 a period beyond the tenure of Basso. Basso was
terminated effectively on January 31, 1996 as indicated in the
letter of Ms. Woodward. 80
CMI also accused Basso of making "questionable overseas
phone calls". Basso, however, adequately explained in his Reply
81 that the phone calls to Italy and Portland, USA were made for
the purpose of looking for a technical maintenance personnel with
US Federal Aviation Authority qualifications, which CMI needed at
that time. The calls to the US were also made in connection with
his functions as General Manager, such as inquiries on his tax
returns filed in Nevada. Basso also explained that the phone lines
82 were open direct lines that all personnel were free to use to
make direct long distance calls. 83
Finally, CMI alleged that Basso approved the disbursement of
Php80,000.00 to cover the transfer fee of the Manila Polo Club
share from Mr. Kenneth Glover, the previous General Manager, to
him. CMI claimed that "nowhere in the said contract was it likewise
indicated that the Manila Polo Club share was part of the
compensation package given by CMI to Basso." 84 CMI's claims
are not credible. Basso explained that the Manila Polo Club share
was offered to him as a bonus to entice him to leave his then
employer, United Airlines. A letter from Mr. Paul J. Casey, former
president of Continental, supports Basso. 85 In the letter, Mr.
Casey explained:
As a signing bonus, and a perk to attract Mr. Basso
to join Continental Airlines, he was given the Manila Polo
Club share and authorized to have the share re-issued in
his name. In addition to giving Mr. Basso the Manila Polo
Club share, Continental agreed to pay the dues for a
period of three years and this was embodied in his
contract with Continental. This was all done with my
knowledge and approval. 86
Clause 14 of the employment contract also states:
Club Memberships: The Company will locally pay annual
dues for membership in a club in Manila that your
immediate supervisor and I agree is of at least that value
to Continental through you in your role as our General
Manager for the Philippines. 87
Taken together, the above pieces of evidence suggest that
the Manila Polo Club share was part of Basso's compensation

package and thus he validly used company funds to pay for the
transfer fees. If doubts exist between the evidence presented by
the employer and the employee, the scales of justice must be
tilted in favor of the latter. 88
Finally, CMI violated procedural due process in terminating
Basso. In King of Kings Transport, Inc. v. Mamac 89 we detailed
the procedural due process steps in termination of employment:
To clarify, the following should be
terminating the services of employees:

considered

in

(1) The first written notice to be served on the


employees should contain the specific causes or grounds
for termination against them, and a directive that the
employees are given the opportunity to submit their
written explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules
means every kind of assistance that management must
accord to the employees to enable them to prepare
adequately for their defense. This should be construed
as a period of at least five (5) calendar days from receipt
of the notice to give the employees an opportunity to
study the accusation against them, consult a union
official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint.
Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the
notice should contain a detailed narration of the facts
and circumstances that will serve as basis for the charge
against the employees. A general description of the
charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are
violated and/or which among the grounds under Art. 282
is being charged against the employees.
(2) After serving the first notice, the employers
should schedule and conduct a hearing or conference
wherein the employees will be given the opportunity to:
(1) explain and clarify their defenses to the charge
against them; (2) present evidence in support of their
defenses; and (3) rebut the evidence presented against
them by the management. During the hearing or
conference, the employees are given the chance to
defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this

conference or hearing could be used by the parties as an


opportunity to come to an amicable settlement.
(3) After
determining
that
termination
of
employment is justified, the employers shall serve the
employees a written notice of termination indicating
that: (1) all circumstances involving the charge against
the employees have been considered; and (2) grounds
have been established to justify the severance of their
employment. (Emphasis in original.)
Here, Mr. Schulz's and Ms. Woodward's letters dated
December 19, 1995 and March 14, 1996, respectively, are not one
of the valid twin notices. Neither identified the alleged acts that
CMI now claims as bases for Basso's termination. Ms. Woodward's
letter even stressed that the original plan was to remove Basso as
General Manager but with an offer to make him consultant. It was
inconsistent of CMI to declare Basso as unworthy of its trust and
confidence and, in the same breath, offer him the position of
consultant. As the Court of Appeals pointed out: AIDSTE
But mark well that Basso was clearly notified that
the sole ground for his dismissal was the exercise of the
termination at will clause in the employment contract.
The alleged loss of trust and confidence claimed by
Continental appears to be a mere afterthought belatedly
trotted out to save the day. 90
Basso is entitled to separation pay and full backwages.
Under Article 279 of the Labor Code, an employee who is
unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges, and to
his full backwages, inclusive of allowances and to his other
benefits or their monetary equivalent computed from the time his
compensation was withheld up to the time of actual
reinstatement.
Where reinstatement is no longer viable as an option,
separation pay equivalent to one (1) month salary for every year
of service should be awarded as an alternative. The payment of
separation pay is in addition to payment of backwages. 91 In the
case of Basso, reinstatement is no longer possible since he has
already passed away. Thus, Basso's separation pay with full
backwages shall be paid to his heirs.
As to the computation of backwages, we agree with CMI that
Basso was entitled to backwages only up to the time he reached

65 years old, the compulsory retirement age under the law. 92


This is our consistent ruling. 93 When Basso was illegally
dismissed on January 31, 1996, he was already 58 years old. 94
He turned 65 years old on October 2, 2002. Since backwages are
granted on grounds of equity for earnings lost by an employee due
to his illegal dismissal, 95 Basso was entitled to backwages only
for the period he could have worked had he not been illegally
dismissed, i.e., from January 31, 1996 to October 2, 2002.
WHEREFORE, premises considered, the Decision of the Court
of Appeals dated May 23, 2006 and Resolution dated June 19,
2007 in the consolidated cases CA-G.R. SP No. 83938 and CA-G.R.
SP No. 84281 are AFFIRMED, with MODIFICATION as to the
award of backwages. Petitioner Continental Micronesia, Inc. is
hereby ordered to pay Respondent Joseph Basso's heirs: 1)
separation pay equivalent to one (1) month pay for every year of
service, and 2) full backwages from January 31, 1996, the date of
his illegal dismissal, to October 2, 2002, the date of his
compulsory retirement age.
SO ORDERED.
Velasco, Jr., Peralta, Villarama, Jr. and Perez, * JJ., concur.
||| (Continental Micronesia, Inc. v. Basso, G.R. Nos. 178382-83,
[September 23, 2015])

30. Art 217, Arts. 261-262 (1), Jurisdiction; Art 290, Prescription of
ULP
UST FACULTY UNION V UST
SECOND DIVISION
[G.R. No. 203957. July 30, 2014.]
UNIVERSITY OF SANTO TOMAS FACULTY UNION,
petitioner, vs. UNIVERSITY OF SANTO TOMAS,
respondent.
DECISION

CARPIO, J p:
The Case
G.R. No. 203957 is a petition for review 1 assailing the Decision 2
promulgated on 13 July 2012 as well as the Resolution 3
promulgated on 19 October 2012 by the Court of Appeals (CA) in CAG.R. SP No. 120970. The CA set aside the 8 June 2011 Decision 4 and
29 July 2011 Resolution 5 of the Fourth Division of the National Labor
Relations Commission (NLRC) in NLRC LAC No. 10-003370-08, as well
as the 24 September 2010 Decision 6 of the Labor Arbiter (LA) in
NLRC-NCR Case No. 09-09745-07.
In its 24 September 2010 decision, the LA ordered the University of
Santo Tomas (UST) to remit P18,000,000.00 to the hospitalization
and medical benefits fund (fund) pursuant to the mandate of the
1996-2001 Collective Bargaining Agreement (CBA). The LA also
ordered UST to pay 10% of the total monetary award as attorney's
fees. The other claims were dismissed for lack of merit.
In its 8 June 2011 decision, the NLRC ordered UST to remit to the
University of Santo Tomas Faculty Union (USTFU) the amounts of
P80,000,000.00 for the fund pursuant to the CBA and P8,000,000.00
as attorney's fees equivalent to 10% of the monetary award. The
NLRC denied. UST's motion for reconsideration for lack of merit.
In its 13 July 2012 decision, the CA found grave abuse of discretion
on the part of NLRC and granted UST's petition. The CA set aside the
decisions of the NLRC and the LA, without prejudice to the refiling of
USTFU's complaint in the proper forum. The CA denied USTFU's
motion for reconsideration for lack of merit.
The Facts
The CA recited the facts as follows: cAIDEa
In a letter dated February 6, 2007, [USTFU] demanded
from [UST], through its Rector, Fr. Ernesto M. Arceo, O.P.
("Fr. Arceo"), remittance of the total amount of
P65,000,000.00 plus legal interest thereon, representing
deficiency in its contribution to the medical and
hospitalization fund ("fund") of [UST's] faculty members.
[USTFU] also sent [UST] a letter dated February 26, 2007,
accompanied by a summary of its claims pursuant to their
1996-2001 CBA.
On March 2, 2007, Fr. Arceo informed [USTFU] that the
aforesaid benefits were not meant to be given annually
but rather as a one-time allocation or contribution to the

fund. [USTFU] then sent [UST] another demand letter


dated June 24, 2007 reiterating its position that [UST] is
obliged to remit to the fund, its contributions not only for
the years 1996-1997 but also for the subsequent years,
but to no avail.
Thus, on September 5, 2007 [USTFU] filed against [UST], a
complaint for unfair labor practice, as well as for moral
and exemplary damages plus attorney's fees before the
arbitration branch of the NLRC.
[UST] sought the dismissal of the complaint on the ground
of lack of jurisdiction. It contended that the case falls
within the exclusive jurisdiction of the voluntary arbitrator
or panel of voluntary arbitrators because it involves the
interpretation and implementation of the provisions of the
CBA; and the conflict between the herein parties must be
resolved as grievance under the CBA and not as unfair
labor practice.
[UST's] motion to dismiss was denied by the LA in its
August 8, 2008 order. [UST] appealed the Order to the
NLRC. The NLRC Seventh Division, however, dismissed the
appeal on May 12, 2009 and remanded the case to the LA
for further proceedings.
The NLRC, in its assailed decision, correctly summarized
the issues and submissions of the herein parties in their
respective position papers, as follows: ECcDAH
According to [UST], the parties had, in the past,
concluded several Collective Bargaining Agreements
for the mutual benefit of the union members and
[UST], and one of these agreements was the 19962001 CBA. It is undisputed that one of the economic
benefits granted by [UST] under the said CBA was
the "Hospitalization Fund," provided under Section 1A(4) of the Article XIII thereof, the pertinent
provisions of which state:
ARTICLE XIII
ECONOMIC BENEFITS
Section 1. ECONOMIC BENEFIT. Upon
ratification and approval and for the term of this
Agreement, the economic benefits to be granted

by the UNIVERSITY and the schedule of such


releases are as follows:
A. School Year 1996-97 (June 1, 1996 to May 31,
1997):
xxx xxx xxx
4. Hospitalization Fund: Upon ratification and
approval hereof, the UNIVERSITY shall establish
a perpetual hospitalization and medical benefits
fund in the sum of TWO MILLION PESOS
(P2,000,000) to be managed conjointly by a
hospitalization and medical benefits committee
where both management and union are equally
represented.
xxx xxx xxx
B. School Year 1997-98 (June 1, 1997-May 31,
1998); cTCaEA
xxx xxx xxx
2. Hospitalization Fund: The UNIVERSITY shall
contribute the sum of ONE MILLION PESOS
(P1,000,000) to augment the Hospitalization and
Medical Benefits fund. The said sum shall be
added to the remaining balance of the
aforementioned fund;
xxx xxx xxx
C. School Year 1998-99 (June 1, 1998-May 31,
1999);
xxx xxx xxx
2. Hospitalization Fund: The UNIVERSITY shall
contribute the sum of ONE MILLION PESOS
(P1,000,000) to augment the Hospitalization and
Medical Benefits Fund. The said sum shall be
added to the remaining balance of the
aforementioned fund;
D. Miscellaneous Provisions:
xxx xxx xxx
2. All the economic benefits herein given and
those elsewhere provided under this agreement,
other than retirement benefits and one-half of

the signing bonus, are chargeable to the tuition


fee share, if any, of the faculty members;
xxx xxx xxx
[USTFU] added that the amount of four (4) million pesos
was agreed to be paid by the University to the
Hospitalization Fund annually for the fourth and fifth year
of their CBA, pursuant to the parties' Memorandum of
Agreement (MOA) which embodied the renegotiated
economic provisions of the said CBA for the years 19992000 and 2000-2001. aEcTDI
According to [USTFU], Section D(2) of the 1996-2001 CBA
provides that:
'All the economic benefits herein given and those
elsewhere provided under this agreement, other than
retirement benefits and one-half of the signing
bonus, are chargeable to the tuition fee share, if any,
of the faculty members.'
[USTFU] explained that the rationale for the above-quoted
provision is that the economic benefits under the said CBA
like the Hospitalization and Medical Benefits Fund, are
sourced from the tuition fee increases and pursuant
thereto, [UST] is obligated to remit the amount of
P2,000,000.00 not only in the first year of the CBA (19961997) but also in the subsequent years because the said
amount became an integral part of the current or existing
tuition fee. Furthermore, [UST] is likewise obligated to
slide in the amounts allocated for the Hospitalization and
Medical Benefits Fund for the succeeding years to the
next CBA year and so on and so forth. [USTFU] claimed
that the tuition fee increase once integrated to the old
amount of tuition fee becomes and remains an integral
part of the existing tuition fee. cTDIaC
[USTFU] averred that while [UST] remitted the amount of
P2,000,000.00 during the first year of the 1996-2001 CBA,
[UST] did not slide-in or remit the said amount in the
succeeding year (1997-1998). [UST] only remitted the
amount of P1,000.000,000.00 [sic]for the CBA year 19981999. Moreover, [UST] remitted only the amount of
P1,000,000.00 on the third year of the CBA instead of
P4,000,000.00 (2 Million + 1 Million + 1 Million). And
though [UST] remitted the amount of P4,000,000 during

the fourth year (2) [sic] of the 1996-2001 CBA, it did not
remit any amount at all during the fifth year of the said
Agreement.
[USTFU] claimed that during the period of the 1996-2001
CBA, [UST] should have remitted the total amount of
P25,000,000.00 instead of P8,000,000.00 only. Thus, a
deficiency of P17,000,000.00. [USTFU's] assertion is based
on the following illustration:
Year 1 Year 2 Year 3 Year 4 Year 5 Actual
Total
1996- 1997- 19982000amount
1999-00
amount
97
98
99
01
to
remitte
[be]
d
remitted
2M
2M did 2M did 2M did 2M did
remitte not
not
not
not slide
d
slide
slide
slide
1M 1M did 1M did 1M did
remitte not
not
not slide
d
slide
slide
1M
1M did 1M did
remitte
not
not slide
d
slide
4M
4M did
not
remitted
slide

2M

10M

1M

4M

1M

3M

4M

8M

8M

Total
25M
=====
=====
=

[USTFU] added that after the fifth year of the CBA, i.e.
2001 onwards, [UST] ought to remit the amount of
P8,000,000.00 ([2]M+1M+1M+4M) annually to the
Hospitalization and Medical Benefits Fund. Hence, for the
school year 2001-2002 up to the school year 2005-2006,
an additional amount of P24,000,000.00 (8M x 3) should
have been remitted by [UST] to the aforesaid fund. All in
all, the total amount yet to be remitted had ballooned to
P81,000,000.00. prLL

Furthermore, [USTFU] averred that [UST] likewise failed


and refused to render a proper accounting of the monies it
paid or released to the covered faculty as well as the
money it received as tuition fee increase starting from
school year 1997-1998 onwards thereby violating Section
D (1), Article XIII of the 1996-2001 CBA which provides
that:
'At the end of this agreement, and within three (3)
months therefrom, the UNIVERSITY shall render an
accounting of the monies it paid or released to the
covered faculty in consequence hereof.' IEAacS
On the other hand, [UST] claimed that it religiously
complied with the economic provisions of the 1996-2001
CBA particularly its obligation to remit to the
Hospitalization and Medical Benefits Fund as the
renegotiated economic provisions under the MOA by
remitting the total amount of P8,000,000.00. [UST]
claimed that it was never the intention of the parties to
the CBA that the amounts deposited to the Hospitalization
fund for each year shall be carried over to the succeeding
years. UST added that the MOA likewise made no mention
that the amount of P4,000,000.00 corresponding to the
school year 1999-2000 should be carried over to the next
school year. Thus, it was safe to conclude that the clear
intention of the parties was that the amounts indicated on
the CBA should only be remitted once on the scheduled
school year. Accordingly, [UST] averred that it was not
guilty of unfair labor practice.
[UST] further argued that the claim of [USTFU] had
already been barred by prescription since under Article
290 of the Labor Code all unfair labor practice [cases]
should be filed within one (1) year from the accrual
thereof otherwise they shall forever be barred. And
assuming that the instance [sic] case may be considered
as a money claim, the same already prescribed after three
(3) years from the time the cause of action accrued.
Finally, [UST] maintained that the present dispute should
not be treated as unfair labor practice but should be
resolved as a grievance under the CBA and referred to a
Voluntary Arbitrator.

The parties thereafter submitted their respective Replies


and Rejoinders amplifying their arguments while refuting
those made by the other. 7
The Labor Arbiter's Ruling
The LA ruled in favor of USTFU. The LA classified USTFU's complaint
as one for "unfair labor practice, claims for sliding in of funds to
hospitalization and medical benefits under the CBA, damages and
attorney's fee with prayer for slide-in and restoration of medical
benefits under the CBA." 8 The LA ruled that UST was not able to
comply with Article XIII, Section 1A-(4) of the 1996-2001 CBA.
However, despite UST's alleged non-compliance, the LA ruled that
UST did not commit unfair labor practice.
The LA interpreted the pertinent CBA provisions to mean that UST
bound itself to contribute to the fund P2,000,000.00 every school
year, regardless of the appropriated augmentation amount. The LA
computed UST's liability in this manner:
Considering that the pertinent provision of the [19962001] CBA Article XIII, Section 1A(4) stated that "The
University shall establish a perpetual hospitalization and
medical benefits fund in the sum of two million pesos
(P2,000,000.00) . . ." it follows that the amount of P2M
every school year must be slided in regardless of the
augmentation amount as may be appropriated. The word
shall is mandatory and the word perpetual [is] continuous
thus, [UST] is obligated to remit the actual amount to wit:
SY
SY
SY
SY
SY

1996-1997
1997-1998
1998-1999
1999-2000
2000-2001

P2M
P2M + P1M
P2M + P1M
P4M (Renegotiated)
P4M

TOTAL REMITTANCE

=
=
=
=
=
=

P2M
P3M
P3M
P4M
P4M

P16M
=======

Thus, [UST] therefore has an unremitted fund of Eight


Million (P8,000,000.00) pesos.
Corollarily, the CBA covering the period SY 2001-2006
[UST] is under obligation to remit two (2) million
(P2,000,000.00) [sic] pesos every year or a total of ten

million (P10,000,000.00) pesos in addition to whatever


augmented amount stipulated in the CBA. SECcAI
In fine, the total unremitted amount to the [hospitalization
and medical benefits] fund is eighteen million
(P18,000,000.00) pesos. P8M for SY 1996-2001 and P10M
for SY 2001-2006. 9
The LA did not find UST's non-compliance with the 1996-2001 CBA as
acts that constitute unfair labor practice.
The failure of [UST] to slide in yearly the P2M
hospitalization fund is not violation of the CBA but an error
in the interpretation of the provision of the CBA. It could
not be said either that [UST] acted with malice and bad
faith in view of the compliance with the other economic
provision[s] of the CBA. An error in the interpretation of a
provision in the CBA, absent any malice or bad faith could
not be considered as unfair labor practice as held in the
case of Singapore Airlines Local Employees Association
vs. NLRC, et al., 130 SCRA 472. 10
The dispositive portion of the LA's Decision reads:
WHEREFORE, premised on the foregoing considerations,
judgment is hereby rendered ordering [UST] to remit the
amount of eighteen million (P18,000,000.00) pesos to
[the] hospitalization and medical benefits fund pursuant
to the mandate of the Collective Bargaining Agreement on
economic benefits.
[UST is] likewise directed to pay attorney's fee[s]
equivalent to ten (10) percent of the total monetary award
in this case.
Other claims dismissed for lack of merit.
SO ORDERED. 11
USTFU filed a Memorandum of Partial Appeal 12 from the LA's
Decision. USTFU claimed that the LA erred in holding that UST is
liable to USTFU in the amount of P18 million only, and in not holding
that the amounts claimed by USTFU should be remitted by UST to
USTFU. USTFU claimed that, as of 2011, UST's total liability to the
fund is P97 million: P17 million for CBA years 1996 to 2001, P40
million for CBA years 2001 to 2006, and P40 million for CBA years
2006 to 2011. USTFU also claimed that the amount should be
remitted by UST to USTFU for proper turnover to the fund. DAESTI

UST, on the other hand, filed an Appeal Memorandum. 13 UST


claimed that the LA committed grave abuse of discretion in taking
cognizance over the case because the issue is within the jurisdiction
of the voluntary arbitrator. UST further claimed that the LA
committed grave abuse of discretion in finding that UST erred in its
interpretation of the CBA and in not finding that USTFU's claims are
already barred by prescription.
The NLRC's Ruling
The NLRC granted USTFU's appeal and denied UST's appeal for lack
of merit. The NLRC ordered UST to pay USTFU P80,000,000.00 and
attorney's fees equivalent to ten percent of the monetary award.
The NLRC pointed out that UST's refusal to comply, despite repeated
demands, with the CBA's economic provisions is tantamount to a
gross and flagrant violation. Thus, the present case properly falls
under the LA's original jurisdiction as well as the NLRC's appellate
jurisdiction. The issue of prescription also cannot be held against
USTFU because the cause of action accrued only when UST refused
to comply with USTFU's 6 February 2007 demand letter. The demand
letter was sent only after the conduct of proceedings in the
Permanent Union-University Committee (PUUC).
The NLRC noted that the subsequent CBAs between UST and USTFU
show that the parties intended that the amount appropriated each
year to augment the fund shall be carried over to the succeeding
years and is chargeable to the tuition fee increment. The NLRC ruled
that the amounts appropriated for each year during the effectivity of
the 1996-2001 CBA should still be appropriated to the succeeding
years. From school year 1997-1998 and onwards, the basis for such
carry over is that the amounts were sourced from tuition increases
corresponding to a given school year. Since any increase in tuition is
integrated into the subsequent tuition, the amount allocated to the
fund because of the tuition increase should be remitted to the fund.
The 2001-2006 and 2006-2011 CBAs have express provisions on the
carry over. The NLRC computed UST's deficiency 14 as follows:
HSTCcD
For the 1996-2001 CBA:
Total
amount
1999that
2000-01
00
should be
submitted

Year 1 Year 2 Year 3 Year 4


199697

199798

199899

Year 5

2M

2M
1M

2M
1M
1M

2M
2M
1M
1M
1M
1M
4M
4M

2M + 3M + 4M + 8M +
8M =
25M
==== ==== ==== ==== ===== ======
=== === ==== ===
==
===
Since it is undisputed that [UST] remitted the amount of
PhP8,000,000.00 only, there is still a deficiency of
PhP17,000,000.00 corresponding to the 1996-2001 CBA.
cICHTD
xxx xxx xxx
For the 2001-2006 CBA:
Year 1

Year 2

Year 3

Total
amount
2005that
06
should
be
submitted

Year 4

2001-02 2002-03 2003-04

2M

2M
3M

2M
3M
3M

2M +
5M +
8M +
===== ===== =====
==
==
==

2M
3M
3M

8M =
23M
==== ======
===
==

For the 2006-2011 CBA:


Year 1
2006-07

Year 2
2007-08

8M +

8M +

Year 3
Year 4
2008-09 2009-10
8M +

8M +

Year 5
2010-11

Total amount
that should be
submitted

8M =

40M

The NLRC computed UST's total liability for school years 1996-1997
up to 2010-2011 at P80,000,000.00. The records show that UST

remitted P8,000,000.00 for 1996-2001 CBA, and there is absence of


proof that the additional contributions to the fund were made for the
2001-2006 and 2006-2011 CBAs. The NLRC also ordered UST to pay
USTFU attorney's fees at 10% of the monetary award. CacISA
UST filed a motion for reconsideration of the NLRC decision. UST
again claimed that the Voluntary Arbitrator, and not LA, had
jurisdiction over the interpretation of the CBA; the P80,000,000.00
award had no basis; and the fund should be remitted to the Hospital
and Medical Benefits Committee, not to USTFU, as stated in the CBA.
In a Resolution promulgated on 29 July 2011, the NLRC denied UST's
motion for reconsideration for lack of merit.
UST filed a petition for certiorari and prohibition under Rule 65 of the
Rules of Court before the CA. UST still questioned the jurisdiction of
the LA, as well as the award of P80,000,000.00. UST also claimed
that USTFU's money claims are barred by prescription, and that the
proper recipient of the award should be the Hospital and Medical
Benefits Committee. Finally, UST also questioned the award for
attorney's fees. 15 DTcASE
On 8 November 2011, USTFU filed a comment before the CA. USTFU
claimed that the NLRC did not commit grave abuse of discretion in
finding that USTFU is entitled to its claims for payment of the
unremitted benefits. USTFU also claimed that certiorari is not a
proper remedy for UST because the NLRC did not commit any grave
abuse of discretion. 16
The Court of Appeals' Ruling
The CA, in its decision promulgated on 13 July 2012, disposed of the
present case by agreeing with UST's argument that the LA and the
NLRC did not have jurisdiction to hear and decide the present case.
The CA stated that since USTFU's ultimate objective is to clarify the
relevant items in the CBA, then USTFU's complaint should have been
filed with the voluntary arbitrator or panel of voluntary arbitrators.
The dispositive portion of the CA's decision reads:
WHEREFORE, finding grave abuse of discretion on the part
of public respondent NLRC, the petition is GRANTED.
Without prejudice to the re-filing of private respondent's
complaint with the proper forum, the assailed NLRC
decision dated June 8, 2011 and resolution dated July 29,
2011 in NLRC LAC No. 10-003370-08, as well as the
decision dated September 24, 2010 of the Labor Arbiter in
NLRC-NCR Case No. 09-09745-07 are hereby SET ASIDE.

SO ORDERED. 17
USTFU filed its motion for reconsideration 18 before the CA. USTFU
maintained that the LA and the NLRC had jurisdiction over the
subject matter of the complaint.
In a resolution 19 promulgated on 19 October 2012, the CA denied
USTFU's motion for reconsideration for lack of merit. HaIATC
USTFU filed the present petition for review 20 before this Court on 7
December 2012.
The Issues
USTFU enumerated the following grounds warranting allowance of its
petition:
1. The Honorable Court of Appeals departed from the
usual course of judicial proceedings in holding that
the Labor Arbiter and the NLRC have no jurisdiction
over the complaint for unfair labor practice (ULP)
filed by USTFU.
2. The Court of Appeals acted in a way not in accord with
the applicable decisions of the Supreme Court in
holding that the voluntary arbitrator has jurisdiction
over the instant case despite the fact that Article XIII
("Grievance Machinery") of the CBA is not applicable.
3. The Court of Appeals committed grave abuse of
discretion in the appreciation of facts in not finding
that under Art. XXII of the CBA, the Permanent
University-Union Committee (PUUC) is the proper
forum to resolve the dispute between UST and
USTFU. However, Art. XXII does not provide for a
"voluntary arbitration" clause and therefore, USTFU
validly filed the complaint for ULP before the Labor
Arbiter.
4. The Honorable Court of Appeals committed grave
abuse of discretion in its appreciation of evidence in
not finding that the parties agreed to have the
dispute resolved by the labor tribunals and UST had
actively participated in the proceedings before the
Labor Arbiter and the NLRC which is tantamount to a
recognition of the jurisdiction of the said bodies.
5. The Court of Appeals departed from the usual course of
proceedings in referring back the case to voluntary

arbitration despite the fact that the parties already


fully and exhaustively litigated the case before the
Labor Arbiter and the NLRC which both correctly
found in favor of USTFU. Moreover, referral to
voluntary arbitration would result in waste of
precious time in relitigating the case all over again.
21 aTcSID
UST, for its part, enumerated the following grounds for opposing
USTFU's petition:
1. The Court of Appeals correctly ruled that it is the
Voluntary Arbitrator which has jurisdiction over the
instant case.
2. Assuming arguendo that NLRC has jurisdiction over the
instant case, it clearly erred when it made an award
not prayed for in petitioner USTFU's complaint, in
effect mandating double payment.
3. Assuming arguendo that NLRC has jurisdiction over the
instant case, it erred in ruling that respondent UST is
still liable to pay the amount of P17,000,000.00 for
the period 1996-2001 under the 1996-2001 CBA
considering that:
a. There is no slide-in provision in the 1996-2001
CBA.
b. The amounts allocated for the Hospitalization Fund
during SYs 1996-2001 were not sourced from the
70% share of the teaching and non-teaching
personnel in the tuition fee increases.
4. The complaint for money claims of petitioner USTFU
arising from the interpretation of the 1996-2001 CBA
is already barred by prescription.
5. Assuming arguendo that NLRC has jurisdiction over the
instant case, it unjustly and erroneously ordered
respondent UST to pay the subject amount to
petitioner USTFU and not to the Hospital and Medical
Benefits Committee under the CBA. 22
The Court's Ruling
The petition has no merit. We shall address the issues raised by the
parties one by one.
Jurisdiction over the Present Case

On the issue of jurisdiction, we affirm with modification the ruling of


the CA. The Labor Arbiter has no jurisdiction over the present case;
however, despite the lack of jurisdiction, we rule on the issues
presented. We recognize that a remand to the voluntary arbitration
stage will give rise to the possibility that this case will still reach this
Court through the parties' appeals. Furthermore, it does not serve
the cause of justice if we allow this case to go unresolved for an
inordinate amount of time.
We quote the pertinent Articles of the Labor Code of the Philippines
below: DAcSIC
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, . . .:
1. Unfair labor practices cases;
xxx xxx xxx
(b) The Commission shall have exclusive appellate
jurisdiction over all cases decided by Labor Arbiters.
(c) Cases
arising
from
the
interpretation
or
implementation of collective bargaining agreements and
those arising from the interpretation or enforcement of
company personnel policies shall be disposed of by the
Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration as may be provided
in said agreements. TADCSE
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.
Art. 262-A. Procedures. The Voluntary Arbitrator or
panel of Voluntary Arbitrators shall have the power to hold
hearings, receive evidences and take whatever action is
necessary to resolve the issue or issues subject to the
dispute, including efforts to effect a voluntary settlement
between the parties. TAIDHa
All parties to the dispute shall be entitled to attend the
arbitration proceedings. The attendance of any third party
to the exclusion of any witness from the proceedings shall
be determined by the Voluntary Arbitrator or panel of
Voluntary Arbitrators. Hearing may be adjourned for cause
or upon agreement by the parties.
Unless the parties agree otherwise, it shall be mandatory
for the Voluntary Arbitrator or panel of Voluntary
Arbitrators to render an award or decision within twenty
(20) calendar days from the date of submission of the
dispute to voluntary arbitration.
The award or decision of the Voluntary Arbitrator or panel
of Voluntary Arbitrators shall contain the facts and the law
on which it is based. It shall be final and executory after
ten (10) calendar days from receipt of the copy of the
award or decision by the parties. EHaCID
Upon motion of any interested party, the Voluntary
Arbitrator or panel of Voluntary Arbitrators or the Labor
Arbiter in the region where the movant resides, in case of
the absence or incapacity of the Voluntary Arbitrator or

panel of Voluntary Arbitrators for any reason, may issue a


writ of execution requiring either the sheriff of the
Commission or regular courts or any public official whom
the parties may designate in the submission agreement to
execute the final decision, order or award.
On the other hand, the pertinent provisions in the 1996-2001 CBA
between UST and USTFU provide: HESCcA
ARTICLE X
GRIEVANCE MACHINERY
Section 1. Grievance. Any misunderstanding concerning
policies and practices directly affecting faculty members
covered by this [collective bargaining] agreement or their
working conditions in the UNIVERSITY or any dispute
arising as to the meaning, application or violation of any
provisions of this Agreement or any complaint that a
covered faculty member may have against the
UNIVERSITY shall be considered a grievance.
Section 2. Exclusion. Termination of employment and
preventive suspension shall be exempted from the
provisions of this Article as the same shall be governed by
the procedure in the Labor Code and its Implementing
Rules.
Section 3. Procedure. A grievance shall be settled as
expeditiously as possible in accordance with the following
procedure:
STEP I. Upon presentation of a grievance in writing
by the aggrieved faculty member, to the FACULTY
UNION Grievance Officer, the said officer shall
present the same to the Dean or school/department
head concerned who shall render his decision on the
matter within five (5) school days from the date of
the presentation. If the aggrieved party is not
satisfied with the decision, or if the Dean or
school/department head fails to act within the fiveschool-day period, appeal may be made to Step II
within five (5) school days from receipt of the
decision or, in the absence of a decision, the
expiration of the period for its rendition. If no appeal
is made within the period of appeal, the grievance
shall be deemed settled on the basis of Step I.
aCITEH

STEP II. All appeals from Step I shall be presented to


and considered by an Adjudication Committee which
shall be composed of two (2) representatives chosen
by the UNIVERSITY and two (2) representatives
chosen by the FACULTY UNION. The Committee shall
meet within ten (10) school days after the elevation
to this step and and try to settle the grievance to the
satisfaction of all concerned. It shall render its
decision within twenty (20) school days following the
presentation of the grievance to the Adjudication
Committee. A quorum for any meeting of the
Committee shall consist of a majority of its entire
membership. The affirmative vote of at least three
(3) members of the Committee shall be necessary to
reach a decision. If the Committee renders a
decision, the grievance shall be deemed settled
accordingly. If the Committee fails to make a decision
within the period of twenty (20) days above stated,
the FACULTY UNION President may, within ten (10)
days thereafter elevate the grievance to Step III.
STEP III. The grievance appealed to this step shall be
handled by the FACULTY UNION President who shall
take it up with the Rector of the UNIVERSITY who, in
turn, shall settle the grievance within ten (10) days. If
no settlement is arrived at within the aforementioned
period, the grievance will automatically be referred to
voluntary arbitration.
STEP IV. The mechanics of arbitration shall be as
follows:
(a) The UNIVERSITY and the FACULTY UNION
shall select within three (3) days, by raffle or
process of elimination, an arbitrator mutually
agreeable to them preferably from the list
provided by the Bureau of Labor Relations.
(b) The voluntary arbitrator shall render an
award within ten (10) days after the issue in
dispute is submitted for decision and his award
shall be final and binding upon all parties to the
grievance. CTIDcA
(c) Arbitration costs shall be shared equally by
the UNIVERSITY and the FACULTY UNION. 23

ARTICLE XXII
PERMANENT UNIVERSITY-UNION COMMITTEE (PUUC)
Permanent UNION-UNIVERSITY Committee (PUUC).
The UNIVERSITY and the FACULTY UNION realize that
notwithstanding this CBA, there will remain problems and
irritants which will require the continuing attention of
both parties. Symbolic of the mutual good faith of the
parties, they have agreed to establish a permanent
committee, where the UNIVERSITY and the FACULTY
UNION are equally represented, to address these
problems as they arise.
a. Within thirty (30) days from signing of this Agreement,
the Committee shall meet. The members of the
Committee are the following:
1) For the ADMINISTRATION:
a) Rector or his representative;
b) Vice Rector for Academic Affairs or his
representative;
c) Vice Rector for Finance or his representative;
and
d) Appointee of the Rector.
2) For the FACULTY UNION:
a) President of the UNION;
b) Executive Vice President of the UNION or his
representative;
c) Secretary General or his representative; and
d) Appointee of the UNION President.
b. The regular meetings of this Committee shall be held
at least bi-monthly or as the need arises.
c. The decision reached in the PUUC Meetings shall be
binding to all UNIVERSITY functionaries. 24
Jurisdiction is determined by the allegations of the complaint. In the
present case, USTFU alleged that UST committed unfair labor
practice in its blatant violation of the economic provisions of the
1996-2001 CBA, and subsequently, the 2001-2006 and 2006-2011
CBAs. UST, meanwhile, has consistently questioned USTFU's act of
bringing the case before the LA, and of not submitting the present

case to voluntary arbitration. The LA assumed jurisdiction, but ruled


that UST did not commit any unfair labor practice in UST's
interpretation of the economic provisions of the 1996-2001 CBA. The
NLRC, on the other hand, ruled that there was indeed unfair labor
practice. The CA ruled that the LA and the NLRC did not have
jurisdiction as there was no unfair labor practice. acHETI
Reading the pertinent portions of the 1996-2001 CBA along with
those of the Labor Code,we see that UST and USTFU's
misunderstanding arose solely from their differing interpretations of
the CBA's provisions on economic benefits, specifically those
concerning the fund. Therefore, it was clearly error for the LA to
assume jurisdiction over the present case. The case should have
been resolved through the voluntary arbitrator or panel of voluntary
arbitrators.
Article 217 (c) of the Labor Code provides that the Labor Arbiter shall
refer to the grievance machinery and voluntary arbitration as
provided in the CBA those cases that involve the interpretation of
said agreements. Article 261 of the Labor Code further provides that
all unresolved grievances arising from the interpretation or
implementation of the CBA, including violations of said agreement,
are under the original and exclusive jurisdiction of the voluntary
arbitrator or panel of voluntary arbitrators. Excluded from this
original and exclusive jurisdiction is gross violation of the CBA, which
is defined in Article 261 as "flagrant and/or malicious refusal to
comply with the economic provisions" of the CBA. San Jose v. NLRC
25 provides guidelines for understanding Articles 217, 261, and 262:
HAEDCT
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. aETASc
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. CDAcIT
"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.
Despite the allegation that UST refused to comply with the economic
provisions of the 1996-2001 CBA, we cannot characterize UST's
refusal as "flagrant and/or malicious." Indeed, UST's literal
interpretation of the CBA was, in fact, what led USTFU to file its
complaint. To our mind, USTFU actually went beyond the text of the
1996-2001 CBA when it claimed that the integrated tuition fee
increase as described in Section 1D (2) is the basis for UST's alleged
deficiency.
We cannot subscribe to USTFU's view that the 1996-2001 CBA's
Article X: Grievance Machinery is not applicable to the present case.
When the issue is about the grievance procedure, USTFU insists on a
literal interpretation of the 1996-2001 CBA. Indeed, the present case

falls
under
Section
1's
definition
of
grievance:
"[a]ny
misunderstanding concerning policies and practices directly affecting
faculty members covered by this [collective bargaining] agreement
or their working conditions in the UNIVERSITY or any dispute arising
as to the meaning, application or violation of any provisions of this
Agreement or any complaint that a covered faculty member may
have against the UNIVERSITY." Section 2 excludes only termination
and preventive suspension from the grievance procedure. TcHCDI
USTFU's focus is on the 1996-2001 CBA's provisions about the
grievance process rather than the provision about the subject
matters covered by the grievance process. Despite UST's alleged
violation of the economic provisions of the CBA by its insufficient
remittances to the fund, a dispute arising as to the meaning,
application or violation of the CBA, USTFU used Step I in Section 3,
and ignored Steps III and IV, to rule out any referral to voluntary
arbitration. USTFU concludes that the 1996-2001 CBA's provisions on
grievance machinery only refer to a grievance of a faculty member
against UST, and that said provisions do not contemplate a situation
where USTFU itself has a grievance against UST.
USTFU argues that the PUUC is the proper forum to resolve the issue,
and that the filing of a complaint before the LA is proper in the
absence of a voluntary arbitration clause in the 1996-2001 CBA's
Article XXII: Permanent University-Union Committee. However, as
provided in the 1996-2001 CBA, PUUC is established for "continuing
problems and irritants which will require the continuing attention" of
UST and USTFU. Clearly, the PUUC addresses matters not covered by
the CBA.
USTFU's adamant refusal to consider voluntary arbitration ignores
Articles 261 to 262-A of the Labor Code,as well as Steps III and IV of
Section 3 of the 1996-2001 CBA.
Accrual of Cause of Action and
Prescription of Claims
USTFU's claims arose from UST's alleged failure to contribute the
correct amounts to the fund during the 1996-2001 CBA. However,
USTFU did not complain of any violation by UST during the lifetime of
the 1996-2001 CBA. Neither did USTFU complain of any violation by
UST during the lifetime of the succeeding 2001-2006 CBA. It was
only on 6 February 2007 that USTFU sent a demand letter to UST
Rector Fr. Ernesto M. Arceo, O.P., for the claimed hospitalization and
medical benefits under the 1996-2001 CBA. On 2 March 2007, UST,
through its Rector, Fr. Ernesto M. Arceo, O.P., informed USTFU,
through its President, Dr. Gil Gamilla, that "the hospitalization and

medical benefits contained in [the 1996-2001 CBA] were a one-time


give, and therefore not meant to slide." USTFU notified UST on 24
June 2007 about its intent to file the necessary complaint. On 6
September 2007, USTFU filed a complaint against UST before the LA.
The 1996-2001 CBA, as well as the applicable laws, is silent as to
when UST's alleged violation becomes actionable. Thus, we apply
Article 1150 of the Civil Code of the Philippines: "The time for
prescription for all kinds of actions, when there is no special
provision which ordains otherwise, shall be counted from the day
they may be brought." 26 Prescription of an action is counted
from the time the action may be brought. 27
It is error to state that USTFU's cause of action accrued only upon
UST's categorical denial of its claims on 2 March 2007. USTFU's
cause of action accrued when UST allegedly failed to comply with the
economic provisions of the 1996-2001 CBA. Upon such failure by
UST, USTFU could have brought an action against UST.
Article 290 of the Labor Code provides that unfair labor practices
prescribe within one year "from accrual of such unfair labor practice;
otherwise, they shall be forever barred." Article 291 of the same
Code provides that money claims arising from employer-employee
relations prescribe "within three (3) years from the time the cause of
action accrued; otherwise they shall be forever barred." USTFU's
claims under the 1996-2001 CBA, whether characterized as one for
unfair labor practice or for money claims from employer-employee
relations, have already prescribed when USTFU filed a complaint
before the LA.
USTFU filed its complaint under the theory of unfair labor practice.
Thus, USTFU had one year from UST's alleged failure to contribute,
or "slide in," the correct amount to the fund to file its complaint.
USTFU had one year for every alleged breach by UST: school year
(SY) 1997-1998, SY 1998-1999, SY 1999-2000, SY 2000-2001, SY
2001-2002, and SY 2002-2003. USTFU did not file any complaint
within the respective one-year prescriptive periods. USTFU decided
to file its complaint only in 2007, several years after the
accrual of its several possible causes of action. Even if USTFU
filed its complaint under the theory of money claims from employeremployee relations, its cause of action still has prescribed. caITAC
Determination of the Benefits Due
We consolidate USTFU's claims, UST's remittances, and UST's alleged
balances in the table below:
USTFU's

UST's

UST's alleged

claims 28
1996 to 2001
CBA
SY 1996-1997
SY 1997-1998
SY 1998-1999
1999
Memorandum
of Agreement
SY 1999-2000
SY 2000-2001
2001 to 2006
CBA
SY 2001-2002
SY 2002-2003
SY 2003-2004
SY 2004-2005
SY 2005-2006
2006-2011 CBA
SY 2006-2007
SY 2007-2008
SY 2008-2009
SY 2009-2010
SY 2010-2011
Total

remittances 29

balances

P2,000,000.00
P3,000,000.00
P4,000,000.00

P2,000,000.00
P1,000,000.00
P1,000,000.00

0
P2,000,000.00
P3,000,000.00

P8,000,000.00
P8,000,000.00

P4,000,000.00
-

P4,000,000.00
P8,000,000.00

P8,000,000.00
P8,000,000.00
P8,000,000.00
P8,000,000.00
P8,000,000.00

P2,000,000.00
P5,000,000.00
P8,000,000.00
P8,000,000.00
P8,000,000.00

P6,000,000.00
P3,000,000.00
0
0
0

P8,000,000.00
P8,000,000.00
0
P8,000,000.00
P8,000,000.00
0
P8,000,000.00
P8,000,000.00
0
P8,000,000.00
P8,000,000.00
0
P8,000,000.00
P8,000,000.00
0

P105,000,000.0
P79,000,000.00 P26,000,000.00
0
========= ========== ==========
====
===
===

We restate the following provisions in the pertinent CBAs to establish


what USTFU claims as its bases for additional funds: SEDIaH
1996-2001 CBA
ARTICLE XIII
ECONOMIC BENEFITS
Section 1. ECONOMIC BENEFIT. Upon ratification and
approval and for the term of this Agreement, the
economic benefits to be granted by the UNIVERSITY and
the schedule of such releases are as follows:

A. School Year 1996-97 (June 1, 1996 to


May 31, 1997):
xxx xxx xxx
4. Hospitalization Fund: Upon ratification and
approval hereof, the UNIVERSITY shall
establish a perpetual hospitalization and
medical benefits fund in the sum of TWO
MILLION PESOS (P2,000,000) to be managed
conjointly by a hospitalization and medical
benefits committee where both management
and union are equally represented.
The joint committee shall promulgate its internal rules and
regulations, and on the second year of this agreement,
i.e., SY 1997-98, may allocate such amount as required,
but not to exceed ten per cent (10%) of the gross income
of the fund, for administrative expenses. For the duration
of the first year of operation of the fund, the UNIVERSITY
and the FACULTY UNION shall equally subsidize the
operations of the fund.
The hospitalization costs and medical benefits of the
members of the faculty as provided in Article XVI of this
agreement shall be taken from this fund.
This
Fund
is
independently
managed
by
the
aforementioned joint committee, subject to independent
audit. The yearly state of finances of the fund shall be
reported, appended to the FACULTY UNION's own annual
report, to all members of the university faculty.
B. School Year 1997-98 (June 1, 1997-May
31, 1998):
xxx xxx xxx
2. Hospitalization Fund: The UNIVERSITY shall
contribute the sum of ONE MILLION PESOS
(P1,000,000) to augment the
Hospitalization and Medical Benefits fund.
The said sum shall be added to the remaining
balance of the aforementioned fund;
xxx xxx xxx
C. School Year 1998-99 (June 1, 1998-May
31, 1999):

xxx xxx xxx


2. Hospitalization Fund: The UNIVERSITY shall
contribute the sum of ONE MILLION PESOS
(P1,000,000)
to
augment
the
Hospitalization and Medical Benefits fund.
The said sum shall be added to the remaining
balance of the aforementioned fund;
D. Miscellaneous Provisions:
1. At the end of this agreement, and within three
months therefrom, the UNIVERSITY shall render
an accounting of the monies it paid or released
to the covered faculty in consequence thereof;
2. All the economic benefits herein given and
those elsewhere provided under this agreement,
other than retirement benefits and one-half of
the signing bonus, are chargeable to the tuition
fee share, if any, of the faculty members;
3. In the event that the tuition fee benefits of the
faculty for any of the three years covered by this
part of this agreement i.e., the University
decides to raise tuition fees in the coming two
school years, exceed those provided herein, the
same may be allocated for salaries and other
benefits as determined by the FACULTY UNION
and the matter duly communicated to the
UNIVERSITY; and, cDAISC
4. None of the benefits provided herein, both
distributable immediately after ratification and
those to be given during the term hereof, other
than the amounts checked-off and the
Hospitalization and Medical Benefits are to be
directly distributed to the faculty members by
the University. 30
1999 Memorandum of Agreement
1.0 The University hereby agrees to grant increase in
salary and fringe benefits as provided for by the tuition
fee increase of school year 1999-2000 according to the
following scheme:
xxx xxx xxx

6.0 If there is any tuition fee increase for school year


2000-2001, there will be an additional increase in
salary/fringe benefits to be agreed upon by both parties.
7.0 An additional amount of four million pesos will
be deposited in the hospitalization fund of the
faculty. 31
2001-2006 CBA
Article XX
HOSPITALIZATION AND MEDICAL BENEFITS
Section 1. Hospitalization and Medical Benefits Fund.
The UNION and the UNIVERSITY shall build up and
maintain the perpetual Hospitalization and Medical
Benefits Fund. For this purpose, the UNIVERSITY agrees
to appropriate for AY 2001-2002 two million pesos
(PhP2,000,000.00); for AY 2002-2003 three million
pesos (PhP3,000,000.00); and for AY 2003-2004
another three million pesos (PhP3,000,000.00). It is
understood that the amount appropriated for each
year is carried over to the succeeding years and is
chargeable to the tuition fee increment. . . . 32
ECcTaH
2006-2011 CBA
Article XX
HOSPITALIZATION AND MEDICAL BENEFITS
Section
5. Miscellaneous
Provisions.

a.
The
UNIVERSITY will continue to slide in the amounts
set aside in the 2001-2006 CBA to augment the
fund. Fifty percent of the amount due shall be remitted
within a month from the start of the first semester and the
other fifty percent within a month from the start of the
second semester of the academic year. These sums of
money shall be remitted without necessity of demand on
the part of the union and may not be garnished or held by
the university on account of disputes in hospital billings
between the University and the Union.
xxx xxx xxx 33
USTFU claims that UST's contributions should have been cumulative,
with the amount appropriated for each year carried over to the
succeeding years and is chargeable to the tuition fee increment.

However, USTFU's claims are not supported by the economic


provisions of the 1996-2001 CBA and the 1999 Memorandum of
Agreement reproduced above.
We wholly agree with UST's interpretation of the economic provisions
of the 1996-2001 CBA, the 1999 Memorandum of Agreement, and
the 2001-2006 and 2006-2011 CBAs, as well as its remittances to
the fund for the covered periods. UST faithfully followed the clear
provisions of these agreements.
The 1996-2001 CBA established the fund, with an initial remittance
of P2,000,000.00 for school year 1996-1997. UST bound itself to
augment the fund by contributing P1,000,000.00 per year for school
years 1997-1998 and 1998-1999. The 1999 Memorandum of
Agreement merely stated that UST will deposit P4,000,000.00 to the
fund. Express mention of the carry-over is found only in Section 1,
Article XX of the 2001-2006 CBA: "It is understood that the amount
appropriated for each year is carried over to the succeeding
years . . . ." The 1996-2001 CBA does not have this carry-over
provision. During the lifetime of the 1996-2001 CBA, the 1999
Memorandum of Agreement, and the 2001-2006 CBA, USTFU never
questioned the non-compliance by UST with an alleged carry-over
agreement applicable to the 1996-2001 CBA. AcIaST
This Court is well aware of Article 1702 of the Civil Code,which
provides that "[i]n case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living
for the laborer." This Court is also well aware that when the
provisions of the CBA are clear and unambiguous, the literal
meaning of the stipulations shall govern. 34 In the present case, the
CBA provisions pertaining to the fund are clear and should be
interpreted according to their literal meaning.
WHEREFORE, we DENY the petition. We DECLARE that the claims
of the University of Santo Tomas Faculty Union have prescribed and
that there is no carry-over provision for the Hospitalization and
Medical Benefits Fund in the 1996-2001 Collective Bargaining
Agreement and in the 1999 Memorandum of Agreement. The carryover provision for the Hospitalization and Medical Benefits Fund is
found only in the 2001-2006 and 2006-2011 Collective Bargaining
Agreements.
No costs.
SO ORDERED.
Leonardo-de Castro, * Del Castillo, Perez and Perlas-Bernabe, JJ.,
concur.

||| (UST Faculty Union v. UST, G.R. No. 203957, [July 30, 2014])

31. Art 223 (now Art 229), Appeal requirements


DIAMOND TAXI V LLAMAS
SECOND DIVISION
[G.R. No. 190724. March 12, 2014.]
DIAMOND TAXI and/or BRYAN ONG, petitioners, vs.
FELIPE LLAMAS, JR., respondent.
DECISION
BRION, J p:
In this petition for review on certiorari, 1 we resolve the challenge to
the August 13, 2008 decision 2 and the November 27, 2009
resolution 3 of the Court of Appeals (CA) in CA-G.R. CEB-S.P. No.
02623. This CA decision reversed and set aside the May 30, 2006
resolution 4 of the National Labor Relations Commission (NLRC) in
NLRC Case No. V-000294-06 (RAB VII-07-1574-05) that dismissed
respondent Felipe Llamas, Jr.'s appeal for non-perfection.

The Factual Antecedents


Llamas worked as a taxi driver for petitioner Diamond Taxi, owned
and operated by petitioner Bryan Ong. On July 18, 2005, Llamas filed
before the Labor Arbiter (LA) a complaint for illegal dismissal against
the petitioners.
In their position paper, the petitioners denied dismissing Llamas.
They claimed that Llamas had been absent without official leave for
several days, beginning July 14, 2005 until August 1, 2005. The
petitioners submitted a copy of the attendance logbook to prove that
Llamas had been absent on these cited dates. They also pointed out
that Llamas committed several traffic violations in the years 20002005 and that they had issued him several memoranda for acts of
insubordination and refusal to heed management instructions. They
argued that these acts traffic violations, insubordination and
refusal to heed management instructions constitute grounds for
the termination of Llamas' employment.
Llamas failed to seasonably file his position paper. IDaEHC
On November 29, 2005, the LA rendered a decision 5 dismissing
Llamas' complaint for lack of merit. The LA held that Llamas was not
dismissed, legally or illegally. Rather, the LA declared that Llamas
left his job and had been absent for several days without leave.
Llamas received a copy of this LA decision on January 5, 2006.
Meanwhile, he filed his position paper 6 on December 20, 2005.
In his position paper, Llamas claimed that he failed to seasonably file
his position paper because his previous counsel, despite his repeated
pleas, had continuously deferred compliance with the LA's orders for
its submission. Hence, he was forced to secure the services of
another counsel on December 19, 2005 in order to comply with the
LA's directive.
On the merits of his complaint, Llamas alleged that he had a
misunderstanding with Aljuver Ong, Bryan's brother and operations
manager of Diamond Taxi, on July 13, 2005 (July 13, 2005 incident).
When he reported for work on July 14, 2005, Bryan refused to give
him the key to his assigned taxi cab unless he would sign a prepared
resignation letter. He did not sign the resignation letter. He reported
for work again on July 15 and 16, 2005, but Bryan insisted that he
sign the resignation letter prior to the release of the key to his
assigned taxi cab. Thus, he filed the illegal dismissal complaint.
On January 16, 2006, Llamas filed before the LA a motion for
reconsideration of its November 29, 2005 decision. The LA treated

Llamas' motion as an appeal per Section 15, Rule V of the 2005


Revised Rules of Procedure of the NLRC (2005 NLRC Rules) (the
governing NLRC Rules of Procedure at the time Llamas filed his
complaint before the LA).
In its May 30, 2006 resolution, 7 the NLRC dismissed for nonperfection Llamas' motion for reconsideration treated as an appeal.
The NLRC pointed out that Llamas failed to attach the required
certification of non-forum shopping per Section 4, Rule VI of the 2005
NLRC Rules.
Llamas moved to reconsider the May 30, 2006 NLRC resolution; he
attached the required certification of non-forum shopping.
When the NLRC denied his motion for reconsideration 8 in its August
31, 2006 resolution, 9 Llamas filed before the CA a petition for
certiorari. 10
The CA's ruling
In its August 13, 2008 decision, 11 the CA reversed and set aside the
assailed NLRC resolution. Citing jurisprudence, the CA pointed out
that non-compliance with the requirement on the filing of a
certificate of non-forum shopping, while mandatory, may
nonetheless be excused upon showing of manifest equitable grounds
proving substantial compliance. Additionally, in order to determine if
cogent reasons exist to suspend the rules of procedure, the court
must first examine the substantive aspect of the case.
The CA pointed out that the petitioners failed to prove overt acts
showing Llamas' clear intention to abandon his job. On the contrary,
the petitioners placed Llamas in a situation where he was forced to
quit as his continued employment has been rendered impossible,
unreasonable or unlikely, i.e., making him sign a resignation letter as
a precondition for giving him the key to his assigned taxi cab. To the
CA, the petitioners' act amounted to constructive dismissal. The CA
additionally noted that Llamas immediately filed the illegal dismissal
case that proved his desire to return to work and negates the charge
of abandonment.
Further, the CA brushed aside the petitioners' claim that Llamas
committed several infractions that warranted his dismissal. The CA
declared that the petitioners should have charged Llamas for these
infractions to give the latter an opportunity to explain his side. As
matters then stood, they did not charge him for these infractions;
hence, the petitioners could not have successfully used these as
supporting grounds to justify Llamas' dismissal on the ground of
abandonment.

As the CA found equitable grounds to take exception from the rule on


certificate of non-forum shopping, it declared that the NLRC had
acted with grave abuse of discretion when it dismissed Llamas'
appeal purely on a technicality. To the CA, the NLRC should have
considered as substantially compliant with this rule Llamas'
subsequent submission of the required certificate with his motion for
reconsideration (of the NLRC's May 30, 2006 resolution).
Accordingly, the CA ordered the petitioners to pay Llamas separation
pay, full backwages and other benefits due the latter from the time
of the dismissal up to the finality of the decision. The CA awarded
separation pay in lieu of reinstatement because of the resulting
strained work relationship between Llamas and Bryan following the
altercation between the former and the latter's brother.
The petitioners filed the present petition after the CA denied their
motion for reconsideration 12 in the CA's November 27, 2009
resolution. 13 HICcSA
The Petition
The petitioners argue that the CA erred when it encroached on the
NLRC's exclusive jurisdiction to review the merits of the LA's
decision. To the petitioners, the CA should have limited its action in
determining whether grave abuse of discretion attended the NLRC's
dismissal of Llamas' appeal; finding that it did, the CA should have
remanded the case to the NLRC for further proceedings.
Moreover, the petitioners point out that the NLRC did not gravely
abuse its discretion when it rejected Llamas' appeal. They argue that
the NLRC's action conformed with its rules and with this Court's
decisions that upheld the dismissal of an appeal for failure to file a
certificate of non-forum shopping.
Directly addressing the CA's findings on the dismissal issue, the
petitioners argue that they did not constructively dismiss Llamas.
They maintain that Llamas no longer reported for work because of
the several liabilities he incurred that would certainly have, in any
case, warranted his dismissal.
The Case for the Respondent
Llamas argues in his comment 14 that the CA correctly found that
the NLRC acted with grave abuse of discretion when it maintained its
dismissal of his appeal despite his subsequent filing of the certificate
of non-forum shopping. Quoting the CA's ruling, Llamas argues that
the NLRC should have given due course to his appeal to avoid
miscarriage of substantial justice.

On the issue of dismissal, Llamas argues that the CA correctly


reversed the LA's ruling that found him not dismissed, legally or
illegally. Relying on the CA's ruling, Llamas points out that the
petitioners bore the burden of proving the abandonment charge. In
this case, the petitioners failed to discharge their burden; hence, his
dismissal was illegal.
The Court's Ruling
We do not find the petition meritorious.
Preliminary considerations:
factual-issue-bar-rule
In this Rule 45 petition for review on certiorari, we review the legal
errors that the CA may have committed in the assailed decision, in
contrast with the review for jurisdictional error undertaken in an
original certiorari action. In reviewing the Legal correctness of the CA
decision in a labor case made under Rule 65 of the Rules of Court,
we examine the CA decision in the context that it determined the
presence or the absence of grave abuse of discretion in the NLRC
decision before it and not on the basis of whether the NLRC decision,
on the merits of the case, was correct. In other words, we have to be
keenly aware that the CA undertook a Rule 65 review, not a review
on appeal, of the challenged NLRC decision. In question form, the
question that we ask is: Did the CA correctly determine whether the
NLRC committed grave abuse of discretion in ruling on the case? 15
In addition, the Court's jurisdiction in a Rule 45 petition for review on
certiorari is limited to resolving only questions of law. A question of
law arises when the doubt or controversy concerns the correct
application of law or jurisprudence to a certain set of facts. In
contrast, a question of fact exists when the doubt or controversy
concerns the truth or falsehood of facts. 16
As presented by the petitioners, the petition before us involves
mixed questions of fact and law, with the core issue being one of
fact. Whether the CA, in ruling on the labor case before it under an
original certiorari action, can make its own factual determination
requires the consideration and application of law and jurisprudence;
it is essentially a question of law that a Rule 45 petition properly
addresses.
In the context of this case, however, this legal issue is inextricably
linked with and cannot be resolved without the definitive resolution
of the core factual issue whether Llamas abandoned his work or
had been constructively dismissed. As a proscribed question of fact,
we generally cannot address this issue, except to the extent

necessary to determine whether the CA correctly found that the


NLRC acted with grave abuse of discretion in dismissing Llamas'
appeal on purely technical grounds. HcTEaA
For raising mixed questions of fact and law, we deny the petition
outright. Even if this error were to be disregarded, however, we
would still deny the petition as we find the CA legally correct in
reversing the NLRC's resolution on the ground of grave abuse of
discretion.
The CA has ample authority to make its
own factual determination
We agree that remanding the case to the NLRC for factual
determination and decision of the case on the merits would have
been, ordinarily, a prudent approach. Nevertheless, the CA's action
on this case was not procedurally wrong and was not without legal
and jurisprudential basis.
In this jurisdiction, courts generally accord great respect and finality
to factual findings of administrative agencies, i.e., labor tribunals, in
the exercise of their quasi-judicial function. 17 These findings,
however, are not infallible. This doctrine espousing comity to
administrative findings of facts cannot preclude the courts from
reviewing and, when proper, disregarding these findings of facts
when shown that the administrative body committed grave abuse of
discretion by capriciously, whimsically or arbitrarily disregarding
evidence or circumstances of considerable importance that are
crucial or decisive of the controversy. 18
Hence, in labor cases elevated to it via petition for certiorari, the CA
can grant this prerogative writ when it finds that the NLRC acted with
grave abuse of discretion in arriving at its factual conclusions. To
make this finding, the CA necessarily has to view the evidence if only
to determine if the NLRC ruling had basis in evidence. It is in the
sense and manner that the CA, in a Rule 65 certiorari petition before
it, had to determine whether grave abuse of discretion on factual
issues attended the NLRC's dismissal of Llamas' appeal. Accordingly,
we do not find erroneous the course that the CA took in resolving
Llamas' certiorari petition. The CA may resolve factual issues by
express legal mandate and pursuant to its equity jurisdiction.
The NLRC committed grave abuse of
discretion in dismissing Llamas' appeal on
mere technicality
Article 223 (now Article 229) 19 of the Labor Code states that
decisions (or awards or orders) of the LA shall become final and

executory unless appealed to the NLRC within ten (10) calendar days
from receipt of the decision. Consistent with Article 223, Section 1,
Rule VI of the 2005 NLRC Rules also provides for a ten (10)-day
period for appealing the LA's decision. Under Section 4 (a), Rule VI
20 of the 2005 NLRC Rules, the appeal shall be in the form of a
verified memorandum of appeal and accompanied by proof of
payment of the appeal fee, posting of cash or surety bond (when
necessary), certificate of non-forum shopping, and proof of
service upon the other parties. Failure of the appealing party to
comply with any or all of these requisites within the reglementary
period will render the LA's decision final and executory.
Indisputably, Llamas did not file a memorandum of appeal from the
LA's decision. Instead, he filed, within the ten (10)-day appeal period,
a motion for reconsideration. Under Section 15, Rule V of the 2005
NLRC Rules, motions for reconsideration from the LA's decision are
not allowed; they may, however, be treated as an appeal provided
they comply with the requirements for perfecting an appeal. The
NLRC dismissed Llamas' motion for reconsideration treated as an
appeal for failure to attach the required certificate of non-forum
shopping per Section 4 (a), Rule VI of the 2005 NLRC Rules.
The requirement for a sworn certification of non-forum shopping was
prescribed by the Court under Revised Circular 28-91, 21 as
amended by Administrative Circular No. 04-94, 22 to prohibit and
penalize the evils of forum shopping. Revised Circular 28-91, as
amended by Administrative Circular No. 04-94, requires a sworn
certificate of non-forum shopping to be filed with every petition,
complaint, application or other initiatory pleading filed before the
Court, the CA, or the different divisions thereof, or any other court,
tribunal or agency. HIaTCc
Ordinarily, the infirmity in Llamas' appeal would have been fatal and
would have justified an end to the case. A careful consideration of
the circumstances of the case, however, convinces us that the NLRC
should, indeed, have given due course to Llamas' appeal despite the
initial absence of the required certificate. We note that in his motion
for reconsideration of the NLRC's May 30, 2006 resolution, Llamas
attached the required certificate of non-forum shopping.
Moreover, Llamas adequately explained, in his motion for
reconsideration, the inadvertence and presented a clear justifiable
ground to warrant the relaxation of the rules. To recall, Llamas was
able to file his position paper, through his new counsel, only on
December 20, 2005. He hired the new counsel on December 19,
2005 after several repeated, albeit failed, pleas to his former counsel

to submit, on or before October 25, 2005 per the LA's order, the
required position paper. On November 29, 2005, however, the LA
rendered a decision that Llamas and his new counsel learned and
received a copy of only on January 5, 2006. Evidently, the LA's
findings and conclusions were premised solely on the petitioners'
pleadings and evidence. And, while not the fault of the LA, Llamas,
nevertheless, did not have a meaningful opportunity to present his
case, refute the contents and allegations in the petitioners' position
paper and submit controverting evidence.
Faced with these circumstances, i.e., Llamas' subsequent compliance
with the certification-against-forum-shopping requirement; the utter
negligence and inattention of Llamas' former counsel to his pleas
and cause, and his vigilance in immediately securing the services of
a new counsel; Llamas' filing of his position paper before he learned
and received a copy of the LA's decision; the absence of a
meaningful opportunity for Llamas to present his case before the LA;
and the clear merits of his case (that our subsequent discussion will
show), the NLRC should have relaxed the application of procedural
rules in the broader interests of substantial justice. Indeed, while the
requirement as to the certificate of non-forum shopping is
mandatory, this requirement should not, however, be interpreted too
literally and thus defeat the objective of preventing the undesirable
practice of forum-shopping. 23
Under Article 221 (now Article 227) 24 of the Labor Code,"the
Commission and its members and the Labor Arbiters shall use every
and all reasonable means to ascertain the facts in each case
speedily and objectively and without regard to technicalities of law
or procedure, all in the interest of due process." 25 Consistently, we
have emphasized that "rules of procedure are mere tools designed to
facilitate the attainment of justice. A strict and rigid application
which would result in technicalities that tend to frustrate rather than
promote substantial justice should not be allowed . . . . No procedural
rule is sacrosanct if such shall result in subverting justice." 26
Ultimately, what should guide judicial action is that a party is given
the fullest opportunity to establish the merits of his action or defense
rather than for him to lose life, honor, or property on mere
technicalities. 27
Then, too, we should remember that "the dismissal of an employee's
appeal on purely technical ground is inconsistent with the
constitutional mandate on protection to labor." 28 Under the
Constitution 29 and the Labor Code, 30 the State is bound to protect
labor and assure the rights of workers to security of tenure

tenurial security being a preferred constitutional right that, under


these fundamental guidelines, technical infirmities in labor pleadings
cannot defeat. 31
In this case, Llamas' action against the petitioners concerned his job,
his security of tenure. This is a property right of which he could not
and should not be deprived of without due process. 32 But, more
importantly, it is a right that assumes a preferred position in our
legal hierarchy. 33
Under these considerations, we agree that the NLRC committed
grave abuse of discretion when, in dismissing Llamas' appeal, it
allowed purely technical infirmities to defeat Llamas' tenurial
security without full opportunity to establish his case's merits.
Llamas did not abandon his work; he was
constructively dismissed
"Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment." 34 It is a form of neglect of
duty that constitutes just cause for the employer to dismiss the
employee. 35
To constitute abandonment of work, two elements must concur: "(1) .
. . the employee must have failed to report for work or must have
been absent without valid or justifiable reason; and (2) . . . there
must have been a clear intention [on the part of the employee] to
sever the employer-employee relationship manifested by some overt
act." 36 The employee's absence must be accompanied by overt
acts that unerringly point to the employee's clear intention to sever
the employment relationship. 37 And, to successfully invoke
abandonment, whether as a ground for dismissing an employee or as
a defense, the employer bears the burden of proving the employee's
unjustified refusal to resume his employment. 38 Mere absence of
the employee is not enough. 39 TADcCS
Guided by these parameters, we agree that the petitioners
unerringly failed to prove the alleged abandonment. They did not
present proof of some overt act of Llamas that clearly and
unequivocally shows his intention to abandon his job. We note that,
aside from their bare allegation, the only evidence that the
petitioners submitted to prove abandonment were the photocopy of
their attendance logbook and the July 15, 2005 memorandum 40
that they served on Llamas regarding the July 13, 2005 incident.
These pieces of evidence, even when considered collectively, indeed
failed to prove the clear and unequivocal intention, on Llamas' part,
that the law requires to deem as abandonment Llamas' absence

from work. Quite the contrary, the petitioners' July 15, 2005
memorandum, in fact, supports, if not strengthens, Llamas' version
of the events that led to his filing of the complaint, i.e., that as a
result of the July 13, 2005 incident, the petitioners refused to give
him the key to his assigned taxi cab unless he would sign the
resignation letter.
Moreover, and as the CA pointed out, Llamas lost no time in filing the
illegal dismissal case against them. To recall, he filed the complaint
on July 18, 2005 or only two days from the third time he was refused
access to his assigned taxi cab on July 16, 2005. Clearly, Llamas
could not be deemed to have abandoned his work for, as we have
previously held, the immediate filing by the employee of an illegal
dismissal complaint is proof enough of his intention to return to work
and negates the employer's charge of abandonment. 41 To reiterate
and emphasize, abandonment is a matter of intention that cannot
lightly be presumed from certain equivocal acts of the employee. 42
The CA, therefore, correctly regarded Llamas as constructively
dismissed for the petitioners' failure to prove the alleged just cause
abandonment for his dismissal. Constructive dismissal exists
when there is cessation of work because continued employment is
rendered impossible, unreasonable or unlikely. Constructive dismissal
is a dismissal in disguise or an act amounting to dismissal but made
to appear as if it were not. In constructive dismissal cases, the
employer is, concededly, charged with the burden of proving that its
conduct and action were for valid and legitimate grounds. 43 The
petitioners' persistent refusal to give Llamas the key to his assigned
taxi cab, on the condition that he should first sign the resignation
letter, rendered, without doubt, his continued employment
impossible, unreasonable and unlikely; it, thus, constituted
constructive dismissal.
In sum, the CA correctly found equitable grounds to warrant
relaxation of the rule on perfection of appeal (filing of the certificate
of non-forum shopping) as there was patently absent sufficient proof
for the charge of abandonment. Accordingly, we find the CA legally
correct in reversing and setting aside the NLRC's resolution rendered
in grave abuse of discretion.
WHEREFORE, in light of these considerations, we hereby DENY the
petition. We AFFIRM the decision dated August 13, 2008 and the
resolution dated November 27, 2009 of the Court of Appeals in CAG.R. CEB-S.P. No. 02623.
SO ORDERED.

Carpio, Del Castillo, Perez and Perlas-Bernabe, JJ., concur.


||| (Diamond Taxi v. Llamas, Jr., G.R. No. 190724, [March 12, 2014])

32. Art. 223, Execution pending appeal


Seacrest Maritime Management, Inc. v. Picar
SECOND DIVISION
[G.R. No. 209383. March 11, 2015.]
SEACREST
MARITIME
MANAGEMENT,
INC.,
ROLANDO B. MAGCALE, AND SEALION SHIPPING
LIMITED-UNITED KINGDOM, petitioners, vs. MAURICIO
G. PICAR, JR., respondent.
DECISION

MENDOZA, J p:
This is a petition for review under Rule 45 of the Rules of Court
assailing the May 2, 2013 Decision 1 and the September 9, 2013
Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP No. 124763,
which dismissed, for being moot and academic, the petition for
certiorari filed under Rule 65 questioning the decision of the National
Labor Relations Commission (NLRC), in a case for disability benefits.
The Antecedents
Respondent Mauricio Picar, Jr. (Picar) was employed by petitioner
Sealion Shipping Limited-United Kingdom through its local manning
agent Seacrest Maritime Management, Inc. (petitioners), as Chief
Cook continuously for several contracts from April 2005 until his last
employment contract in 2010, on board the vessel, "MV Toisa
Paladin." The last contract was for a fixed duration of three (3)
months which commenced on September 5, 2010 with a basic salary
of US$630.00 exclusive of overtime pay and other benefits. 3
On September 24, 2010, Picar experienced high fever, chilling,
lumbar back pain, and difficulty in urinating accompanied with blood.
He was referred for medical treatment to the Maritime Medical
Center PTE, Ltd. in Singapore (MMC). He was diagnosed with Urinary
Tract Infection (UTI) and Renal Calculus. After his check-up, he was
required to go back to the vessel and take a rest. On September 28,
2010, he was brought back to MMC where he was confined until
October 1, 2010. On October 2, 2010, he was repatriated. 4
Upon his arrival in Manila, Picar was referred to Dr. Natalio G. Alegre
(Dr. Alegre) at St. Luke's Medical Center (SLMC). On October 21,
2010, he underwent sonography of his kidneys and urinary bladder,
which showed "renal cyst on his right kidney; calyceal lithiasis, right;
and normal urinary bladder; slightly enlarged prostate gland was
noted." Dr. Alegre repeatedly recommended that he undergo
extracorporeal shockwave lithotripsy for the dissolution of his right
kidney stone. 5
On February 23, 2011, Picar consulted Dr. Efren R. Vicaldo (Dr.
Vicaldo) who also diagnosed him to be suffering from Right Renal
Calculus, Essential Hypertension. Dr. Vicaldo considered his illness as
work aggravated/related and declared him unfit to resume work as a
seafarer in any capacity. 6
Picar then filed a complaint for permanent disability compensation,
balance of sick wages, reimbursement of medical expenses, moral
and exemplary damages, and attorney's fees.

On June 22, 2011, the Labor Arbiter (LA) rendered judgment 7 in


favor of Picar. The LA found that his illness was work-related and that
the nature of his work as a chief cook contributed to the aggravation
of his condition. The dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered ordering respondents to pay jointly and severally
the complainant his permanent disability compensation in
the sum of US$60,000.00, balance of sick wages in the
sum of US$1,890.00, moral damages in the sum of
P200,000.00, exemplary damages in the sum of
P200,000.00, and ten percent (10%) of the judgment
award as attorney's fees. ETDaIC
All other claims are dismissed for lack of merit.
SO ORDERED. 8
On appeal, the NLRC affirmed in toto the decision of the LA. 9 The
NLRC ruled that Picar's disability was permanent as he was totally
unable to perform his job for more than 120 days from his
repatriation. In support of its ruling, it cited the case of Remigio v.
NLRC 10 where it was held that if an employee was unable to
perform his customary job for more than 120 days and did not come
within the coverage of Rule X of the Amended Rules on Employees
Compensability (which, in more detailed manner, describes what
constitutes temporary total disability), then the said employee
undoubtedly suffered from permanent total disability regardless of
whether or not he lost the use of any part of his body.
Aggrieved, petitioners elevated the matter to the CA.
In the meantime, Picar moved for the execution of the LA decision.
On July 3, 2012, the LA issued a Writ of Execution for the
enforcement and full satisfaction of its decision. Consequently,
petitioners paid the judgment award as evidenced by the
Satisfaction of Judgment pursuant to a Writ of Execution with
Acknowledgment Receipt executed by the NLRC-NCR Sheriff on
August 13, 2012. 11
In its assailed Decision, dated May 2, 2013, the CA dismissed the
petition. Citing the case of Career Philippines Ship Management, Inc.
v. Madjus, 12 the CA ruled that the payment by petitioners of the
judgment award constituted an amicable settlement that had
rendered the petition moot and academic. The dispositive portion of
the decision reads:

WHEREFORE, in light of the foregoing considerations, the


instant petition is DISMISSED for having become MOOT
AND ACADEMIC. 13
Petitioners filed a motion for reconsideration of the said decision, but
it was denied in the CA Resolution, dated September 9, 2013.
Hence, this petition.
Issues and Arguments
For resolution is the sole issue of whether the CA committed
reversible error in dismissing the petition for having become moot
and academic.
Petitioners contend that the settlement of the judgment award was
by virtue of a writ of execution duly issued and was effected
specifically without prejudice to further recourse before the CA.
There was nothing voluntary about the satisfaction of the judgment
award made in strict and compulsory compliance with Rule XI,
Section 8 of the 2011 NLRC Rules of Procedure. The terms of the
settlement were fair to both the employer and the employee. Hence,
the ruling in Career Philippines, relied upon by the CA, was
inapplicable.
On April 14, 2014, Picar filed his Comment 14 wherein he stresses
that the CA committed no error in dismissing the petition. He asserts
that the voluntary satisfaction by petitioners of the full judgment
award rendered the said petition moot and was a clear indication
that petitioners believed on the merits and judiciousness of the
award for disability compensation.
Petitioners fault the CA for dismissing outright the petition for being
moot and academic instead of resolving the same on its merits.
The Court's Ruling
As correctly argued by petitioners, the petition for certiorari before
the CA was not rendered moot and academic by their satisfaction of
the judgment award in compliance with the writ of execution issued
by the LA. The CA cited Career Philippines, but it finds no application
here. Career Philippines was resolved on equitable considerations. In
the said case, while petitioner employer had the luxury of having
other remedies available to it such as its petition for certiorari
pending before the CA and an eventual appeal to this Court,
respondent seafarer could no longer pursue other claims, including
for interests that may accrue during the pendency of the case. Thus,
it was held that the LA and the CA could not be faulted for
interpreting petitioner's "conditional settlement" to be tantamount to

an amicable settlement of the case resulting in the mootness of the


petition for certiorari.
In this case, no such document was executed between the parties.
The payment of the judgment award without prejudice by petitioners
required no obligations whatsoever on the part of Picar.
The case of Leonis Navigation v. Villamater (Leonis Navigation) 15 is
more in point, where the Court explained:
Petitioners never moved for a reconsideration of this
Order regarding the voluntariness of their payment to
Sonia, as well as the dismissal with prejudice and the
concomitant termination of the case.
However, petitioners argued that the finality of the case
did not render the petition for certiorari before the
CA moot and academic. On this point, we agree with
petitioners.
In the landmark case of St. Martin Funeral Home v. NLRC,
16 we ruled that judicial review of decisions of the NLRC is
sought via a petition for certiorari under Rule 65 of the
Rules of Court, and the petition should be filed before the
CA, following the strict observance of the hierarchy of
courts. Under Rule 65, Section 4, 17 petitioners are
allowed sixty (60) days from notice of the assailed order
or resolution within which to file the petition. Thus,
although the petition was not filed within the 10-day
period, petitioners seasonably filed their petition for
certiorari before the CA within the 60-day reglementary
period under Rule 65. AHEDaI
Further, a petition for certiorari does not normally include
an inquiry into the correctness of its evaluation of the
evidence. Errors of judgment, as distinguished from errors
of jurisdiction, are not within the province of a special civil
action for certiorari, which is merely confined to issues of
jurisdiction or grave abuse of discretion. It is, thus,
incumbent upon petitioners to satisfactorily establish that
the NLRC acted capriciously and whimsically in order that
the extraordinary writ of certiorari will lie. By grave abuse
of discretion is meant such capricious and whimsical
exercise of judgment as is equivalent to lack of
jurisdiction, and it must be shown that the discretion was
exercised arbitrarily or despotically. 18 (Emphasis
supplied)

Adhering to the pronouncement in Leonis Navigation, the Court, in


Philippine Transmarine Carriers, Inc. v. Legaspi (Transmarine), 19
held that the satisfaction of the monetary award by the employer did
not render the petition for certiorari moot before the CA. In
Transmarine, pursuant to a writ of execution issued, the employer
ship-owner/manning agency and the complaining seafarer agreed to
a settlement of the judgment award. It was, however, stipulated that
the settlement shall be without prejudice to the pending petition for
certiorari filed by the employer before the CA. It was further agreed
that, in the event that the petition would be granted and the
judgment award would be eventually reversed, whether in full or
partially, the seafarer shall return all amounts in excess of what he
would be entitled to and the employer shall be allowed to file the
necessary motion for the return or restitution of the amount unjustly
paid. The parties' covenants, as well as the acknowledgment by the
seafarer of receipt in full of the judgment award, were embodied in a
receipt of the judgment award with undertaking. The CA, upon being
informed of the settlement, dismissed the petition for certiorari for
being moot and academic. In support of the dismissal, the CA also
relied on Career Philippines. In reversing and setting aside the order
of dismissal issued by the CA, the Court in Transmarine wrote:
In Career Philippines, believing that the execution of the
LA Decision was imminent after its petition for injunctive
relief was denied, the employer filed before the LA a
pleading embodying a conditional satisfaction of judgment
before the CA and, accordingly, paid the employee the
monetary award in the LA decision. In the said pleading,
the employer stated that the conditional satisfaction of
the judgment award was without prejudice to its pending
appeal before the CA and that it was being made only to
prevent the imminent execution.
The CA later dismissed the employer's petition for being
moot and academic, noting that the decision of the LA
had attained finality with the satisfaction of the judgment
award. This Court affirmed the ruling of the CA,
interpreting the "conditional settlement" to be tantamount
to an amicable settlement of the case resulting in the
mootness of the petition for certiorari, considering (i) that
the employee could no longer pursue other claims, and (ii)
that the employer could not have been compelled to
immediately pay because it had filed an appeal bond to
ensure payment to the employee.

Stated differently, the Court ruled against the employer


because the conditional satisfaction of judgment signed
by the parties was highly prejudicial to the employee. The
agreement stated that the payment of the monetary
award was without prejudice to the right of the employer
to file a petition for certiorari and appeal, while the
employee agreed that she would no longer file any
complaint or prosecute any suit of action against the
employer after receiving the payment.
xxx xxx xxx
In the present case, the Receipt of the Judgment Award
with Undertaking was fair to both the employer and the
employee. As in Leonis Navigation, the said agreement
stipulated that respondent should return the amount to
petitioner if the petition for certiorari would be granted
but without prejudice to respondent's right to appeal. The
agreement, thus, provided available remedies to both
parties.
It is clear that petitioner paid respondent subject to the
terms and conditions stated in the Receipt of the
Judgment Award with Undertaking. Both parties signed the
agreement. Respondent neither refuted the agreement
nor claimed that he was forced to sign it against his will.
Therefore, the petition for certiorari was not rendered
moot despite petitioner's satisfaction of the judgment
award, as the respondent had obliged himself to return
the payment if the petition would be granted. 20
Verily in this case, petitioners satisfied the judgment award in strict
compliance with a duly issued writ of execution and pursuant to
terms fair to both parties. Thus, the equitable ruling in Career
Philippines would certainly be unfair to petitioners in this case as
they still have a remedy under the rules. The CA, therefore, was in
error in dismissing the petition for being moot and academic.
SDaHEc
WHEREFORE, the petition is GRANTED. The May 2, 2013 Decision
and the September 9, 2013 Resolution of the Court of Appeals in CAG.R. SP No. 124763 are REVERSED and SET ASIDE. The case is
ordered REMANDED to the Court of Appeals for decision on the
merits.
SO ORDERED.

||| (Seacrest Maritime Management, Inc. v. Picar, Jr., G.R. No. 209383,
[March 11, 2015])

33. Art 261, 262 and 262 (a), Voluntary Arbitrator


PHILEC V CA
Gr no. 168612
SECOND DIVISION
[G.R. No. 168612. December 10, 2014.]
PHILIPPINE ELECTRIC CORPORATION (PHILEC),
petitioner, vs. COURT OF APPEALS, NATIONAL
CONCILIATION AND MEDIATION BOARD (NCMB),
Department of Labor and Employment, RAMON T.
JIMENEZ, in his capacity as Voluntary Arbitrator,
PHILEC WORKERS' UNION (PWU), ELEODORO V.
LIPIO, and EMERLITO C. IGNACIO, respondents.
DECISION
LEONEN, J p:

An appeal to reverse or modify a Voluntary Arbitrator's award or


decision must be filed before the Court of Appeals within 10 calendar
days from receipt of the award or decision.
This is a petition 1 for review on certiorari of the Court of Appeals'
decision 2 dated May 25, 2004, dismissing the Philippine Electric
Corporation's petition for certiorari for lack of merit.
Philippine Electric Corporation (PHILEC) is a domestic corporation
"engaged in the manufacture and repairs of high voltage
transformers." 3 Among its rank-and-file employees were Eleodoro V.
Lipio (Lipio) and Emerlito C. Ignacio, Sr. (Ignacio, Sr.), former
members of the PHILEC Workers' Union (PWU). 4 PWU is a legitimate
labor organization and the exclusive bargaining representative of
PHILEC's rank-and-file employees. 5
From June 1, 1989 to May 31, 1997, PHILEC and its rank-and-file
employees were governed by collective bargaining agreements
providing for the following step increases in an employee's basic
salary in case of promotion: 6
Pay

Rank-and-File (PWU)
June 1, 1989 June 1, 1992 June 1, 1994
Grade
to
to
to
May 31, 1992 May 31, 1994 May 31, 1997
I-II
50
60
65
II-III
60
70
78
III-IV
70
80
95
IV-V
80
110
120
V-VI
100
140
150
VI-VII
120
170
195
VII-VIII
170
230
255
VIII-IX
220
290
340
IX-X
260
350
455
On August 18, 1997 and with the previous collective bargaining
agreements already expired, PHILEC selected Lipio for promotion
from Machinist under Pay Grade VIII 7 to Foreman I under Pay Grade
B. 8 PHILEC served Lipio a memorandum, 9 instructing him to
undergo training for the position of Foreman I beginning on August
25, 1997. PHILEC undertook to pay Lipio training allowance as
provided in the memorandum:
This will confirm your selection and that you will undergo
training for the position of Foreman I (PG B) of the Tank

Finishing Section, Distribution Transformer Manufacturing


and Repair effective August 25, 1997. TaDSHC
You will be trained as a Foreman I, and shall receive the
following training allowance until you have completed the
training/observation period which shall not exceed four (4)
months.
First Month
Second
Month
Third Month
Fourth Month

P350.00
P815.00
P815.00
P815.00

Please be guided accordingly. 10


Ignacio, Sr., then DT-Assembler with Pay Grade VII, 11 was likewise
selected for training for the position of Foreman I. 12 On August 21,
1997, PHILEC served Ignacio, Sr. a memorandum, 13 instructing him
to undergo training with the following schedule of allowance:
This will confirm your selection and that you will undergo
training for the position of Foreman I (PG B) of the
Assembly Section, Distribution Transformer Manufacturing
and Repair effective August 25, 1997.
You will be trained as a Foreman I, and shall receive the
following training allowance until you have completed the
training/observation period which shall not exceed four (4)
months:
First Month
Second
Month
Third Month
Fourth Month

P255.00
P605.00
P1,070.00
P1,070.00

Please be guided accordingly. 14


On September 17, 1997, PHILEC and PWU entered into a new
collective bargaining agreement, effective retroactively on June 1,
1997 and expiring on May 31, 1999. 15 Under Article X, Section 4 of
the June 1, 1997 collective bargaining agreement, a rank-and-file
employee promoted shall be entitled to the following step increases
in his or her basic salary: 16

Section 4. STEP INCREASES. [Philippine Electric


Corporation] shall adopt the following step increases on
the basic salary in case of promotion effective June 1,
1997. Such increases shall be based on the scale below or
upon the minimum of the new pay grade to which the
employee is promoted, whichever is higher:

Pay Grade

Step
Increase

I-II
II-III
III-IV
IV-V
V-VI
VI-VII
VII-VIII
VIII-IX
IX-X

P80.00
P105.00
P136.00
P175.00
P224.00
P285.00
P361.00
P456.00
P575.00

To be promoted, a rank-and-file employee shall undergo training or


observation and shall receive training allowance as provided in
Article IX, Section 1 (f) of the June 1, 1997 collective bargaining
agreement: 17
Section 1. JOB POSTING AND BIDDING:
xxx xxx xxx
(f) Allowance for employees under Training or Observation
shall be on a graduated basis as follows:
For the first month of training, the allowance should be
equivalent to one step increase of the next higher grade.
Every month thereafter the corresponding increase shall
be equivalent to the next higher grade until the allowance
for the grade applied for is attained.
As an example, if a Grade I employee qualifies for a Grade
III position, he will receive the training allowance for
Grade I to Grade II for the first month. On the second
month, he will receive the training allowance for Grade I
to Grade II plus the allowance for Grade II to Grade III. He
will then continue to receive this amount until he finishes
his training or observation period. 18

Claiming that the schedule of training allowance stated in the


memoranda served on Lipio and Ignacio, Sr. did not conform to
Article X, Section 4 of the June 1, 1997 collective bargaining
agreement, PWU submitted the grievance to the grievance
machinery. 19
PWU and PHILEC failed to amicably settle their grievance. Thus, on
December 21, 1998, the parties filed a submission agreement 20
with the National Conciliation and Mediation Board, submitting the
following issues to voluntary arbitration: cDAEIH
I
WHETHER OR NOT PHILEC VIOLATED SECTION 4 (Step
Increases) ARTICLE X (Wage and Position Standardization)
OF THE EXISTING COLLECTIVE BARGAINING AGREEMENT
(CBA) IN IMPLEMENTING THE STEP INCREASES RELATIVE
TO THE PROMOTION OF INDIVIDUAL COMPLAINANTS.
II
WHETHER OR NOT PHILEC's MANNER OF IMPLEMENTING
THE STEP INCREASES IN CONNECTION WITH THE
PROMOTION OF INDIVIDUAL COMPLAINANTS IN RELATION
TO THE PROVISIONS OF SECTION 4, ARTICLE X OF THE
CBA CONSTITUTES UNFAIR LABOR PRACTICE. 21
In their submission agreement, PWU and PHILEC designated Hon.
Ramon T. Jimenez as Voluntary Arbitrator (Voluntary Arbitrator
Jimenez). 22
Voluntary Arbitrator Jimenez, in the order 23 dated January 4, 1999,
directed the parties to file their respective position papers.
In its position paper, 24 PWU maintained that PHILEC failed to follow
the schedule of step increases under Article X, Section 4 of the June
1, 1997 collective bargaining agreement. Machinist I, Lipio's position
before he underwent training for Foreman I, fell under Pay Grade VIII,
while Foreman I fell under Pay Grade X. Following the schedule under
Article X, Section 4 of the June 1, 1997 collective bargaining
agreement and the formula under Article IX, Section 1 (f), Lipio
should be paid training allowance equal to the step increase for pay
grade bracket VIII-IX for the first month of training. For the
succeeding months, Lipio should be paid an allowance equal to the
step increase for pay grade bracket VIII-IX plus the step increase for
pay grade bracket IX-X, thus: 25
First month
Second month

P456.00
P1,031.00

Third month
Fourth month

P1,031.00
P1,031.00

With respect to Ignacio, Sr., he was holding the position of DTAssembler under Pay Grade VII when he was selected to train for the
position of Foreman I under Pay Grade X. Thus, for his first month of
training, Ignacio, Sr. should be paid training allowance equal to the
step increase under pay grade bracket VII-VIII. For the second month,
he should be paid an allowance equal to the step increase under pay
grade bracket VII-VIII plus the step increase under pay grade bracket
VIII-IX. For the third and fourth months, Ignacio, Sr. should receive an
allowance equal to the amount he received for the second month
plus the amount equal to the step increase under pay grade bracket
IX-X, thus: 26
First month
Second month
Third month
Fourth month

P361.00
P817.00
P1,392.00
P1,392.00

For PHILEC's failure to apply the schedule of step increases under


Article X of the June 1, 1997 collective bargaining agreement, PWU
argued that PHILEC committed an unfair labor practice under Article
248 27 of the Labor Code.28
In its position paper, 29 PHILEC emphasized that it promoted Lipio
and Ignacio, Sr. while it was still negotiating a new collective
bargaining agreement with PWU. Since PHILEC and PWU had not yet
negotiated a new collective bargaining agreement when PHILEC
selected Lipio and Ignacio, Sr. for training, PHILEC applied the
"Modified SGV" pay grade scale in computing Lipio's and Ignacio,
Sr.'s training allowance. 30
This "Modified SGV" pay grade scale, which PHILEC and PWU
allegedly agreed to implement beginning on May 9, 1997, covered
both rank-and-file and supervisory employees. 31 According to
PHILEC, its past collective bargaining agreements with the rank-andfile and supervisory unions resulted in an overlap of union
membership in Pay Grade IX of the rank-and-file employees and Pay
Grade A of the supervisory employees. 32 Worse, past collective
bargaining agreements resulted in rank-and-file employees under
Pay Grades IX and X enjoying higher step increases than supervisory
employees under Pay Grades A and B: 33 CHDaAE

Pay Grade

Pay Grade
Scale

Step Increase

Scale under
the

Step Increase

under the
Supervisory
CBA

Rank-and-File
CBA

VIII-IX
P340.00
A
P290.00
IX-X
P455.00
A-B
P350.00
To preserve the hierarchical wage structure within PHILEC's
enterprise, PHILEC and PWU allegedly agreed to implement the
uniform pay grade scale under the "Modified SGV" pay grade
system, thus: 34
Step
Increase

Pay Grade
Rank-and-File Supervisory
I-II
II-III
III-IV
IV-V
V-VI
VI-VII
VII-VIII
VIII-IX
A
IX-X
A-B
X-XI
B-C
XI-XII
C-D
D-E
E-F

P65.00
P78.00
P95.00
P120.00
P150.00
P195.00
P255.00
P350.00
P465.00
P570.00
P710.00
P870.00
P1,055.00

Pay grade bracket I-IX covered rank-and-file employees, while pay


grade bracket A-F covered supervisory employees. 35
Under the "Modified SGV" pay grade scale, the position of Foreman I
fell under Pay Grade B. PHILEC then computed Lipio's and Ignacio,
Sr.'s training allowance accordingly. 36
PHILEC disputed PWU's claim of unfair labor practice. According to
PHILEC, it did not violate its collective bargaining agreement with
PWU when it implemented the "Modified SGV" scale. Even assuming
that it violated the collective bargaining agreement, PHILEC argued

that its violation was not "gross" or a "flagrant and/or malicious


refusal to comply with the economic provisions of [the collective
bargaining agreement]." 37 PHILEC, therefore, was not guilty of
unfair labor practice. 38
Voluntary Arbitrator Jimenez held in the decision 39 dated August
13, 1999, that PHILEC violated its collective bargaining agreement
with PWU. 40 According to Voluntary Arbitrator Jimenez, the June 1,
1997 collective bargaining agreement governed when PHILEC
selected Lipio and Ignacio, Sr. for promotion on August 18 and 21,
1997. 41 The provisions of the collective bargaining agreement
being the law between the parties, PHILEC should have computed
Lipio's and Ignacio, Sr.'s training allowance based on Article X,
Section 4 of the June 1, 1997 collective bargaining agreement. 42
As to PHILEC's claim that applying Article X, Section 4 would result in
salary distortion within PHILEC's enterprise, Voluntary Arbitrator
Jimenez ruled that this was "a concern that PHILEC could have
anticipated and could have taken corrective action" 43 before
signing the collective bargaining agreement.
Voluntary Arbitrator Jimenez dismissed PWU's claim of unfair labor
practice. 44 According to him, PHILEC's acts "cannot be considered a
gross violation of the [collective bargaining agreement] nor . . . [a]
flagrant and/or malicious refusal to comply with the economic
provisions of the [agreement]." 45
Thus, Voluntary Arbitrator Jimenez ordered PHILEC to pay Lipio and
Ignacio, Sr. training allowance based on Article X, Section 4 and
Article IX, Section 1 of the June 1, 1997 collective bargaining
agreement. 46
PHILEC received a copy of Voluntary Arbitrator Jimenez's decision on
August 16, 1999. 47 On August 26, 1999, PHILEC filed a motion for
partial reconsideration 48 of Voluntary Arbitrator Jimenez's decision.
In the resolution 49 dated July 7, 2000, Voluntary Arbitrator Jimenez
denied PHILEC's motion for partial reconsideration for lack of merit.
PHILEC received a copy of the July 7, 2000 resolution on August 11,
2000. 50
On August 29, 2000, PHILEC filed a petition 51 for certiorari before
the Court of Appeals, alleging that Voluntary Arbitrator Jimenez
gravely abused his discretion in rendering his decision. 52 PHILEC
maintained that it did not violate the June 1, 1997 collective
bargaining agreement. 53 It applied the "Modified SGV" pay grade
rates to avoid salary distortion within its enterprise. 54 acTDCI

In addition, PHILEC argued that Article X, Section 4 of the collective


bargaining agreement did not apply to Lipio and Ignacio, Sr.
Considering that Lipio and Ignacio, Sr. were promoted to a
supervisory position, their training allowance should be computed
based on the provisions of PHILEC's collective bargaining agreement
with ASSET, the exclusive bargaining representative of PHILEC's
supervisory employees. 55
The Court of Appeals affirmed Voluntary Arbitrator Jimenez's
decision. 56 It agreed that PHILEC was bound to apply Article X,
Section 4 of its June 1, 1997 collective bargaining agreement with
PWU in computing Lipio's and Ignacio, Sr.'s training allowance. 57 In
its decision, the Court of Appeals denied due course and dismissed
PHILEC's petition for certiorari for lack of merit. 58
PHILEC filed a motion for reconsideration, which the Court of Appeals
denied in the resolution 59 dated June 23, 2005.
On August 3, 2005, PHILEC filed its petition for review on certiorari
before this court, 60 insisting that it did not violate its collective
bargaining agreement with PWU. 61 PHILEC maintains that Lipio and
Ignacio, Sr. were promoted to a position covered by the pay grade
scale for supervisory employees. 62 Consequently, the provisions of
PHILEC's collective bargaining agreement with its supervisory
employees should apply, not its collective bargaining agreement
with PWU. 63 To insist on applying the pay grade scale in Article X,
Section 4, PHILEC argues, would result in a salary distortion within
PHILEC. 64
In the resolution 65 dated September 21, 2005, this court ordered
PWU to comment on PHILEC's petition for review on certiorari.
In its comment, 66 PWU argues that Voluntary Arbitrator Jimenez did
not gravely abuse his discretion in rendering his decision. He
correctly applied the provisions of the PWU collective bargaining
agreement, the law between PHILEC and its rank-and-file employees,
in computing Lipio's and Ignacio, Sr.'s training allowance. 67
On September 27, 2006, PHILEC filed its reply, 68 reiterating its
arguments in its petition for review on certiorari.
The issue for our resolution is whether Voluntary Arbitrator Jimenez
gravely abused his discretion in directing PHILEC to pay Lipio's and
Ignacio, Sr.'s training allowance based on Article X, Section 4 of the
June 1, 1997 rank-and-file collective bargaining agreement.
This petition should be denied.
I

The Voluntary Arbitrator's decision


dated August 13, 1999 is already final and
executory
We note that PHILEC filed before the Court of Appeals a petition for
certiorari under Rule 65 of the Rules of Court against Voluntary
Arbitrator Jimenez's decision. 69
This was not the proper remedy.
Instead, the proper remedy to reverse or modify a Voluntary
Arbitrator's or a panel of Voluntary Arbitrators' decision or award is
to appeal the award or decision before the Court of Appeals. Rule 43,
Sections 1 and 3 of the Rules of Court provide:
Section 1. Scope.
This Rule shall apply to appeals from judgments or final
orders of the Court of Tax Appeals and from awards,
judgments, final orders or resolutions of or authorized by
any quasi-judicial agency in the exercise of its quasijudicial functions. Among these agencies are the Civil
Service Commission, Central Board of Assessment
Appeals, Securities and Exchange Commission, Office of
the President, Land Registration Authority, Social Security
Commission, Civil Aeronautics Board, Bureau of Patents,
Trademarks
and
Technology
Transfer,
National
Electrification Administration, Energy Regulatory Board,
National Telecommunications Commission, Department of
Agrarian Reform under Republic Act No. 6657,
Government Service Insurance System, Employees
Compensation Commission, Agricultural Inventions Board,
Insurance
Commission,
Philippine
Atomic
Energy
Commission, Board of Investments, Construction Industry
Arbitration Commission, and voluntary arbitrators
authorized by law. DSAacC
xxx xxx xxx
Sec. 3. Where to appeal.
An appeal under this Rule may be taken to the Court of
Appeals within the period and in the manner herein
provided, whether the appeal involves questions of fact,
of law, or mixed questions of fact and law. (Emphasis
supplied)
A Voluntary Arbitrator or a panel of Voluntary Arbitrators has the
exclusive original jurisdiction over grievances arising from the

interpretation
or
implementation
of
collective
bargaining
agreements. Should the parties agree, a Voluntary Arbitrator or a
panel of Voluntary Arbitrators shall also resolve the parties' other
labor disputes, including unfair labor practices and bargaining
deadlocks. Articles 261 and 262 of the Labor Code provide:
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.
In Luzon Development Bank v. Association of Luzon Development
Bank Employees, 70 this court ruled that the proper remedy against
the award or decision of the Voluntary Arbitrator is an appeal before
the Court of Appeals. This court first characterized the office of a
Voluntary Arbitrator or a panel of Voluntary Arbitrators as a quasi-

judicial agency, citing Volkschel Labor Union, et al. v. NLRC 71 and


Oceanic Bic Division (FFW) v. Romero: 72
In Volkschel Labor Union, et al. v. NLRC, et al., on the
settled premise that the judgments of courts and awards
of quasi-judicial agencies must become final at some
definite time, this Court ruled that the awards of voluntary
arbitrators determine the rights of parties; hence, their
decisions have the same legal effect as judgments of a
court. In Oceanic Bic Division (FFW), et al. v. Romero, et
al., this Court ruled that "a voluntary arbitrator by the
nature of her functions acts in a quasi-judicial capacity."
Under these rulings, it follows that the voluntary
arbitrator, whether acting solely or in a panel, enjoys in
law the status of a quasi-judicial agency but independent
of; and apart from, the NLRC since his decisions are not
appealable to the latter. 73 (Citations omitted)
This court then stated that the office of a Voluntary Arbitrator or a
panel of Voluntary Arbitrators, even assuming that the office is not
strictly a quasi-judicial agency, may be considered an
instrumentality, thus:
Assuming arguendo that the voluntary arbitrator or the
panel of voluntary arbitrators may not strictly be
considered as a quasi-judicial agency, board or
commission, still both he and the panel are
comprehended within the concept of a "quasi-judicial
instrumentality." It may even be stated that it was to meet
the very situation presented by the quasi-judicial
functions of the voluntary arbitrators here, as well as the
subsequent arbitrator/arbitral tribunal operating under the
Construction Industry Arbitration Commission, that the
broader term "instrumentalities" was purposely included
in the above-quoted provision. cAECST
An "instrumentality" is anything used as a means or
agency. Thus, the terms governmental "agency" or
"instrumentality" are synonymous in the sense that either
of them is a means by which a government acts, or by
which a certain government act or function is performed.
The word "instrumentality," with respect to a state,
contemplates an authority to which the state delegates
governmental power for the performance of a state
function. An individual person, like an administrator or
executor, is a judicial instrumentality in the settling of an

estate, in the same manner that a sub-agent appointed by


a bankruptcy court is an instrumentality of the court, and
a trustee in bankruptcy of a defunct corporation is an
instrumentality of the state.
The voluntary arbitrator no less performs a state function
pursuant to a governmental power delegated to him
under the provisions therefor in the Labor Code and he
falls, therefore, within the contemplation of the term
"instrumentality" in the aforequoted Sec. 9 of B.P. 129. 74
(Citations omitted)
Since the office of a Voluntary Arbitrator or a panel of Voluntary
Arbitrators is considered a quasi-judicial agency, this court
concluded that a decision or award rendered by a Voluntary
Arbitrator is appealable before the Court of Appeals. Under Section 9
of the Judiciary Reorganization Act of 1980, the Court of Appeals has
the exclusive original jurisdiction over decisions or awards of quasijudicial agencies and instrumentalities:
Section 9. Jurisdiction. The Court of Appeals shall
exercise:
xxx xxx xxx
3. Exclusive
appellate
jurisdiction
over
all
final
judgements, resolutions, orders or awards of Regional Trial
Courts and quasi-judicial agencies, instrumentalities,
boards or commission, including the Securities and
Exchange Commission, the Social Security Commission,
the Employees Compensation Commission and the Civil
Service Commission, except those falling within the
appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the Labor Code of the Philippines
under Presidential Decree No. 442, as amended, the
provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph 4 of the fourth paragraph of
Section 17 of the Judiciary Act of 1948. (Emphasis
supplied)
Luzon Development Bank was decided in 1995 but remains "good
law." 75 In the 2002 case of Alcantara, Jr. v. Court of Appeals, 76 this
court rejected petitioner Santiago Alcantara, Jr.'s argument that the
Rules of Court,specifically Rule 43, Section 2, superseded the Luzon
Development Bank ruling:
Petitioner argues, however, that Luzon Development Bank
is no longer good law because of Section 2, Rule 43 of the

Rules of Court, a new provision introduced by the 1997


revision. The provision reads:
SEC. 2. Cases not covered. This Rule shall not
apply to judgments or final orders issued under the
Labor Code of the Philippines.
The provisions may be new to the Rules of Court but it is
far from being a new law. Section 2, Rule 42 of the 1997
Rules of Civil Procedure, as presently worded, is nothing
more but a reiteration of the exception to the exclusive
appellate jurisdiction of the Court of Appeals, as provided
for in Section 9, Batas Pambansa Blg. 129, 7 as amended
by Republic Act No. 7902: 8
(3) Exclusive appellate jurisdiction over all final
judgments, decisions, resolutions, orders or awards of
Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including
the Securities and Exchange Commission, the
Employees' Compensation Commission and the Civil
Service Commission, except those falling within the
appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the Labor Code of
the Philippines under Presidential Decree No. 442, as
amended, the provisions of this Act and of
subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section
17 of the Judiciary Act of 1948.
The Court took into account this exception in Luzon
Development Bank but, nevertheless, held that the
decisions of voluntary arbitrators issued pursuant to the
Labor Code do not come within its ambit: HcaATE
. . . . The fact that [the voluntary arbitrator's]
functions and powers are provided for in the Labor
Code does not place him within the exceptions to
said Sec. 9 since he is a quasi-judicial instrumentality
as contemplated therein. It will be noted that,
although the Employees' Compensation Commission
is also provided for in the Labor Code, Circular No. 191, which is the forerunner of the present Revised
Administrative Circular No. 1-95, laid down the
procedure for the appealability of its decisions to the
Court of Appeals under the foregoing rationalization,

and this was later adopted by Republic Act No. 7902


in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary
arbitrator or panel of arbitrators should likewise be
appealable to the Court of Appeals, in line with the
procedure outlined in Revised Administrative Circular
No. 1-95, just like those of the quasi-judicial agencies,
boards and commissions enumerated therein. 77
(Emphases in the original)
This court has since reiterated the Luzon Development Bank ruling in
its decisions: 78
Article 262-A of the Labor Code provides that the award or decision
of the Voluntary Arbitrator "shall be final and executory after ten (10)
calendar days from receipt of the copy of the award or decision by
the parties":
Art. 262-A. PROCEDURES. The Voluntary Arbitrator or
panel of Voluntary Arbitrators shall have the power to hold
hearings, receive evidences and take whatever action is
necessary to resolve the issue or issues subject of the
dispute, including efforts to effect a voluntary settlement
between parties.
All parties to the dispute shall be entitled to attend the
arbitration proceedings. The attendance of any third party
or the exclusion of any witness from the proceedings shall
be determined by the Voluntary Arbitrator or panel of
Voluntary Arbitrators. Hearing may be adjourned for cause
or upon agreement by the parties.
Unless the parties agree otherwise, it shall be mandatory
for the Voluntary Arbitrator or panel of Voluntary
Arbitrators to render an award or decision within twenty
(20) calendar days from the date of submission of the
dispute to voluntary arbitration.
The award or decision of the Voluntary Arbitrator or panel
of Voluntary Arbitrators shall contain the facts and the law
on which it is based. It shall be final and executory after
ten (10) calendar days from receipt of the copy of the
award or decision by the parties.
Upon motion of any interested party, the Voluntary
Arbitrator or panel of Voluntary Arbitrators or the Labor
Arbiter in the region where the movant resides, in case of

the absence or incapacity of the Voluntary Arbitrator or


panel of Voluntary Arbitrators, for any reason, may issue a
writ of execution requiring either the sheriff of the
Commission or regular courts or any public official whom
the parties may designate in the submission agreement to
execute the final decision, order or award. (Emphasis
supplied)
Thus, in Coca-Cola Bottlers Philippines, Inc. Sales Force UnionPTGWO-BALAIS v. Coca Cola-Bottlers Philippines, Inc., 79 this court
declared that the decision of the Voluntary Arbitrator had become
final and executory because it was appealed beyond the 10-day
reglementary period under Article 262-A of the Labor Code.
It is true that Rule 43, Section 4 of the Rules of Court provides for a
15-day reglementary period for filing an appeal:
Section 4. Period of appeal. The appeal shall be taken
within fifteen (15) days from notice or the award,
judgment, final order or resolution, or from the date of its
last publication, if publication is required by law for its
effectivity, or of the denial of petitioner's motion for new
trial or reconsideration duly filed in accordance with the
governing law of the court or agency a quo. Only one (1)
motion for reconsideration shall be allowed. Upon proper
motion and the payment of the full amount of the docket
fee before the expiration of the reglementary period, the
Court of Appeals may grant an additional period of fifteen
(15) days only within which to file the petition for review.
No further extension shall be granted except for the most
compelling reason and in no case to exceed fifteen (15)
days. (Emphasis supplied) cISDHE
The 15-day reglementary period has been upheld by this court in a
long line of cases. 80 In AMA Computer College-Santiago City, Inc. v.
Nacino, 81 Nippon Paint Employees Union-OLALIA v. Court of
Appeals, 82 Manila Midtown Hotel v. Borromeo, 83 and Sevilla
Trading Company v. Semana, 84 this court denied petitioners'
petitions for review on certiorari since petitioners failed to appeal the
Voluntary Arbitrator's decision within the 15-day reglementary period
under Rule 43. In these cases, the Court of Appeals had no
jurisdiction to entertain the appeal assailing the Voluntary
Arbitrator's decision.
Despite Rule 43 providing for a 15-day period to appeal, we rule that
the Voluntary Arbitrator's decision must be appealed before the

Court of Appeals within 10 calendar days from receipt of the decision


as provided in the Labor Code.
Appeal is a "statutory privilege," 85 which may be exercised "only in
the manner and in accordance with the provisions of the law." 86
"Perfection of an appeal within the reglementary period is not only
mandatory but also jurisdictional so that failure to do so rendered
the decision final and executory, and deprives the appellate court of
jurisdiction to alter the final judgment much less to entertain the
appeal." 87
We ruled that Article 262-A of the Labor Code allows the appeal of
decisions rendered by Voluntary Arbitrators. 88 Statute provides that
the Voluntary Arbitrator's decision "shall be final and executory after
ten (10) calendar days from receipt of the copy of the award or
decision by the parties." Being provided in the statute, this 10-day
period must be complied with; otherwise, no appellate court will
have jurisdiction over the appeal. This absurd situation occurs when
the decision is appealed on the 11th to 15th day from receipt as
allowed under the Rules, but which decision, under the law, has
already become final and executory.
Furthermore, under Article VIII, Section 5 (5) of the Constitution, this
court "shall not diminish, increase, or modify substantive rights" in
promulgating rules of procedure in courts. 89 The 10-day period to
appeal under the Labor Code being a substantive right, this period
cannot be diminished, increased, or modified through the Rules of
Court. 90
In Shioji v. Harvey, 91 this court held that the "rules of
court,promulgated by authority of law, have the force and effect of
law, if not in conflict with positive law." 92 Rules of Court are
"subordinate to the statute." 93 In case of conflict between the law
and the Rules of Court,"the statute will prevail." 94
The rule, therefore, is that a Voluntary Arbitrator's award or decision
shall be appealed before the Court of Appeals within 10 days from
receipt of the award or decision. Should the aggrieved party choose
to file a motion for reconsideration with the Voluntary Arbitrator, 95
the motion must be filed within the same 10-day period since a
motion for reconsideration is filed "within the period for taking an
appeal." 96
A petition for certiorari is a special civil action "adopted to correct
errors of jurisdiction committed by the lower court or quasi-judicial
agency, or when there is grave abuse of discretion on the part of
such court or agency amounting to lack or excess of jurisdiction." 97

An extraordinary remedy, 98 a petition for certiorari may be filed


only if appeal is not available. 99 If appeal is available, an appeal
must be taken even if the ground relied upon is grave abuse of
discretion. 100
As an exception to the rule, this court has allowed petitions for
certiorari to be filed in lieu of an appeal "(a) when the public welfare
and the advancement of public policy dictate; (b) when the broader
interests of justice so require; (c) when the writs issued are null; and
(d) when the questioned order amounts to an oppressive exercise of
judicial authority." 101
In Unicraft Industries International Corporation, et al. v. The Hon.
Court of Appeals, 102 petitioners filed a petition for certiorari
against the Voluntary Arbitrator's decision. Finding that the Voluntary
Arbitrator rendered an award without giving petitioners an
opportunity to present evidence, this court allowed petitioners'
petition for certiorari despite being the wrong remedy. The Voluntary
Arbitrator's award, this court said, was null and void for violation of
petitioners' right to due process. This court decided the case on the
merits.
In Leyte IV Electric Cooperative, Inc. v. LEYECO IV Employees UnionALU, 103 petitioner likewise filed a petition for certiorari against the
Voluntary Arbitrator's decision, alleging that the decision lacked
basis in fact and in law. Ruling that the petition for certiorari was
filed within the reglementary period for filing an appeal, this court
allowed petitioner's petition for certiorari in "the broader interests of
justice." 104 AEaSTC
In Mora v. Avesco Marketing Corporation, 105 this court held that
petitioner Noel E. Mora erred in filing a petition for certiorari against
the Voluntary Arbitrator's decision. Nevertheless, this court decided
the case on the merits "in the interest of substantial justice to arrive
at the proper conclusion that is conformable to the evidentiary
facts." 106
None of the circumstances similar to Unicraft, Leyte IV Electric
Cooperative, and Mora are present in this case. PHILEC received
Voluntary Arbitrator Jimenez's resolution denying its motion for
partial reconsideration on August 11, 2000. 107 PHILEC filed its
petition for certiorari before the Court of Appeals on August 29,
2000, 108 which was 18 days after its receipt of Voluntary Arbitrator
Jimenez's resolution. The petition for certiorari was filed beyond the
10-day reglementary period for filing an appeal. We cannot consider
PHILEC's petition for certiorari as an appeal.

There being no appeal seasonably filed in this case, Voluntary


Arbitrator Jimenez's decision became final and executory after 10
calendar days from PHILEC's receipt of the resolution denying its
motion for partial reconsideration. 109 Voluntary Arbitrator Jimenez's
decision is already "beyond the purview of this Court to act upon."
110
II
PHILEC must pay training allowance
based on the step increases provided in
the June 1, 1997 collective bargaining
agreement
The insurmountable procedural issue notwithstanding, the case will
also fail on its merits. Voluntary Arbitrator Jimenez correctly awarded
both Lipio and Ignacio, Sr. training allowances based on the amounts
and formula provided in the June 1, 1997 collective bargaining
agreement.
A collective bargaining agreement is "a contract executed upon the
request of either the employer or the exclusive bargaining
representative of the employees incorporating the agreement
reached after negotiations with respect to wages, hours of work and
all other terms and conditions of employment, including proposals
for adjusting any grievances or questions arising under such
agreement." 111 A collective bargaining agreement being a
contract, its provisions "constitute the law between the parties" 112
and must be complied with in good faith. 113
PHILEC, as employer, and PWU, as the exclusive bargaining
representative of PHILEC's rank-and-file employees, entered into a
collective bargaining agreement, which the parties agreed to make
effective from June 1, 1997 to May 31, 1999. Being the law between
the parties, the June 1, 1997 collective bargaining agreement must
govern PHILEC and its rank-and-file employees within the agreed
period.
Lipio and Ignacio, Sr. were rank-and-file employees when PHILEC
selected them for training for the position of Foreman I beginning
August 25, 1997. Lipio and Ignacio, Sr. were selected for training
during the effectivity of the June 1, 1997 rank-and-file collective
bargaining agreement. Therefore, Lipio's and Ignacio, Sr.'s training
allowance must be computed based on Article X, Section 4 and
Article IX, Section 1 (f) of the June 1, 1997 collective bargaining
agreement.

Contrary to PHILEC's claim, Lipio and Ignacio, Sr. were not


transferred out of the bargaining unit when they were selected for
training. Lipio and Ignacio, Sr. remained rank-and-file employees
while they trained for the position of Foreman I. Under Article IX,
Section 1 (e) of the June 1, 1997 collective bargaining agreement,
114 a trainee who is "unable to demonstrate his ability to perform
the work . . . shall be reverted to his previous assignment. . . ." 115
According to the same provision, the trainee "shall hold that job on a
trial or observation basis and . . . subject to prior approval of the
authorized management official, be appointed to the position in a
regular capacity." 116
Thus, training is a condition precedent for promotion. Selection for
training does not mean automatic transfer out of the bargaining unit
of rank-and-file employees. DCHaTc
Moreover, the June 1, 1997 collective bargaining agreement states
that the training allowance of a rank-and-file employee "whose
application for a posted job is accepted shall [be computed] in
accordance with Section (f) of [Article IX]." 117 Since Lipio and
Ignacio, Sr. were rank-and-file employees when they applied for
training for the position of Foreman I, Lipio's and Ignacio, Sr.'s
training allowance must be computed based on Article IX, Section 1
(f) of the June 1, 1997 rank-and-file collective bargaining agreement.
PHILEC allegedly applied the "Modified SGV" pay grade scale to
prevent any salary distortion within PHILEC's enterprise. This,
however, does not justify PHILEC's non-compliance with the June 1,
1997 collective bargaining agreement. This pay grade scale is not
provided in the collective bargaining agreement. In Samahang
Manggagawa sa Top Form Manufacturing United Workers of the
Philippines (SMTFM-UWP) v. NLRC, 118 this court ruled that "only
provisions embodied in the [collective bargaining agreement] should
be so interpreted and complied with. Where a proposal raised by a
contracting party does not find print in the [collective bargaining
agreement], it is not part thereof and the proponent has no claim
whatsoever to its implementation." 119
Had PHILEC wanted the "Modified SGV" pay grade scale applied
within its enterprise, "it could have requested or demanded that [the
'Modified SGV' scale] be incorporated in the [collective bargaining
agreement]." 120 PHILEC had "the means under the law to compel
[PWU] to incorporate this specific economic proposal in the
[collective bargaining agreement]." 121 It "could have invoked
Article 252 of the Labor Code" 122 to incorporate the "Modified SGV"
pay grade scale in its collective bargaining agreement with PWU. But

it did not. Since this "Modified SGV" pay grade scale does not appear
in PHILEC's collective bargaining agreement with PWU, PHILEC
cannot insist on the "Modified SGV" pay grade scale's application.
We reiterate Voluntary Arbitrator Jimenez's decision dated August 13,
1999 where he said that:
. . . since the signing of the current CBA took place on
September 27, 1997, PHILEC, by oversight, may have
overlooked the possibility of a wage distortion occurring
among ASSET-occupied positions. It is surmised that this
matter could have been negotiated and settled with PWU
before the actual signing of the CBA on September 27.
Instead, PHILEC, again, allowed the provisions of Art. X,
Sec. 4 of the CBA to remain the way it is and is now
suffering the consequences of its laches. 123 (Emphasis
in the original)
We note that PHILEC did not dispute PWU's contention that it
selected several rank-and-file employees for training and paid them
training allowance based on the schedule provided in the collective
bargaining agreement effective at the time of the trainees' selection.
124 PHILEC cannot choose when and to whom to apply the
provisions of its collective bargaining agreement. The provisions of a
collective bargaining agreement must be applied uniformly and
complied with in good faith.
Given the foregoing, Lipio's and Ignacio, Sr.'s training allowance
should be computed based on Article X, Section 4 in relation to
Article IX, Section 1 (f) of the June 1, 1997 rank-and-file collective
bargaining agreement. Lipio, who held the position of Machinist
before selection for training as Foreman I, should receive training
allowance based on the following schedule:
First month
Second
month
Third month
Fourth
month

P456.00
P1,031.00
P1,031.00
P1,031.00

Ignacio, Sr., who held the position of DT-Assembler before selection


for training as Foreman I, should receive training allowance based on
the following schedule:
First month
Second

P361.00
P817.00

month
Third month
Fourth
month

P1,392.00
P1,392.00

Considering that Voluntary Arbitrator Jimenez's decision awarded


sums of money, Lipio and Ignacio, Sr. are entitled to legal interest on
their training allowances. Voluntary Arbitrator Jimenez's decision
having become final and executory on August 22, 2000, PHILEC is
liable for legal interest equal to 12% per annum from finality of the
decision until full payment as this court ruled in Eastern Shipping
Lines, Inc. v. Court of Appeals: 125
When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest . . .
shall be 12% per annum from such finality until its
satisfaction, this interim period being deemed to be by
then as equivalent to a forbearance of credit. 126
The 6% legal interest under Circular No. 799, Series of 2013, of the
Bangko Sentral ng Pilipinas Monetary Board shall not apply,
Voluntary Arbitrator Jimenez's decision having become final and
executory prior to the effectivity of the circular on July 1, 2013. In
Nacar v. Gallery Frames, 127 we held that: TCIDSa
. . . with regard to those judgments that have become
final and executory prior to July 1, 2013, said judgments
shall not be disturbed and shall continue to be
implemented applying the rate of interest fixed therein.
128
WHEREFORE, the petition for review on certiorari is DENIED. The
Court of Appeals' decision dated May 25, 2004 is AFFIRMED.
Petitioner Philippine Electric Corporation is ORDERED to PAY
respondent Eleodoro V. Lipio a total of P3,549.00 for a four (4)-month
training for the position of Foreman I with legal interest of 12% per
annum from August 22, 2000 until the amount's full satisfaction.
For respondent Emerlito C. Ignacio, Sr., Philippine Electric
Corporation is ORDERED to PAY a total of P3,962.00 for a four (4)month training for the position of Foreman I with legal interest of
12% per annum from August 22, 2000 until the amount's full
satisfaction.
SO ORDERED.

Carpio, Del Castillo, Villarama, Jr. * and Mendoza, JJ., concur.


||| (Phil. Electric Corp. v. Court of Appeals, G.R. No. 168612,
[December 10, 2014])

34. Execution of Judgment


ILAW BUKLOD NG MANGGAGAWA V NESTLE PHILS
THIRD DIVISION
[G.R. No. 198675. September 23, 2015.]
ILAW BUKLOD NG MANGGAGAWA (IBM) NESTLE
PHILIPPINES, INC. CHAPTER (ICE CREAM AND
CHILLED PRODUCTS DIVISION), ITS OFFICERS,
MEMBERS BONIFACIO T. FLORENDO, EMILIANO B.
PALANAS and GENEROSO P. LAXAMANA, petitioners,
vs. NESTLE PHILIPPINES, INC., respondent.
DECISION
PERALTA, J p:
Assailed in the instant petition for review on certiorari under
Rule 45 of the Rules of Court are the Resolutions 1 of the Court of
Appeals (CA), dated June 30, 2011 2 and September 28, 2011, 3
respectively, in CA-G.R. SP No. 118459. The June 30, 2011
Resolution dismissed herein petitioners' petition for review, while
the September 28, 2011 Resolution denied petitioners' Motion for
Reconsideration.
The factual and procedural antecedents of the case are as
follows:

On January 13, 1997, herein petitioner union staged a strike


against herein respondent company's Ice Cream and Chilled
Products Division, citing, as grounds, respondent's alleged
violation of the collective bargaining agreement (CBA), dismissal
of union officers and members, discrimination and other unfair
labor practice (ULP) acts.
As a consequence, respondent filed with the National Labor
Relations Commission (NLRC) a Petition for Injunction with Prayer
for Issuance of Temporary Restraining Order, Free Ingress and
Egress Order, and Deputization Order.
On January 20, 1997, a temporary restraining order was
issued by the NLRC. Thereafter, on February 7, 1997, the NLRC
issued a preliminary injunction.
On February 26, 1997, respondent filed a Petition to Declare
Strike Illegal.
Subsequently, on April 2, 1997, then Department of Labor
and Employment (DOLE) Acting Secretary, issued an Order
assuming jurisdiction over the strike and certifying the same to
the NLRC.
On June 2, 1997, petitioner union filed a petition for certiorari
with this Court, questioning the above order of the Acting DOLE
Secretary.
However, after a series of conciliation meetings and
discussions between the parties, they agreed to resolve their
differences and came up with a compromise which was embodied
in a Memorandum of Agreement (MOA) dated August 4, 1998,
pertinent portions of which are as follows:
xxx xxx xxx
1. The COMPANY [herein respondent] shall cause the
dismissal of all criminal cases against dismissed
employees arising out of or as consequences of the
strike that started on January 13, 1997.
Future illegal acts of the UNION [herein petitioner]
shall not be covered by this agreement.
2. The UNION shall unqualifiedly withdraw its Petition for
Certiorari pending with the Supreme Court.
3. The COMPANY and the UNION shall jointly file a motion
to withdraw any and all actions pending with the NLRC
including the Certified Case, arising out of or as
consequences of the strike that started on Jan. 13, 1997.

4. As a consequence of the strike leading to the


execution of this Memorandum of Agreement, the UNION
shall cease and desist from picketing any office or
factory of the COMPANY as well as any government
agency or office of the Courts. It shall likewise remove
streamers, barricades and structures that it had put up
around the COMPANY's Aurora Plant in Quezon City upon
the execution of this Agreement and shall forever cease
and desist from re-establishing the same.
5. The COMPANY shall issue the
Certificates of Past Employment to
employees.

corresponding
all dismissed

6. The COMPANY shall continue to recognize the UNION


as the certified bargaining agent of all rank-and-file
daily-paid employees of its Ice Cream and Chilled
Products Division up to the life of the existing Collective
Bargaining Agreement.
7. The UNION shall immediately elect a new set of
officers who will replace its dismissed officers. The
newly-elected officers shall exclusively come from the
UNION membership who are active employees of the
COMPANY. The UNION shall inform the COMPANY of the
said newly-elected officers.
8. The COMPANY shall pay dismissed employees their
accrued benefits (i.e., Unpaid wages, proportionate 13th
and 14th months pay and vacation leave (VL)
commutation), if any, up to the date of their actual work
in accordance with the existing CBA and COMPANY
programs and policies and consistent with the
COMPANY's
existing
guidelines.
Their
respective
accountabilities shall be deducted from the said accrued
benefits and that the payment of the same shall
furthermore be subject to the execution and submission
to the COMPANY by the dismissed employees of the
corresponding individual releases and quitclaims.
9. The COMPANY and the UNION agree that this
Agreement shall constitute a final resolution of all issues
related to or arising from the strike that started on
January 13, 1997, including the dismissal of a total of
one-hundred thirty (132) (sic) UNION officers and
members, who are all represented by Atty. Potenciano A.
Flores, Jr., as herein provided.

xxx xxx xxx 4


On August 6, 1998, the parties filed a Joint Motion to Dismiss
stating that they are no longer interested in pursuing the petition
for injunction filed by respondent as a consequence of the
settlement of their dispute.
On October 12, 1998, the NLRC issued its Decision approving
the parties' compromise agreement and granting their Joint Motion
to Dismiss.
On January 25, 2010, or after a lapse of more than eleven
(11) years from the time of execution of the subject MOA,
petitioners filed with the NLRC a Motion for Writ of Execution
contending that they have not been paid the amounts they are
entitled to in accordance with the MOA.
Respondent filed its Opposition to the Motion for Writ of
Execution contending that petitioners' remedy is already barred by
prescription because, under the 2005 Revised Rules of the NLRC, a
decision or order may be executed on motion within five (5) years
from the date it becomes final and executory and that the same
decision or order may only be enforced by independent action
within a period of ten (10) years from the date of its finality.
On November 18, 2010, the NLRC promulgated its Resolution
denying petitioners' application for the issuance of a writ of
execution on the ground of prescription.
Petitioners filed a Motion for Reconsideration but the NLRC, in
its Resolution dated February 14, 2011, dismissed it for lack of
merit.
Petitioners then filed a petition for certiorari with the CA
questioning the above Resolutions of the NLRC. The basic issue
raised before the CA was whether or not petitioners' claim for
payment is barred by prescription.
On June 30, 2011, the CA issued the first of its questioned
Resolutions dismissing petitioners' certiorari petition on the
ground that it is a wrong mode of appeal. The CA held that
petitioners' appeal involves a pure question of law which should
have been taken directly to this Court via a petition for review on
certiorari under Rule 45 of the Rules of Court.
Petitioners filed a Motion for Reconsideration, but the CA
denied it in its second questioned Resolution.
Hence, the instant petition for review on certiorari raising the
following Assignment of Errors, to wit:

Reversible Error No. 1


The Court of Appeals erred in misappreciating the
facts of the case.
Reversible Error No. 2
The Court of Appeals erred in sustaining that the
Petitioners' demand to be paid has prescribed. 5
Like petitioners' petition for certiorari filed with the CA, the
main issue raised in the present petition is whether petitioners'
claim is already barred by prescription.
Petitioners' basic contention is that respondent cannot invoke
the defense of prescription because it is guilty of deliberately
causing delay in paying petitioners' claims and that petitioners, on
the other hand, are entitled to protection under the law because
they had been vigilant in exercising their right as provided for
under the subject MOA.
The Court is not persuaded.
There is no dispute that the compromise agreement between
herein petitioner union, representing its officers and members,
and respondent company was executed on August 4, 1998 and
was subsequently approved via the NLRC Decision dated October
12, 1998. However, considering petitioners' allegation that the
terms and conditions of the agreement have not been complied
with by respondent, petitioners should have moved for the
issuance of a writ of execution.
It is wrong for petitioners' counsel to argue that since the
NLRC Decision approving the parties' compromise agreement was
immediately executory, there was no need to file a motion for
execution. It is settled that when a compromise agreement is
given judicial approval, it becomes more than a contract binding
upon the parties. 6 Having been sanctioned by the court, it is
entered as a determination of a controversy and has the force and
effect of a judgment. 7 It is immediately executory and not
appealable, except for vices of consent or forgery. 8 The nonfulfillment of its terms and conditions justifies the issuance
of a writ of execution; in such an instance, execution becomes
a ministerial duty of the court. 9 Stated differently, a decision on a
compromise agreement is final and executory. 10 Such agreement
has the force of law and is conclusive between the parties. 11 It
transcends its identity as a mere contract binding only upon the
parties thereto, as it becomes a judgment that is subject to
execution in accordance with the Rules. 12

In this respect, the law and the rules provide the mode and
the periods within which a party may enforce his right.
The most relevant rule in the instant case is Section 8, Rule
XI, 2005 Revised Rules of Procedure of the NLRC which states that:
Section 8. Execution by Motion or by Independent
Action. A decision or order may be executed on
motion within five (5) years from the date it becomes
final and executory. After the lapse of such period, the
judgment shall become dormant, and may only be
enforced by an independent action within a period of ten
(10) years from date of its finality.
In the same manner, pertinent portions of Sections 4 (a) and
6, Rule III, of the NLRC Manual on Execution of Judgment, provide
as follows:
Section 4. Issuance of a Writ. Execution shall
issue upon an order, resolution or decision that finally
disposes of the actions or proceedings and after the
counsel of record and the parties have been duly
furnished with the copies of the same in accordance with
the NLRC Rules of Procedure, provided:
a) The Commission or Labor Arbiter shall,
motu proprio or upon motion of any interested
party, issue a writ of execution on a judgment
only within five (5) years from the date it
becomes final and executory. . . .
xxx xxx xxx
Section 6. Execution by Independent Action. A
judgment after the lapse of five (5) years from the date it
becomes final and executory and before it is barred by
prescription, may only be enforced by an independent
action.
Similarly, Section 6, Rule 39 of the Rules of Court, which can
be applied in a suppletory manner, provides:
Sec. 6. Execution by motion or by independent
action. A final and executory judgment or order may
be executed on motion within five (5) years from the
date of its entry. After the lapse of such time, and before
it is barred by the statute of limitations, a judgment may
be enforced by action. The revived judgment may also
be enforced by motion within five years from the date of

its entry and, thereafter, by action before it is barred by


the statute of limitations.
Article 1144 of the Civil Code may, likewise be applied, as it
provides that an action upon a written contract must be brought
within ten years from the time the right of action accrues.
It is clear from the above law and rules that a judgment may
be executed on motion within five years from the date of its entry
or from the date it becomes final and executory. After the lapse of
such time, and before it is barred by the statute of limitations, a
judgment may be enforced by action. If the prevailing party fails to
have the decision enforced by a mere motion after the lapse of
five years from the date of its entry (or from the date it becomes
final and executory), the said judgment is reduced to a mere right
of action in favor of the person whom it favors and must be
enforced, as are all ordinary actions, by the institution of a
complaint in a regular form. 13
In the present case, the five-and ten-year periods provided by
law and the rules are more than sufficient to enable petitioners to
enforce their right under the subject MOA. In this case, it is clear
that the judgment of the NLRC, having been based on a
compromise embodied in a written contract, was immediately
executory upon its issuance on October 12, 1998. Thus, it could
have been executed by motion within five (5) years. It was not.
Nonetheless, it could have been enforced by an independent
action within the next five (5) years, or within ten (10) years from
the time the NLRC Decision was promulgated. It was not.
Therefore, petitioners' right to have the NLRC judgment executed
by mere motion as well as their right of action to enforce the same
judgment had prescribed by the time they filed their Motion for
Writ of Execution on January 25, 2010.
It is true that there are instances in which this Court allowed
execution by motion even after the lapse of five years upon
meritorious grounds. However, in instances when this Court
allowed execution by motion even after the lapse of five years,
there is, invariably, only one recognized exception, i.e., when the
delay is caused or occasioned by actions of the judgment debtor
and/or is incurred for his benefit or advantage. 14 In the present
case, there is no indication that the delay in the execution of the
MOA, as claimed by petitioners, was caused by respondent nor
was it incurred at its instance or for its benefit or advantage.
It is settled that the purpose of the law (or rule) in prescribing
time limitations for enforcing judgments or actions is to prevent

obligors from sleeping on their rights. 15 In this regard, petitioners


insist that they are vigilant in exercising their right to pursue
payment of the monetary awards in their favor. However, a careful
review of the records at hand would show that petitioners failed to
prove their allegation. The only evidence presented to show that
petitioners ever demanded payment was a letter dated May 22,
2008, signed by one Atty. Calderon, representing herein individual
petitioners, addressed to respondent company and seeking proof
that the company has indeed complied with the provisions of the
subject MOA. 16 Considering that the NLRC Decision approving the
MOA was issued as early as October 12, 1998, the letter from
petitioners' counsel, which was dated almost ten years after the
issuance of the NLRC Decision, can hardly be considered as
evidence of vigilance on the part of petitioners. No proof was ever
presented showing that petitioners did not sleep on their rights.
Despite their claims to the contrary, the records at hand are bereft
of any evidence to establish that petitioners exerted any effort to
enforce their rights under the subject MOA, either individually,
through their union or their counsel. It is a basic rule in evidence
that each party must prove his affirmative allegation, that mere
allegation is not evidence. 17 Indeed, as allegation is not
evidence, the rule has always been to the effect that a party
alleging a critical fact must support his allegation with substantial
evidence which has been construed to mean such relevant
evidence as a reasonable mind will accept as adequate to support
a conclusion. 18 Unfortunately, petitioners failed in this respect.
Even granting, for the sake of argument, that the records of
the case were lost, as alleged by petitioners, leading to the delay
in the enforcement of petitioners' rights, such loss of the records
cannot be regarded as having interrupted the prescriptive periods
for filing a motion or an action to enforce the NLRC Decision
because such alleged loss could not have prevented petitioners
from attempting to reconstitute the records and, thereafter, filing
the required motion or action on time. 19
As a final note, it bears to reiterate that while the scales of
justice usually tilt in favor of labor, the present circumstances
prevent this Court from applying the same in the instant petition.
Even if our laws endeavor to give life to the constitutional policy
on social justice and on the protection of labor, it does not mean
that every labor dispute will be decided in favor of the workers. 20
The law also recognizes that management has rights which are
also entitled to respect and enforcement in the interest of fair play.
21 Stated otherwise, while the Court fully recognizes the special

protection which the Constitution, labor laws, and social legislation


accord the workingman, the Court cannot, however, alter or
amend the law on prescription to relieve petitioners of the
consequences of their inaction. Vigilantibus, non dormientibus,
jura subveniunt Laws come to the assistance of the vigilant, not
of the sleeping. 22
WHEREFORE, the instant petition is DENIED. The
Resolutions of the Court of Appeals, dated June 30, 2011 and
September 28, 2011, respectively, in CA-G.R. SP No. 118459, are
AFFIRMED.
SO ORDERED.
Velasco, Jr., Villamar, Jr., Perez * and Jardeleza, JJ., concur.
||| (Ilaw Buklod ng Manggagawa (IBM) Nestle Phils., Inc. Chapter v.
Nestle Phils., Inc., G.R. No. 198675, [September 23, 2015])
35. Art 223, Appeal from the Labor Arbiter;s monetary
award/allowable reduction of appeal bond
BALITE, ET AL V SS VENTURES INTERNATIONAL
FIRST DIVISION
[G.R. No. 195109. February 4, 2015.]
ANDY D. BALITE, DELFIN M. ANZALDO AND
MONALIZA DL. BIHASA, petitioners, vs. SS VENTURES
INTERNATIONAL, INC., SUNG SIK LEE AND EVELYN
RAYALA, respondents.
DECISION
PEREZ, J p:
This is a Petition for Review on Certiorari pursuant to Rule 45 of the
Revised Rules of Court, assailing the 18 June 2010 Decision 1
rendered by the Tenth Division of the Court of Appeals in CA-G.R. SP
No. 109589. In its assailed decision, the appellate court reversed the
Resolution of the National Labor Relations Commission (NLRC) which
denied the Motion to Reduce Appeal Bond filed by respondents SS
Ventures International, Inc., Sung Sik Lee and Evelyn Rayala.
In a Resolution 2 dated 30 December 2010, the appellate court
refused to reconsider its earlier decision.
The Facts
Respondent SS Ventures International, Inc. is a domestic corporation
duly engaged in the business of manufacturing footwear products for

local sales and export abroad. It is represented in this action by


respondents Sung Sik Lee and Evelyn Rayala. Petitioners Andy Balite
(Balite), Monaliza Bihasa (Bihasa) and Delfin Anzaldo (Anzaldo) were
regular employees of the respondent company until their
employments were severed for violation of various company policies.
For his part, Balite was issued a Show Cause Memorandum by the
respondent company on 4 August 2005 charging him with the
following infractions: (1) making false reports, malicious and
fraudulent statements and rumor-mongering against the company;
(2) threatening and intimidating co-workers; (3) refusing to
cooperate in the conduct of investigation; and (4) gross negligence
in the care and use of the company property resulting in the damage
of the finished products. After respondent found Balite's explanation
insufficient, he was dismissed from employment, through a Notice of
Termination on 6 September 2005.
Bihasa, on the other hand, was charged with absence without leave
on two occasions and with improper behavior, stubbornness,
arrogance and uncooperative attitude towards superiors and
employees. Bihasa was likewise terminated from the service on 5
May 2006 after her explanation in an administrative investigation
was found unsatisfactory by the respondent company.
Anzaldo was also dismissed from employment after purportedly
giving him due process. The records of the infractions he committed
as well as the date of his termination, however, are not borne by the
records.
Consequently, the three employees charged respondents with illegal
dismissal and recovery of backwages, 13th month pay and
attorney's fees before the Labor Arbiter.
In refuting the allegations of the petitioners, respondents averred
that petitioners were separated from employment for just causes
and after affording them procedural due process of law.
On 30 December 2007, the Labor Arbiter rendered a Decision 3 in
favor of petitioners and held that respondents are liable for illegal
dismissal for failing to comply with the procedural and substantive
requirements in terminating employment. The decretal portion of the
Labor Arbiter Decision reads:
WHEREFORE, premises considered, [petitioners] are
hereby found to have been illegally dismissed even as
respondents are held liable therefore.

Consequently, respondent corporation is hereby ordered


to reinstate [petitioners] to their former positions without
loss of seniority rights and other privileges with
backwages initially computed at this time and reflected
below.
The reinstatement aspect of this decision is immediately
executory and thus respondents are hereby required to
submit a report of compliance therewith within ten (10)
days from receipt thereof.
Respondent corporation is likewise ordered to pay
[petitioners] their 13th month pay and 10% attorney's
fees.
Backwages
1.
2.
3.

Andy Balite
Delfin
Anzaldo
Monaliza
Bihasa

13th month
pay

P162,969.0P17,511.00
4
158,299.44
17,511.00
116,506.62

17,511.00

Attorney's
fees
P18,048.00
17,511.00
13,401.75

All other claims are dismissed for lack of factual or legal


basis. 4 CIAcSa
Aggrieved, respondents interposed an appeal by filing a Notice of
Appeal and paying the corresponding appeal fee. However, instead
of filing the required appeal bond equivalent to the total amount of
the monetary award which is P490,308.00, respondents filed a
Motion to Reduce the Appeal Bond to P100,000.00 and appended
therein a manager's check bearing the said amount. Respondents
cited financial difficulty as justification for their inability to post the
appeal bond in full owing to the partial shutdown of respondent
company's operations.
In a Resolution 5 dated 27 November 2008, the NLRC dismissed the
appeal filed by the respondents for non-perfection. The NLRC ruled
that posting of an appeal bond equivalent to the monetary award is
indispensable for the perfection of the appeal and the reduction of
the appeal bond, absent any showing of meritorious ground to justify
the same, is not warranted in the instant case.
Similarly ill-fated was respondents' Motion for Reconsideration which
was denied by the NLRC in a Resolution 6 dated 30 April 2009.

On certiorari, the Court of Appeals reversed the NLRC Decision and


allowed the relaxation of the rule on posting of the appeal bond.
According to the appellate court, there was substantial compliance
with the rules for the perfection of an appeal because respondents
seasonably filed their Memorandum of Appeal and posted an appeal
bond in the amount of P100,000.00. While the amount of the appeal
bond posted was not equivalent to the monetary award, the Court of
Appeals ruled that respondents were able to sufficiently prove their
incapability to post the required amount of bond. 7 The Court of
Appeals disposed in this wise:
WHEREFORE, premises considered, finding grave
abuse of discretion on the part of the [NLRC], the instant
petition is GRANTED. The [NLRC's] Resolutions dated
November 27, 2008 and April 30, 2009, respectively, are
hereby SET ASIDE. [The NLRC] is hereby directed to
decide petitioners' appeal on the merits. 8
In a Resolution 9 dated 30 December 2010, the Court of Appeals
refused to reconsider its earlier decision.
Petitioners are now before this Court via this instant Petition for
Review on Certiorari 10 praying that the Court of Appeals Decision
and Resolution be reversed and set aside on the ground that:
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS
COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR IN EXCESS OF JURISDICTION WHEN IT
REVERSED THE RESOLUTION OF THE NLRC DISMISSING
RESPONDENTS' APPEAL FOR NON-PERFECTION THEREOF.
11
The Court's Ruling
Petitioners, in assailing the appellate court's decision, argue that
posting of an appeal bond in full is not only mandatory but a
jurisdictional requirement that must be complied with in order to
confer jurisdiction upon the NLRC. They posit that the posting of an
insufficient amount of appeal bond, as in this case, resulted to the
non-perfection of the appeal rendering the decision of the Labor
Arbiter final and executory.
Banking on the appellate court's decision, respondents, for their
part, urge the Court to relax the rules on appeal underscoring on the
so-called "utmost good faith" they demonstrated in filing a Motion to
Reduce Appeal Bond and in posting a cash bond in the amount of
P100,000.00. In justifying their inability to post the required appeal
bond, respondents reasoned that respondent company is in dire

financial condition due to lack of orders from customers constraining


it to temporarily shut down its operations resulting in significant loss
of revenues. Respondents now plea for the liberal interpretation of
the rules so that the case can be threshed out on the merits, and not
on technicality.
Time and again we reiterate the established rule that in the exercise
of the Supreme Court's power of review, the Court is not a trier of
facts 12 and does not routinely undertake the re-examination of the
evidence presented by the contending parties during the trial of the
case considering that the findings of facts of labor officials who are
deemed to have acquired expertise in matters within their respective
jurisdiction are generally accorded not only respect, but even
finality, and are binding upon this Court, when supported by
substantial evidence. 13
The NLRC ruled that no appeal had been perfected on time because
of respondents' failure to post the required amount of appeal bond.
As a result of which, the decision of the Labor Arbiter has attained
finality. The Court of Appeals, on the contrary, allowed the relaxation
of the rules and held that respondents were justified in failing to pay
the required appeal bond. Despite the non-posting of the appeal
bond in full, however, the appellate court deemed that respondents
were able to seasonably perfect their appeal before the NLRC,
thereby directing the NLRC to resolve the case on the merits. ICAcHE
The pertinent rule on the matter is Article 223 of the Labor Code,as
amended, which sets forth the rules on appeal from the Labor
Arbiter's monetary award:
ART. 223. Appeal. Decisions, awards, or orders of the
Labor Arbiter are final and executory unless appealed to
the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or
orders. . . . .
xxx xxx xxx
In case of a judgment involving a monetary award, an
appeal by the employer may be perfected only upon the
posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in
the amount equivalent to the monetary award in the
judgment appealed from. (Emphases ours).
Implementing the aforestated provisions of the Labor Code are the
provisions of Rule VI of the 2011 Rules of Procedure of the NLRC on
perfection of appeals which read:

Section 1. Periods of Appeal. Decisions, awards or


orders of the Labor Arbiter shall be final and executory
unless appealed to the Commission by any or both parties
within ten (10) calendar days from receipt thereof. . . . If
the 10th day or the 5th day, as the case may be, falls on a
Saturday, Sunday or holiday, the last day to perfect the
appeal shall be the first working day following such
Saturday, Sunday or holiday.
xxx xxx xxx
Section 4. Requisites for Perfection of Appeal. (a) The
appeal shall be:
(1) filed within the reglementary period as provided
in Section 1 of this Rule;
(2) verified by the appellant himself/herself in
accordance with Section 4, Rule 7 of the Rules of
Court, as amended;
(3) in the form a of a memorandum of appeal which
shall state the grounds relied upon and the
arguments in support thereof; the relief prayed
for; and with a statement of the date when the
appellant received the appealed decision, award
or order;
(4) in three (3) legibly typewritten or printed copies;
and
(5) accompanied by:
i) proof of payment of the required appeal fee
and legal research fee;
ii) posting of cash or surety bond as provided in
Section 6 of this Rule; and
iii) proof of service upon the other parties.
xxx xxx xxx
(b) A mere notice of appeal without complying with the
other requisites aforestated shall not stop the running of
the period for perfecting an appeal.
xxx xxx xxx
Section 5. Appeal Fee. The appellant shall pay the
prevailing appeal fee and legal research fee to the
Regional Arbitration Branch or Regional Office of origin,

and the official receipt of such payment shall form part of


the records of the case.
Section 6. Bond. In case the decision of the Labor
Arbiter, or the Regional Director involves a monetary
award, an appeal by the employer shall be perfected
only upon the posting of a bond, which shall either be
in the form of cash deposit or surety bond equivalent in
amount to the monetary award, exclusive of damages and
attorney's fees.
xxx xxx xxx
The Commission through the Chairman may on justifiable
grounds blacklist a bonding company, notwithstanding its
accreditation by the Supreme Court.
These statutory and regulatory provisions explicitly provide that an
appeal from the Labor Arbiter to the NLRC must be perfected within
ten calendar days from receipt of such decisions, awards or
orders of the Labor Arbiter. In a judgment involving a monetary
award, the appeal shall be perfected only upon (1) proof of payment
of the required appeal fee; (2) posting of a cash or surety bond
issued by a reputable bonding company; and (3) filing of a
memorandum of appeal. 14
In McBurnie v. Ganzon, 15 we harmonized the provision on appeal
that its procedures are fairly applied to both the petitioner and the
respondent, assuring by such application that neither one or the
other party is unfairly favored. We pronounced that the posting of a
cash or surety bond in an amount equivalent to 10% of the monetary
award pending resolution of the motion to reduce appeal bond shall
be deemed sufficient to perfect an appeal, to wit: DEICaA
It is in this light that the Court finds it necessary to set a
parameter for the litigants' and the NLRC's guidance on
the amount of bond that shall hereafter be filed with a
motion for a bond's reduction. To ensure that the
provisions of Section 6, Rule VI of the NLRC Rules of
Procedure that give parties the chance to seek a reduction
of the appeal bond are effectively carried out, without
however defeating the benefits of the bond requirement
in favor of a winning litigant, all motions to reduce bond
that are to be filed with the NLRC shall be accompanied by
the posting of a cash or surety bond equivalent to 10% of
the monetary award that is subject of the appeal, which
shall provisionally be deemed the reasonable amount of

the bond in the meantime that an appellant's motion is


pending resolution by the Commission. In conformity with
the NLRC Rules, the monetary award, for the purpose of
computing the necessary appeal bond, shall exclude
damages and attorney's fees. Only after the posting of a
bond in the required percentage shall an appellant's
period to perfect an appeal under the NLRC Rules be
deemed suspended.
The rule We set in McBurnie was clarified by the Court in Sara Lee
Philippines v. Ermilinda Macatlang. 16 Considering the peculiar
circumstances in Sara Lee, We determined what is the reasonable
amount of appeal bond. We underscored the fact that the amount of
10% of the award is not a permissible bond but is only such amount
that shall be deemed reasonable in the meantime that the
appellant's motion is pending resolution by the Commission. The
actual reasonable amount yet to be determined is necessarily a
bigger amount. In an effort to strike a balance between the
constitutional obligation of the state to afford protection to labor on
the one hand, and the opportunity afforded to the employer to
appeal on the other, We considered the appeal bond in the amount
of P725M which is equivalent to 25% of the monetary award
sufficient to perfect the appeal, viz.:
We sustain the Court of Appeals in so far as it increases
the amount of the required appeal bond. But we deem it
reasonable to reduce the amount of the appeal bond to
P725 Million. This directive already considers that the
award if not illegal, is extraordinarily huge and that no
insurance company would be willing to issue a bond for
such big money. The amount of P725 Million is
approximately 25% of the basis above calculated. It is a
balancing of the constitutional obligation of the state to
afford protection to labor which, specific to this case, is
assurance that in case of affirmance of the award,
recovery is not negated; and on the other end of the
spectrum, the opportunity of the employer to appeal.
By reducing the amount of the appeal bond in this case,
the employees would still be assured of at least
substantial compensation, in case a judgment award is
affirmed. On the other hand, management will not be
effectively denied of its statutory privilege of appeal.
In line with Sara Lee and the objective that the appeal on the merits
to be threshed out soonest by the NLRC, the Court holds that the

appeal bond posted by the respondent in the amount of P100,000.00


which is equivalent to around 20% of the total amount of monetary
bond is sufficient to perfect an appeal. With the employer's
demonstrated good faith in filing the motion to reduce the bond on
demonstrable grounds coupled with the posting of the appeal bond
in the requested amount, as well as the filing of the memorandum of
appeal, the right of the employer to appeal must be upheld. This is in
recognition of the importance of the remedy of appeal, which is an
essential part of our judicial system and the need to ensure that
every party litigant is given the amplest opportunity for the proper
and just disposition of his cause freed from the constraints of
technicalities. 17
WHEREFORE, premises considered, the petition is DENIED. The
assailed Decision and Resolution of the Court of Appeals are hereby
AFFIRMED.
SO ORDERED.
Sereno, C.J., Leonardo-de Castro, Bersamin and Perlas-Bernabe, JJ.,
concur.
||| (Balite v. SS Ventures International, Inc., G.R. No. 195109,
[February 4, 2015])
36. Art 223(now Art 229), Computaiton of accrued wages
BERGONIO V SOUTHEAST ASIAN AIRLINES
SECOND DIVISION
[G.R. No. 195227. April 21, 2014.]
FROILAN M. BERGONIO, JR., DEAN G. PELAEZ,
CRISANTO O. GEONGO, WARLITO O. JANAYA,
SALVADOR VILLAR, JR., RONALDO CAFIRMA, RANDY
LUCAR, ALBERTO ALBUERA, DENNIS NOPUENTE and
ALLAN SALVACION, petitioners, vs. SOUTH EAST
ASIAN AIRLINES and IRENE DORNIER, respondents.
DECISION
BRION, J p:

We resolve in this petition for review on certiorari 1 the challenge to


the September 30, 2010 decision 2 and the January 13, 2011
resolution 3 of the Court of Appeals (CA) in CA-G.R. SP No. 112011.
This CA decision reversed the July 16, 2008 decision 4 of the
National Labor Relations Commission (NLRC), which, in turn, affirmed
the March 13, 2008 order 5 of the Labor Arbiter (LA) in NLRC Case
No. 00-04-05469-2004. The LA granted the Motion filed by
petitioners Froilan M. Bergonio, Jr., Dean G. Pelaez, et al.,
(collectively, the petitioners) for the release of the garnished amount
to satisfy the petitioners' accrued wages.
The Factual Antecedents
On April 30, 2004, the petitioners filed before the LA a complaint for
illegal dismissal and illegal suspension with prayer for reinstatement
against respondents South East Asian Airlines (SEAIR) and Irene
Dornier as SEAIR's President (collectively, the respondents).
In a decision dated May 31, 2005, the LA found the petitioners
illegally dismissed and ordered the respondents, among others, to
immediately reinstate the petitioners with full backwages. The
respondents received their copy of this decision on July 8, 2005. 6
On August 20, 2005, the petitioners filed before the LA a Motion for
issuance of Writ of Execution for their immediate reinstatement.
During the scheduled pre-execution conference held on September
14, 2005, the respondents manifested their option to reinstate the
petitioners in the payroll. The payroll reinstatement, however, did
not materialize. Thus, on September 22, 2005, the petitioners filed
before the LA a manifestation for their immediate reinstatement.
On October 3, 2005, the respondents filed an opposition to the
petitioners' motion for execution. 7 They claimed that the
relationship between them and the petitioners had already been
strained because of the petitioners' threatening text messages, thus
precluding the latter's reinstatement. IAEcCT
On October 7, 2005, the LA granted the petitioners' motion and
issued a writ of execution. 8
The respondents moved to quash the writ of execution with a prayer
to hold in abeyance the implementation of the reinstatement order.
9 They maintained that the relationship between them and the
petitioners had been so strained that reinstatement was no longer
possible.

The October 7, 2005 writ of execution was returned unsatisfied. In


response, the petitioners filed a motion for re-computation of
accrued wages, and, on January 25, 2006, a motion for execution of
the re-computed amount. On February 16, 2006, the LA granted
this motion and issued an alias writ of execution. 10
On February 21, 2006, the respondents issued a Memorandum
11 directing the petitioners to report for work on February 24,
2006. The petitioners failed to report for work on the appointed
date. On February 28, 2006, the respondents moved before the LA to
suspend the order for the petitioners' reinstatement. 12
Meanwhile, the respondents appealed with the NLRC the May 31,
2005 illegal dismissal ruling of the LA.
In an order dated August 15, 2006, 13 the NLRC dismissed the
respondents' appeal for non-perfection. The NLRC likewise denied
the respondents' motion for reconsideration in its November 29,
2006 resolution, prompting the respondents to file before the CA a
petition for certiorari.
The NLRC issued an Entry of Judgment on February 6, 2007 declaring
its November 29, 2006 resolution final and executory. The petitioners
forthwith filed with the LA another motion for the issuance of a writ
of execution, which the LA granted on April 24, 2007. The LA also
issued another writ of execution. 14 A Notice of Garnishment was
thereafter issued to the respondents' depositary bank
Metrobank-San Lorenzo Village Branch, Makati City in the
amount of P1,900,000.00 on June 6, 2007.
On December 18, 2007, the CA rendered its decision (on the illegal
dismissal ruling of the LA) partly granting the respondents' petition.
The CA declared the petitioners' dismissal valid and awarded them
P30,000.00 as nominal damages for the respondents' failure to
observe due process.
The records show that the petitioners appealed the December 18,
2007 CA decision with this Court. In a resolution dated August 4,
2008, the Court denied the petition. The Court likewise denied the
petitioners' subsequent motion for reconsideration, and thereafter
issued an Entry of Judgment certifying that its August 4, 2008
resolution had become final and executory on March 9, 2009.
On January 31, 2008, the petitioners filed with the LA an Urgent ExParte Motion for the Immediate Release of the Garnished Amount.
In its March 13, 2008 order, 15 the LA granted the petitioners'
motion; it directed Metrobank-San Lorenzo to release the

P1,900,000.00 garnished amount. The LA found valid and


meritorious the respondents' claim for accrued wages in view of the
respondents' refusal to reinstate the petitioners despite the final and
executory nature of the reinstatement aspect of its (LA's) May 31,
2005 decision. The LA noted that as of the December 18, 2007 CA
decision (that reversed the illegal dismissal findings of the LA), the
petitioners' accrued wages amounted to P3,078,366.33.
In its July 16, 2008 resolution, 16 the NLRC affirmed in toto the
LA's March 13, 2008 order. The NLRC afterwards denied the
respondents' motion for reconsideration for lack of merit. 17
The respondents assailed the July 16, 2008 decision and September
29, 2009 resolution of the NLRC via a petition for certiorari filed with
the CA. DIETcH
The CA's ruling
The CA granted the respondents' petition. 18 It reversed and set
aside the July 16, 2008 decision and the September 29, 2009
resolution of the NLRC and remanded the case to the Computation
and Examination Unit of the NLRC for the proper computation of the
petitioners' accrued wages, computed up to February 24, 2006.
The CA agreed that the reinstatement aspect of the LA's decision is
immediately executory even pending appeal, such that the employer
is obliged to reinstate and pay the wages of the dismissed employee
during the period of appeal until the decision (finding the employee
illegally dismissed including the reinstatement order) is reversed by
a higher court. Applying this principle, the CA noted that the
petitioners' accrued wages could have been properly computed until
December 18, 2007, the date of the CA's decision finding the
petitioners validly dismissed.
The CA, however, pointed out that when the LA's decision is
"reversed by a higher tribunal, an employee may be barred from
collecting the accrued wages if shown that the delay in enforcing the
reinstatement pending appeal was without fault" on the employer's
part. In this case, the CA declared that the delay in the execution of
the reinstatement order was not due to the respondents' unjustified
act or omission. Rather, the petitioners' refusal to comply with the
February 21, 2006 return-to-work Memorandum that the respondents
issued and personally delivered to them (the petitioners) prevented
the enforcement of the reinstatement order.
Thus, the CA declared that, given this peculiar circumstance (of the
petitioners' failure to report for work), the petitioners' accrued wages
should only be computed until February 24, 2006 when they were

supposed to report for work per the return-to-work Memorandum.


Accordingly, the CA reversed, for grave abuse of discretion, the
NLRC's July 16, 2008 decision that affirmed the LA's order to release
the garnished amount.
The Petition
The petitioners argue that the CA gravely erred when it ruled,
contrary to Article 223, paragraph 3 of the Labor Code,that the
computation of their accrued wages stopped when they failed to
report for work on February 24, 2006. They maintain that the
February 21, 2006 Memorandum was merely an afterthought on the
respondents' part to make it appear that they complied with the LA's
October 7, 2005 writ of execution. They likewise argue that had the
respondents really intended to have them report for work to comply
with the writ of execution, the respondents could and should have
issued the Memorandum immediately after the LA issued the first
writ of execution. As matters stand, the respondents issued the
Memorandum more than four months after the issuance of this writ
and only after the LA issued the alias writ of execution on February
16, 2006.
Additionally, the petitioners direct the Court's attention to the
several pleadings that the respondents filed to prevent the execution
of the reinstatement aspect of the LA's May 31, 2005 decision, i.e.,
the Opposition to the Issuance of the Writ of Execution, the Motion to
Quash the Writ of Execution and the Motion to Suspend the Order of
Reinstatement. They also point out that in all these pleadings, the
respondents claimed that strained relationship barred their (the
petitioners') reinstatement, evidently confirming the respondents'
lack of intention to reinstate them.
Finally, the petitioners point out that the February 21, 2006
Memorandum directed them to report for work at Clark Field,
Angeles, Pampanga instead of at the NAIA-Domestic Airport in Pasay
City where they had been assigned. They argue that this directive to
report for work at Clark Field violates Article 223, paragraph 3 of the
Labor Code that requires the employee's reinstatement to be under
the same terms and conditions prevailing prior to the dismissal.
Moreover, they point out that the respondents handed the
Memorandum only to Pelaez, who did not act in representation of the
other petitioners, and only in the afternoon of February 23, 2006.
Thus, the petitioners claim that the delay in their reinstatement was
in fact due to the respondents' unjustified acts and that the
respondents never really complied with the LA's reinstatement order.
CIHTac

The Case for the Respondents


The respondents counter, in their comment, 19 that the issues that
the petitioners raise in this petition are all factual in nature and had
already considered and explained in the CA decision. In any case, the
respondents maintain that the petitioners were validly dismissed and
that they complied with the LA's reinstatement order when it
directed the petitioners to report back to work, which directive the
petitioners did not heed.
The respondents add that while the reinstatement of an employee
found illegally dismissed is immediately executory, the employer is
nevertheless not prohibited from questioning this rule especially
when the latter has valid and legal reasons to oppose the
employee's reinstatement. In the petitioners' case, the respondents
point out that their relationship had been so strained that
reinstatement was no longer possible. Despite this strained
relationship, the respondents point out that they still required the
petitioners to report back to work if only to comply with the LA's
reinstatement order. Instead of reporting for work as directed, the
petitioners, however, insisted for a payroll reinstatement, which
option the law grants to them (the respondents) as employer. Also,
contrary to the petitioners' claim, the Memorandum directed them to
report at Clark Field, Pampanga only for a re-orientation of their
respective duties and responsibilities.
Thus, relying on the CA's ruling, the respondents claim that the delay
in the petitioners' reinstatement was in fact due to the latter's
refusal to report for work after the issuance of the February 21, 2006
Memorandum in addition to their strained relationship.
The Court's Ruling
We GRANT the petition.
Preliminary considerations: jurisdictional
limitations of the Court's Rule 45 review of
the CA's Rule 65 decision in labor cases
In a Rule 45 petition for review on certiorari, what we review are the
legal errors that the CA may have committed in the assailed
decision, in contrast with the review for jurisdictional errors that we
undertake in an original certiorari action. In reviewing the legal
correctness of the CA decision in a labor case taken under Rule 65 of
the Rules of Court, we examine the CA decision in the context that it
determined the presence or the absence of grave abuse of discretion
in the NLRC decision before it and not on the basis of whether the
NLRC decision, on the merits of the case, was correct. Otherwise

stated, we proceed from the premise that the CA undertook a Rule


65 review, not a review on appeal, of the NLRC decision challenged
before it. Within this narrow scope of our Rule 45 review, the
question that we ask is: Did the CA correctly determine whether the
NLRC committed grave abuse of discretion in ruling on the case? 20
In addition, the Court's jurisdiction in a Rule 45 petition for review on
certiorari is limited to resolving only questions of law.
The present petition essentially raises the question whether the
petitioners may recover the accrued wages prior to the CA's reversal
of the LA's May 31, 2005 decision. This is a question of law that falls
well within the Court's power in a Rule 45 petition.
Resolution of this question of law, however, is inextricably linked with
the largely factual issue of whether the accrued wages should be
computed until December 17, 2008 when the CA reversed the illegal
dismissal findings of the LA or only until February 24, 2006 when the
petitioners were supposed to report for work per the February 21,
2006 Memorandum. In either case, the determination of this factual
issue presupposes another factual issue, i.e., whether the delay in
the execution of the reinstatement order was due to the
respondents' fault. As questions of fact, they are proscribed by our
Rule 45 jurisdiction; we generally cannot address these factual
issues except to the extent necessary to determine whether the CA
correctly found the NLRC in grave abuse of discretion in affirming
the release of the garnished amount despite the respondents'
issuance of and the petitioners' failure to comply with the February
21, 2006 return-to-work Memorandum.
The jurisdictional limitations of our Rule 45 review of the CA's Rule
65 decision in labor cases, notwithstanding, we resolve this petition's
factual issues for we find legal errors in the CA's decision. Our
consideration of the facts taken within this narrow scope of our
factual review power convinced us, as our subsequent discussion will
show, that no grave abuse of discretion attended the NLRC decision.
DSHTaC
Nature
of
the
reinstatement
aspect
of
the
LA's
decision
on
a
finding
of
illegal
dismissal
Article 223 (now Article 229) 21 of the Labor Code governs appeals
from, and the execution of, the LA's decision. Pertinently, paragraph
3, Article 223 of the Labor Code provides:
Article 223. APPEAL.

xxx xxx xxx


In any event, the decision of the Labor Arbiter reinstating
a dismissed or separated employee, insofar as the
reinstatement
aspect
is
concerned,
shall
immediately be executory, pending appeal . The
employee shall either be admitted back to work under the
same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer,
merely reinstated in the payroll. The posting of a bond by
the employer shall not stay the execution for
reinstatement
provided
herein.
[Emphasis
and
underscoring supplied]
Under paragraph 3, Article 223 of the Labor Code,the LA's order for
the reinstatement of an employee found illegally dismissed is
immediately executory even during pendency of the employer's
appeal from the decision. Under this provision, the employer must
reinstate the employee either by physically admitting him under
the conditions prevailing prior to his dismissal, and paying his wages;
or, at the employer's option, merely reinstating the employee in the
payroll until the decision is reversed by the higher court. 22 Failure
of the employer to comply with the reinstatement order, by
exercising the options in the alternative, renders him liable to pay
the employee's salaries. 23
Otherwise stated, a dismissed employee whose case was favorably
decided by the LA is entitled to receive wages pending appeal
upon reinstatement, which reinstatement is immediately
executory. 24 Unless the appellate tribunal issues a restraining
order, the LA is duty bound to implement the order of reinstatement
and the employer has no option but to comply with it. 25
Moreover, and equally worth emphasizing, is that an order of
reinstatement issued by the LA is self-executory, i.e., the
dismissed employee need not even apply for and the LA need not
even issue a writ of execution to trigger the employer's duty to
reinstate the dismissed employee. In Pioneer Texturizing Corp. v.
NLRC, et al., 26 decided in 1997, the Court clarified once and for all
this self-executory nature of a reinstatement order. After tracing back
the various Court rulings interpreting the amendments introduced by
Republic Act No. 6715 27 on the reinstatement aspect of a labor
decision under Article 223 of the Labor Code,the Court concluded
that to otherwise "require the application for and issuance of a writ
of execution as prerequisites for the execution of a reinstatement
award would certainly betray and run counter to the very object and

intent of Article 223,


reinstatement order." 28

i.e.,

the

immediate

execution

of

In short, therefore, with respect to decisions reinstating employees,


the law itself has determined a sufficiently overwhelming reason for
its immediate and automatic execution even pending appeal. 29 The
employer is duty-bound to reinstate the employee, failing which, the
employer is liable instead to pay the dismissed employee's salary.
The Court's consistent and prevailing treatment and interpretation of
the reinstatement order as immediately enforceable, in fact, merely
underscores the right to security of tenure of employees that the
Constitution 30 protects.
The employer is obliged to pay the
dismissed employee's salary if he
refuses to reinstate until actual
reinstatement or reversal by a higher
tribunal; circumstances that may bar an
employee from receiving the accrued wages
As we amply discussed above, an employer is obliged to
immediately reinstate the employee upon the LA's finding of illegal
dismissal; if the employer fails, it is liable to pay the salary of the
dismissed employee. Of course, it is not always the case that the
LA's finding of illegal dismissal is, on appeal by the employer, upheld
by the appellate court. After the LA's decision is reversed by a higher
tribunal, the employer's duty to reinstate the dismissed employee is
effectively terminated. This means that an employer is no longer
obliged to keep the employee in the actual service or in the payroll.
The employee, in turn, is not required to return the wages that he
had received prior to the reversal of the LA's decision. 31
The reversal by a higher tribunal of the LA's finding (of illegal
dismissal), notwithstanding, an employer, who, despite the LA's
order of reinstatement, did not reinstate the employee during the
pendency of the appeal up to the reversal by a higher tribunal may
still be held liable for the accrued wages of the employee, i.e., the
unpaid salary accruing up to the time the higher tribunal reverses
the decision. 32 The rule, therefore, is that an employee may still
recover the accrued wages up to and despite the reversal by the
higher tribunal. This entitlement of the employee to the accrued
wages proceeds from the immediate and self-executory nature of the
reinstatement aspect of the LA's decision. TEHIaA
By way of exception to the above rule, an employee may be barred
from collecting the accrued wages if shown that the delay in
enforcing the reinstatement pending appeal was without fault on the

part of the employer. To determine whether an employee is thus


barred, two tests must be satisfied: (1) actual delay or the fact that
the order of reinstatement pending appeal was not executed prior to
its reversal; and (2) the delay must not be due to the
employer's unjustified act or omission. Note that under the
second test, the delay must be without the employer's fault. If the
delay is due to the employer's unjustified refusal, the
employer may still be required to pay the salaries
notwithstanding the reversal of the LA's decision. 33
Application of the two-fold test; the
petitioners are entitled to receive their
accrued salaries until December 18, 2007
As we earlier pointed out, the core issue to be resolved is whether
the petitioners may recover the accrued wages until the CA's
reversal of the LA's decision. An affirmative answer to this question
will lead us to reverse the assailed CA decision for legal errors and
reinstate the NLRC's decision affirming the release of the garnished
amount. Otherwise, we uphold the CA's decision to be legally
correct. To resolve this question, we apply the two-fold test.
First, the existence of delay whether there was actual delay or
whether the order of reinstatement pending appeal was not
executed prior to its reversal? We answer this test in the affirmative.
To recall, on May 31, 2005, the LA rendered the decision finding the
petitioners illegally dismissed and ordering their immediate
reinstatement. Per the records, the respondents received copy of this
decision on July 8, 2005. On August 20, 2005, the petitioners filed
before the LA a Motion for Issuance of Writ of Execution for their
immediate reinstatement. The LA issued the Writ of Execution on
October 7, 2005. From the time the respondents received copy of the
LA's decision, and the issuance of the writ of execution, until the CA
reversed this decision on December 17, 2008, the respondents had
not reinstated the petitioners, either by actual reinstatement or in
the payroll. This continued non-execution of the reinstatement order
in fact moved the LA to issue an alias writ of execution on February
16, 2006 and another writ of execution on April 24, 2007.
From these facts and without doubt, there was actual delay in the
execution of the reinstatement aspect of the LA's May 31, 2005
decision before it was reversed in the CA's decision.
Second, the cause of the delay whether the delay was not due
to the employer's unjustified act or omission. We answer this test in
the negative; we find that the delay in the execution of the

reinstatement pending
unjustified acts.

appeal

was

due

to

the

respondents'

In reversing, for grave abuse of discretion, the NLRC's order affirming


the release of the garnished amount, the CA relied on the fact of the
issuance of the February 21, 2006 Memorandum and of the
petitioners' failure to comply with its return-to-work directive. In
other words, with the issuance of this Memorandum, the CA
considered the respondents as having sufficiently complied with their
obligation to reinstate the petitioners. And, the subsequent delay in
or the non-execution of the reinstatement order was no longer the
respondents' fault, but rather of the petitioners who refused to report
back to work despite the directive.
Our careful consideration of the facts and the circumstances that
surrounded the case convinced us that the delay in the
reinstatement pending appeal was due to the respondents' fault. For
one, the respondents filed several pleadings to suspend the
execution of the LA's reinstatement order, i.e., the opposition to the
petitioners' motion for execution filed on October 3, 2005; the
motion to quash the October 7, 2005 writ of execution with prayer to
hold in abeyance the implementation of the reinstatement order;
and the motion to suspend the order for the petitioners'
reinstatement filed on February 28, 2006 after the LA issued the
February 16, 2006 alias writ of execution. These pleadings, to our
mind, show a determined effort on the respondents' part to prevent
or suspend the execution of the reinstatement pending appeal.
EaCSTc
Another reason is that the respondents, contrary to the CA's
conclusion, did not sufficiently notify the petitioners of their intent to
actually reinstate them; neither did the respondents give them
ample opportunity to comply with the return-to-work directive. We
note that the respondents delivered the February 21, 2006
Memorandum (requiring the petitioners to report for work on
February 24, 2006) only in the afternoon of February 23, 2006.
Worse, the respondents handed the notice to only one of the
petitioners Pelaez who did not act in representation of the
others. Evidently, the petitioners could not reasonably be expected
to comply with a directive that they had no or insufficient notice of.
Lastly, the petitioners continuously and actively pursued the
execution of the reinstatement aspect of the LA's decision, i.e., by
filing several motions for execution of the reinstatement order, and
motion to cite the respondents in contempt and re-computation of

the accrued wages for the respondents' continued failure to reinstate


them.
These facts altogether show that the respondents were not at all
sincere in reinstating the petitioners. These facts when taken
together with the fact of delay reveal the respondents' obstinate
resolve and willful disregard of the immediate and self-executory
nature of the reinstatement aspect of the LA's decision.
A further and final point that we considered in concluding that the
delay was due to the respondents' fault is the fact that per the 2005
Revised Rules of Procedure of the NLRC (2005 NLRC Rules), 34
employers are required to submit a report of compliance within ten
(10) calendar days from receipt of the LA's decision, noncompliance
with which signifies a clear refusal to reinstate. Arguably, the 2005
NLRC Rules took effect only on January 7, 2006; hence, the
respondents could not have been reasonably expected to comply
with this duty that was not yet in effect when the LA rendered its
decision (finding illegal dismissal) and issued the writ of execution in
2005. Nevertheless, when the LA issued the February 16, 2006 alias
writ of execution and the April 24, 2007 writ of execution, the 2005
NLRC Rules was already in place such that the respondents had
become duty-bound to submit the required compliance report; their
noncompliance with this rule all the more showed a clear and
determined refusal to reinstate.
All told, under the facts and the surrounding circumstances, the
delay was due to the acts of the respondents that we find were
unjustified. We reiterate and emphasize, Article 223, paragraph 3,
of the Labor Code mandates the employer to immediately
reinstate the dismissed employee, either by actually reinstating
him/her under the conditions prevailing prior to the dismissal or, at
the option of the employer, in the payroll. The respondents' failure in
this case to exercise either option rendered them liable for the
petitioners' accrued salary until the LA decision was reversed by the
CA on December 17, 2008. We, therefore, find that the NLRC, in
affirming the release of the garnished amount, merely implemented
the mandate of Article 223; it simply recognized as immediate and
self-executory the reinstatement aspect of the LA's decision.
Accordingly, we reverse for legal errors the CA decision. We find no
grave abuse of discretion attended the NLRC's July 16, 2008
resolution that affirmed the March 13, 2008 decision of the LA
granting the release of the garnished amount.

WHEREFORE, in light of these considerations, we hereby GRANT the


petition. We REVERSE and SET ASIDE the September 30, 2010
decision and the January 13, 2011 resolution of the Court of Appeals
(CA) in CA-G.R. Sp No. 112011. Accordingly, we REINSTATE the July
16, 2008 decision of the National Labor Relations Commission
(NLRC) affirming the March 13, 2008 order of the Labor Arbiter in
NLRC Case No. 00-04-05469-2004.
Costs against the respondents South East Asian Airlines and Irene
Dornier. THIASE
SO ORDERED.
Carpio, Del Castillo, Perez and Perlas-Bernabe, JJ., concur.
||| (Bergonio, Jr., v. South East Asian Airlines, G.R. No. 195227, [April
21, 2014])