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G.R. No.

L-48645 January 7, 1987 ordered the individual complainants to disaffiliate from the
complainant union; and that management dismissed the
"BROTHERHOOD" LABOR UNITY MOVEMENT OF THE individual complainants when they insisted on their union
PHILIPPINES, ANTONIO CASBADILLO, PROSPERO membership.
TABLADA, ERNESTO BENGSON, PATRICIO SERRANO,
ANTONIO B. BOBIAS, VIRGILIO ECHAS, DOMINGO On their part, respondents moved for the dismissal of the
PARINAS, NORBERTO GALANG, JUANITO NAVARRO, complaint on the grounds that the complainants are not and
NESTORIO MARCELLANA, TEOFILO B. CACATIAN, RUFO have never been employees of respondent company but
L. EGUIA, CARLOS SUMOYAN, LAMBERTO RONQUILLO, employees of the independent contractor; that respondent
ANGELITO AMANCIO, DANILO B. MATIAR, ET company has never had control over the means and methods
AL., petitioners, followed by the independent contractor who enjoyed full
vs. authority to hire and control said employees; and that the
HON. RONALDO B. ZAMORA, PRESIDENTIAL ASSISTANT individual complainants are barred by estoppel from
FOR LEGAL AFFAIRS, OFFICE OF THE PRESIDENT, HON. asserting that they are employees of respondent company.
AMADO G. INCIONG, UNDERSECRETARY OF LABOR,
SAN MIGUEL CORPORATION, GENARO OLIVES, ENRIQUE While pending with the Court of Industrial Relations CIR
CAMAHORT, FEDERICO OATE, ERNESTO VILLANUEVA, pleadings and testimonial and documentary evidences were
ANTONIO BOCALING and GODOFREDO duly presented, although the actual hearing was delayed by
CUETO, respondents. several postponements. The dispute was taken over by the
National Labor Relations Commission (NLRC) with the
GUTIERREZ, JR., J.: decreed abolition of the CIR and the hearing of the case
intransferably commenced on September 8, 1975.
The elemental question in labor law of whether or not an
employer-employee relationship exists between petitioners- On February 9, 1976, Labor Arbiter Nestor C. Lim found for
members of the "Brotherhood Labor Unit Movement of the complainants which was concurred in by the NLRC in a
Philippines" (BLUM) and respondent San Miguel Corporation, decision dated June 28, 1976. The amount of backwages
is the main issue in this petition. The disputed decision of awarded, however, was reduced by NLRC to the equivalent of
public respondent Ronaldo Zamora, Presidential Assistant for one (1) year salary.
legal Affairs, contains a brief summary of the facts involved:
On appeal, the Secretary in a decision dated June 1, 1977,
1. The records disclose that on July 11, 1969, BLUM filed a set aside the NLRC ruling, stressing the absence of an
complaint with the now defunct Court of Industrial Relations, employer-mployee relationship as borne out by the records of
charging San Miguel Corporation, and the following officers: the case. ...
Enrique Camahort, Federico Ofiate Feliciano Arceo, Melencio
Eugenia Jr., Ernesto Villanueva, Antonio Bocaling and The petitioners strongly argue that there exists an employer-
Godofredo Cueto of unfair labor practice as set forth in employee relationship between them and the respondent
Section 4 (a), sub-sections (1) and (4) of Republic Act No. 875 company and that they were dismissed for unionism, an act
and of Legal dismissal. It was alleged that respondents
constituting unfair labor practice "for which respondents Petitioners were paid every ten (10) days on a piece rate
must be made to answer." basis, that is, according to the number of cartons and
wooden shells they were able to load, unload, or pile. The
Unrebutted evidence and testimony on record establish that group leader notes down the number or volume of work that
the petitioners are workers who have been employed at the each individual worker has accomplished. This is then made
San Miguel Parola Glass Factory since 1961, averaging about the basis of a report or statement which is compared with the
seven (7) years of service at the time of their termination. notes of the checker and warehousemen as to whether or not
They worked as "cargadores" or "pahinante" at the SMC Plant they tally. Final approval of report is by officer-in-charge
loading, unloading, piling or palleting empty bottles and Camahort. The pay check is given to the group leaders for
woosen shells to and from company trucks and warehouses. encashment, distribution, and payment to the petitioners in
At times, they accompanied the company trucks on their accordance with payrolls prepared by said leaders. From the
delivery routes. total earnings of the group, the group leader gets a
The petitioners first reported for work to Superintendent-in- participation or share of ten (10%) percent plus an additional
Charge Camahort. They were issued gate passes signed by amount from the earnings of each individual.
Camahort and were provided by the respondent company The petitioners worked exclusive at the SMC plant, never
with the tools, equipment and paraphernalia used in the having been assigned to other companies or departments of
loading, unloading, piling and hauling operation. SMC plant, even when the volume of work was at its
Job orders emanated from Camahort. The orders are then minimum. When any of the glass furnaces suffered a
transmitted to an assistant-officer-in-charge. In turn, the breakdown, making a shutdown necessary, the petitioners
assistant informs the warehousemen and checkers regarding work was temporarily suspended. Thereafter, the petitioners
the same. The latter, thereafter, relays said orders to the would return to work at the glass plant.
capatazes or group leaders who then give orders to the Sometime in January, 1969, the petitioner workers
workers as to where, when and what to load, unload, pile, numbering one hundred and forty (140) organized and
pallet or clean. affiliated themselves with the petitioner union and engaged
Work in the glass factory was neither regular nor continuous, in union activities. Believing themselves entitled to overtime
depending wholly on the volume of bottles manufactured to and holiday pay, the petitioners pressed management, airing
be loaded and unloaded, as well as the business activity of other grievances such as being paid below the minimum
the company. Work did not necessarily mean a full eight (8) wage law, inhuman treatment, being forced to borrow at
hour day for the petitioners. However, work,at times, usurious rates of interest and to buy raffle tickets, coerced by
exceeded the eight (8) hour day and necessitated work on withholding their salaries, and salary deductions made
Sundays and holidays. For this, they were neither paid without their consent. However, their gripes and grievances
overtime nor compensation for work on Sundays and were not heeded by the respondents.
holidays. On February 6, 1969, the petitioner union filed a notice of
strike with the Bureau of Labor Relations in connection with
the dismissal of some of its members who were allegedly dismissal; and (d) the employer's power to control the
castigated for their union membership and warned that employee with respect to the means and methods by which
should they persist in continuing with their union activities the work is to be accomplished. It. is the called "control test"
they would be dismissed from their jobs. Several conciliation that is the most important element (Investment Planning
conferences were scheduled in order to thresh out their Corp. of the Phils. v. The Social Security System, 21 SCRA
differences, On February 12, 1969, union member Rogelio 924; Mafinco Trading Corp. v. Ople, supra,and Rosario
Dipad was dismissed from work. At the scheduled conference Brothers, Inc. v. Ople, 131 SCRA 72).
on February 19, 1969, the complainant union through its
officers headed by National President Artemio Portugal Sr., Applying the above criteria, the evidence strongly indicates
presented a letter to the respondent company containing the existence of an employer-employee relationship between
proposals and/or labor demands together with a request for petitioner workers and respondent San Miguel Corporation.
recognition and collective bargaining. The respondent asserts that the petitioners are employees of
the Guaranteed Labor Contractor, an independent labor
San Miguel refused to bargain with the petitioner union contracting firm.
alleging that the workers are not their employees.
The facts and evidence on record negate respondent SMC's
On February 20, 1969, all the petitioners were dismissed claim.
from their jobs and, thereafter, denied entrance to
respondent company's glass factory despite their regularly The existence of an independent contractor relationship is
reporting for work. A complaint for illegal dismissal and unfair generally established by the following criteria: "whether or
labor practice was filed by the petitioners. not the contractor is carrying on an independent business;
the nature and extent of the work; the skill required; the term
The case reaches us now with the same issues to be resolved and duration of the relationship; the right to assign the
as when it had begun. performance of a specified piece of work; the control and
supervision of the work to another; the employer's power
The question of whether an employer-employee relationship with respect to the hiring, firing and payment of the
exists in a certain situation continues to bedevil the courts. contractor's workers; the control of the premises; the duty to
Some businessmen try to avoid the bringing about of an supply the premises tools, appliances, materials and labor;
employer-employee relationship in their enterprises because and the mode, manner and terms of payment" (56 CJS
that judicial relation spawns obligations connected with Master and Servant, Sec. 3(2), 46; See also 27 AM. Jur.
workmen's compensation, social security, medicare, Independent Contractor, Sec. 5, 485 and Annex 75 ALR
minimum wage, termination pay, and unionism. (Mafinco 7260727)
Trading Corporation v. Ople, 70 SCRA 139).
None of the above criteria exists in the case at bar.
In determining the existence of an employer-employee
relationship, the elements that are generally considered are Highly unusual and suspect is the absence of a written
the following: (a) the selection and engagement of the contract to specify the performance of a specified piece of
employee; (b) the payment of wages; (c) the power of work, the nature and extent of the work and the term and
duration of the relationship. The records fail to show that a employment of complainants a regular one, in the sense that
large commercial outfit, such as the San Miguel Corporation, it does not depend on any specific project or seasonable
entered into mere oral agreements of employment or labor activity. (NLRC Decision, p. 94, Rollo).lwphl@it
contracting where the same would involve considerable
expenses and dealings with a large number of workers over a so as it with petitioners in the case at bar. In fact, despite
long period of time. Despite respondent company's past shutdowns of the glass plant for repairs, the petitioners,
allegations not an iota of evidence was offered to prove the thereafter, promptly returned to their jobs, never having
same or its particulars. Such failure makes respondent SMC's been replaced, or assigned elsewhere until the present
stand subject to serious doubts. controversy arose. The term of the petitioners' employment
appears indefinite. The continuity and habituality of
Uncontroverted is the fact that for an average of seven (7) petitioners' work bolsters their claim of employee status vis-
years, each of the petitioners had worked continuously and a-vis respondent company,
exclusively for the respondent company's shipping and
warehousing department. Considering the length of time that Even under the assumption that a contract of employment
the petitioners have worked with the respondent company, had indeed been executed between respondent SMC and the
there is justification to conclude that they were engaged to alleged labor contractor, respondent's case will,
perform activities necessary or desirable in the usual nevertheless, fail.
business or trade of the respondent, and the petitioners are, Section 8, Rule VIII, Book III of the Implementing Rules of the
therefore regular employees (Phil. Fishing Boat Officers and Labor Code provides:
Engineers Union v. Court of Industrial Relations, 112 SCRA
159 and RJL Martinez Fishing Corporation v. National Labor Job contracting. There is job contracting permissible under
Relations Commission, 127 SCRA 454). the Code if the following conditions are met:

As we have found in RJL Martinez Fishing Corporation v. (1) The contractor carries on an independent business and
National Labor Relations Commission (supra): undertakes the contract work on his own account under his
own responsibility according to his own manner and method,
... [T]he employer-employee relationship between the parties free from the control and direction of his employer or
herein is not coterminous with each loading and unloading principal in all matters connected with the performance of
job. As earlier shown, respondents are engaged in the the work except as to the results thereof; and
business of fishing. For this purpose, they have a fleet of
fishing vessels. Under this situation, respondents' activity of (2) The contractor has substantial capital or investment in
catching fish is a continuous process and could hardly be the form of tools, equipment, machineries, work premises,
considered as seasonal in nature. So that the activities and other materials which are necessary in the conduct of his
performed by herein complainants, i.e. unloading the catch of business.
tuna fish from respondents' vessels and then loading the
same to refrigerated vans, are necessary or desirable in the We find that Guaranteed and Reliable Labor contractors have
business of respondents. This circumstance makes the neither substantial capital nor investment to qualify as an
independent contractor under the law. The premises, tools,
equipment and paraphernalia used by the petitioners in their independent contractor considers no business expenses or
jobs are admittedly all supplied by respondent company. It is capital outlay of the latter. Nor is the profit or gain of the
only the manpower or labor force which the alleged alleged contractor in the conduct of its business provided for
contractors supply, suggesting the existence of a "labor only" as an amount over and above the workers' wages. Instead,
contracting scheme prohibited by law (Article 106, 109 of the the alleged contractor receives a percentage from the total
Labor Code; Section 9(b), Rule VIII, Book III, Implementing earnings of all the workers plus an additional amount
Rules and Regulations of the Labor Code). In fact, even the corresponding to a percentage of the earnings of each
alleged contractor's office, which consists of a space at individual worker, which, perhaps, accounts for the
respondent company's warehouse, table, chair, typewriter petitioners' charge of unauthorized deductions from their
and cabinet, are provided for by respondent SMC. It is salaries by the respondents.
therefore clear that the alleged contractors have no capital
outlay involved in the conduct of its business, in the Anent the argument that the petitioners are not employees
maintenance thereof or in the payment of its workers' as they worked on piece basis, we merely have to cite our
salaries. rulings in Dy Keh Beng v. International Labor and Marine
Union of the Philippines (90 SCRA 161), as follows:
The payment of the workers' wages is a critical factor in
determining the actuality of an employer-employee "[C]ircumstances must be construed to determine indeed if
relationship whether between respondent company and payment by the piece is just a method of compensation and
petitioners or between the alleged independent contractor does not define the essence of the relation. Units of time . . .
and petitioners. It is important to emphasize that in a truly and units of work are in establishments like respondent (sic)
independent contractor-contractee relationship, the fees are just yardsticks whereby to determine rate of compensation,
paid directly to the manpower agency in lump sum without to be applied whenever agreed upon. We cannot construe
indicating or implying that the basis of such lump sum is the payment by the piece where work is done in such an
salary per worker multiplied by the number of workers establishment so as to put the worker completely at liberty to
assigned to the company. This is the rule inSocial Security turn him out and take in another at pleasure."
System v. Court of Appeals (39 SCRA 629, 635). Article 106 of the Labor Code provides the legal effect of a
The alleged independent contractors in the case at bar were labor only contracting scheme, to wit:
paid a lump sum representing only the salaries the workers ... the person or intermediary shall be considered merely as
were entitled to, arrived at by adding the salaries of each an agent of the employer who shall be responsible to the
worker which depend on the volume of work they. had workers in the same manner and extent as if the latter were
accomplished individually. These are based on payrolls, directly employed by him.
reports or statements prepared by the workers' group leader,
warehousemen and checkers, where they note down the Firmly establishing respondent SMC's role as employer is the
number of cartons, wooden shells and bottles each worker control exercised by it over the petitioners that is, control in
was able to load, unload, pile or pallet and see whether they the means and methods/manner by which petitioners are to
tally. The amount paid by respondent company to the alleged
go about their work, as well as in disciplinary measures that the closure of respondent's warehouse was merely a
imposed by it. ploy to get rid of the petitioners, who were then agitating the
respondent company for benefits, reforms and collective
Because of the nature of the petitioners' work as cargadores bargaining as a union. There is no showing that petitioners
or pahinantes, supervision as to the means and manner of had been remiss in their obligations and inefficient in their
performing the same is practically nil. For, how many ways jobs to warrant their separation.
are there to load and unload bottles and wooden shells? The
mere concern of both respondent SMC and the alleged As to the charge of unfair labor practice because of SMC's
contractor is that the job of having the bottles and wooden refusal to bargain with the petitioners, it is clear that the
shells brought to and from the warehouse be done. More respondent company had an existing collective bargaining
evident and pronounced is respondent company's right to agreement with the IBM union which is the recognized
control in the discipline of petitioners. Documentary evidence collective bargaining representative at the respondent's glass
presented by the petitioners establish respondent SMC's right plant.
to impose disciplinary measures for violations or infractions
of its rules and regulations as well as its right to recommend There being a recognized bargaining representative of all
transfers and dismissals of the piece workers. The inter-office employees at the company's glass plant, the petitioners
memoranda submitted in evidence prove the company's cannot merely form a union and demand bargaining. The
control over the petitioners. That respondent SMC has the Labor Code provides the proper procedure for the recognition
power to recommend penalties or dismissal of the piece of unions as sole bargaining representatives. This must be
workers, even as to Abner Bungay who is alleged by SMC to followed.
be a representative of the alleged labor contractor, is the WHEREFORE, IN VIEW OF THE FOREGOING, the petition is
strongest indication of respondent company's right of control GRANTED. The San Miguel Corporation is hereby ordered to
over the petitioners as direct employer. There is no evidence REINSTATE petitioners, with three (3) years backwages.
to show that the alleged labor contractor had such right of However, where reinstatement is no longer possible, the
control or much less had been there to supervise or deal with respondent SMC is ordered to pay the petitioners separation
the petitioners. pay equivalent to one (1) month pay for every year of
The petitioners were dismissed allegedly because of the service.
shutdown of the glass manufacturing plant. Respondent SO ORDERED.
company would have us believe that this was a case of
retrenchment due to the closure or cessation of operations of
the establishment or undertaking. But such is not the case
here. The respondent's shutdown was merely temporary, one
of its furnaces needing repair. Operations continued after
such repairs, but the petitioners had already been refused
entry to the premises and dismissed from respondent's
service. New workers manned their positions. It is apparent
G.R. No. 87700 June 13, 1990

SAN MIGUEL CORPORATION EMPLOYEES UNION-


PTGWO, DANIEL S.L. BORBON II, HERMINIA REYES,
MARCELA PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS
PRESIDING JUDGE OF BRANCH 166, RTC, PASIG, and
SAN MIGUEL CORPORATION, respondents.

Romeo C. Lagman for petitioners.

Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for


respondents.

MELENCIO-HERRERA, J.:

Respondent Judge of the Regional Trial Court of Pasig, Branch


166, is taken to task by petitioners in this special civil action
for certiorari and Prohibition for having issued the challenged (CBA) effective 1 July 1986 to 30 June 1989 (Annex A,
Writ of Preliminary Injunction on 29 March 1989 in Civil Case SanMig's Comment). Section 1 of their CBA specifically
No. 57055 of his Court entitled "San Miguel Corporation vs. provides that "temporary, probationary, or contract
SMCEU-PTGWO, et als." employees and workers are excluded from the bargaining
unit and, therefore, outside the scope of this Agreement."
Petitioners' plea is that said Writ was issued without or in
excess of jurisdiction and with grave abuse of discretion, a In a letter, dated 20 November 1988 (Annex C, Petition), the
labor dispute being involved. Private respondent San Miguel Union advised SanMig that some Lipercon and D'Rite workers
Corporation (SanMig. for short), for its part, defends the Writ had signed up for union membership and sought the
on the ground of absence of any employer-employee regularization of their employment with SMC. The Union
relationship between it and the contractual workers alleged that this group of employees, while appearing to be
employed by the companies Lipercon Services, Inc. contractual workers supposedly independent contractors,
(Lipercon) and D'Rite Service Enterprises (D'Rite), besides have been continuously working for SanMig for a period
the fact that the Union is bereft of personality to represent ranging from six (6) months to fifteen (15) years and that
said workers for purposes of collective bargaining. The their work is neither casual nor seasonal as they are
Solicitor General agrees with the position of SanMig. performing work or activities necessary or desirable in the
usual business or trade of SanMig. Thus, it was contended
The antecedents of the controversy reveal that: that there exists a "labor-only" contracting situation. It was
Sometime in 1983 and 1984, SanMig entered into contracts then demanded that the employment status of these workers
for merchandising services with Lipercon and D'Rite (Annexes be regularized.
K and I, SanMig's Comment, respectively). These companies On 12 January 1989 on the ground that it had failed to
are independent contractors duly licensed by the Department receive any favorable response from SanMig, the Union filed
of Labor and Employment (DOLE). SanMig entered into those a notice of strike for unfair labor practice, CBA violations, and
contracts to maintain its competitive position and in keeping union busting (Annex D, Petition).
with the imperatives of efficiency, business expansion and
diversity of its operation. In said contracts, it was expressly On 30 January 1989, the Union again filed a second notice of
understood and agreed that the workers employed by the strike for unfair labor practice (Annex F, Petition).
contractors were to be paid by the latter and that none of
them were to be deemed employees or agents of SanMig. As in the first notice of strike. Conciliatory meetings were
There was to be no employer-employee relation between the held on the second notice. Subsequently, the two (2) notices
contractors and/or its workers, on the one hand, and SanMig of strike were consolidated and several conciliation
on the other. conferences were held to settle the dispute before the
National Conciliation and Mediation Board (NCMB) of DOLE
Petitioner San Miguel Corporation Employees Union-PTWGO (Annex G, Petition).
(the Union, for brevity) is the duly authorized representative
of the monthly paid rank-and-file employees of SanMig with
whom the latter executed a Collective Bargaining Agreement
Beginning 14 February 1989 until 2 March 1989, series of compel plaintiff to hire the employees or workers of
pickets were staged by Lipercon and D'Rite workers in LIPERCON and D'RITE;
various SMC plants and offices.
h. preventing and/or disrupting the peaceful and normal
On 6 March 1989, SMC filed a verified Complaint for operation of plaintiff at the work places within the bargaining
Injunction and Damages before respondent Court to enjoin unit referred to in the CBA, Annex 'C' hereof, to compel
the Union from: plaintiff to hire the employees or workers of LIPERCON and
D'RITE. (Annex H, Petition)
a. representing and/or acting for and in behalf of the
employees of LIPERCON and/or D'RITE for the purposes of Respondent Court found the Complaint sufficient in form and
collective bargaining; substance and issued a Temporary Restraining Order for the
purpose of maintaining the status quo, and set the
b. calling for and holding a strike vote, to compel plaintiff to application for Injunction for hearing.
hire the employees or workers of LIPERCON and D'RITE;
In the meantime, on 13 March 1989, the Union filed a Motion
c. inciting, instigating and/or inducing the employees or to Dismiss SanMig's Complaint on the ground of lack of
workers of LIPERCON and D'RITE to demonstrate and/or jurisdiction over the case/nature of the action, which motion
picket at the plants and offices of plaintiff within the was opposed by SanMig. That Motion was denied by
bargaining unit referred to in the CBA,...; respondent Judge in an Order dated 11 April 1989.
d. staging a strike to compel plaintiff to hire the employees or After several hearings on SanMig's application for injunctive
workers of LIPERCON and D'RITE; relief, where the parties presented both testimonial and
e. using the employees or workers of LIPERCON AND D'RITE documentary evidence on 25 March 1989, respondent Court
to man the strike area and/or picket lines and/or barricades issued the questioned Order (Annex A, Petition) granting the
which the defendants may set up at the plants and offices of application and enjoining the Union from Committing the acts
plaintiff within the bargaining unit referred to in the CBA ...; complained of, supra. Accordingly, on 29 March 1989,
respondent Court issued the corresponding Writ of
f. intimidating, threatening with bodily harm and/or molesting Preliminary Injunction after SanMig had posted the required
the other employees and/or contract workers of plaintiff, as bond of P100,000.00 to answer for whatever damages
well as those persons lawfully transacting business with petitioners may sustain by reason thereof.
plaintiff at the work places within the bargaining unit referred
to in the CBA, ..., to compel plaintiff to hire the employees or In issuing the Injunction, respondent Court rationalized:
workers of LIPERCON and D'RITE; The absence of employer-employee relationship negates the
g. blocking, preventing, prohibiting, obstructing and/or existence of labor dispute. Verily, this court has jurisdiction to
impeding the free ingress to, and egress from, the work take cognizance of plaintiff's grievance.
places within the bargaining unit referred to in the CBA .., to The evidence so far presented indicates that plaintiff has
contracts for services with Lipercon and D'Rite. The
application and contract for employment of the defendants' On 3 May 1989, the National Conciliation and Mediation
witnesses are either with Lipercon or D'Rite. What could be Board (NCMB) called the parties to conciliation. The Union
discerned is that there is no employer-employee relationship stated that it would lift the strike if the thirty (30) Lipercon
between plaintiff and the contractual workers employed by and D'Rite employees were recalled, and discussion on their
Lipercon and D'Rite. This, however, does not mean that a other demands, such as wage distortion and appointment of
final determination regarding the question of the existence of coordinators, were made. Effected eventually was a
employer-employee relationship has already been made. To Memorandum of Agreement between SanMig and the Union
finally resolve this dispute, the court must extensively that "without prejudice to the outcome of G.R. No. 87700
consider and delve into the manner of selection and (this case) and Civil Case No. 57055 (the case below), the
engagement of the putative employee; the mode of payment laid-off individuals ... shall be recalled effective 8 May 1989
of wages; the presence or absence of a power of dismissal; to their former jobs or equivalent positions under the same
and the Presence or absence of a power to control the terms and conditions prior to "lay-off" (Annex 15, SanMig
putative employee's conduct. This necessitates a full-blown Comment). In turn, the Union would immediately lift the
trial. If the acts complained of are not restrained, plaintiff pickets and return to work.
would, undoubtedly, suffer irreparable damages. Upon the
other hand, a writ of injunction does not necessarily expose After an exchange of pleadings, this Court, on 12 October
defendants to irreparable damages. 1989, gave due course to the Petition and required the
parties to submit their memoranda simultaneously, the last
Evidently, plaintiff has established its right to the relief of which was filed on 9 January 1990.
demanded. (p. 21, Rollo)
The focal issue for determination is whether or not
Anchored on grave abuse of discretion, petitioners are now respondent Court correctly assumed jurisdiction over the
before us seeking nullification of the challenged Writ. On 24 present controversy and properly issued the Writ of
April 1989, we issued a Temporary Restraining Order Preliminary Injunction to the resolution of that question, is
enjoining the implementation of the Injunction issued by the matter of whether, or not the case at bar involves, or is in
respondent Court. The Union construed this to mean that "we connection with, or relates to a labor dispute. An affirmative
can now strike," which it superimposed on the Order and answer would bring the case within the original and exclusive
widely circulated to entice the Union membership to go on jurisdiction of labor tribunals to the exclusion of the regular
strike. Upon being apprised thereof, in a Resolution of 24 May Courts.
1989, we required the parties to "RESTORE the status quo
ante declaration of strike" (p. 2,62 Rollo). Petitioners take the position that 'it is beyond dispute that
the controversy in the court a quo involves or arose out of a
In the meantime, however, or on 2 May 1989, the Union went labor dispute and is directly connected or interwoven with
on strike. Apparently, some of the contractual workers of the cases pending with the NCMB-DOLE, and is thus beyond
Lipercon and D'Rite had been laid off. The strike adversely the ambit of the public respondent's jurisdiction. That the
affected thirteen (13) of the latter's plants and offices. acts complained of (i.e., the mass concerted action of
picketing and the reliefs prayed for by the private
respondent) are within the competence of labor tribunals, is and conditions of employment or the association or
beyond question" (pp. 6-7, Petitioners' Memo). representation of persons in negotiating, fixing, maintaining,
changing, or arranging the terms and conditions of
On the other hand, SanMig denies the existence of any employment, regardless of whether the disputants stand in
employer-employee relationship and consequently of any the proximate relation of employer and employee."
labor dispute between itself and the Union. SanMig submits,
in particular, that "respondent Court is vested with While it is SanMig's submission that no employer-employee
jurisdiction and judicial competence to enjoin the specific relationship exists between itself, on the one hand, and the
type of strike staged by petitioner union and its officers contractual workers of Lipercon and D'Rite on the other, a
herein complained of," for the reasons that: labor dispute can nevertheless exist "regardless of whether
the disputants stand in the proximate relationship of
A. The exclusive bargaining representative of an employer employer and employee" (Article 212 [1], Labor Code, supra)
unit cannot strike to compel the employer to hire and thereby provided the controversy concerns, among others, the terms
create an employment relationship with contractual workers, and conditions of employment or a "change" or
especially were the contractual workers were recognized by "arrangement" thereof (ibid). Put differently, and as defined
the union, under the governing collective bargaining by law, the existence of a labor dispute is not negative by the
agreement, as excluded from, and therefore strangers to, the fact that the plaintiffs and defendants do not stand in the
bargaining unit. proximate relation of employer and employee.
B. A strike is a coercive economic weapon granted the That a labor dispute, as defined by the law, does exist herein
bargaining representative only in the event of a deadlock in a is evident. At bottom, what the Union seeks is to regularize
labor dispute over 'wages, hours of work and all other and of the status of the employees contracted by Lipercon and
the employment' of the employees in the unit. The union D'Rite in effect, that they be absorbed into the working unit
leaders cannot instigate a strike to compel the employer, of SanMig. This matter definitely dwells on the working
especially on the eve of certification elections, to hire relationship between said employees vis-a-vis SanMig. Terms,
strangers or workers outside the unit, in the hope the latter tenure and conditions of their employment and the
will help re-elect them. arrangement of those terms are thus involved bringing the
C. Civil courts have the jurisdiction to enjoin the above matter within the purview of a labor dispute. Further, the
because this specie of strike does not arise out of a labor Union also seeks to represent those workers, who have
dispute, is an abuse of right, and violates the employer's signed up for Union membership, for the purpose of
constitutional liberty to hire or not to hire. (SanMig's collective bargaining. SanMig, for its part, resists that Union
Memorandum, pp. 475-476, Rollo). demand on the ground that there is no employer-employee
relationship between it and those workers and because the
We find the Petition of a meritorious character. demand violates the terms of their CBA. Obvious then is that
representation and association, for the purpose of
A "labor dispute" as defined in Article 212 (1) of the Labor negotiating the conditions of employment are also involved.
Code includes "any controversy or matter concerning terms In fact, the injunction sought by SanMig was precisely also to
prevent such representation. Again, the matter of As the case is indisputably linked with a labor dispute,
representation falls within the scope of a labor dispute. jurisdiction belongs to the labor tribunals. As explicitly
Neither can it be denied that the controversy below is directly provided for in Article 217 of the Labor Code, prior to its
connected with the labor dispute already taken cognizance of amendment by R.A. No. 6715 on 21 March 1989, since the
by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR suit below was instituted on 6 March 1989, Labor Arbiters
NS-01-093-83). have original and exclusive jurisdiction to hear and decide
the following cases involving all workers including "1. unfair
Whether or not the Union demands are valid; whether or not labor practice cases; 2. those that workers may file involving
SanMig's contracts with Lipercon and D'Rite constitute "labor- wages, hours of work and other terms and conditions of
only" contracting and, therefore, a regular employer- employment; ... and 5. cases arising from any violation of
employee relationship may, in fact, be said to exist; whether Article 265 of this Code, including questions involving the
or not the Union can lawfully represent the workers of legality of striker and lockouts. ..." Article 217 lays down the
Lipercon and D'Rite in their demands against SanMig in the plain command of the law.
light of the existing CBA; whether or not the notice of strike
was valid and the strike itself legal when it was allegedly The claim of SanMig that the action below is for damages
instigated to compel the employer to hire strangers outside under Articles 19, 20 and 21 of the Civil Code would not
the working unit; those are issues the resolution of which suffice to keep the case within the jurisdictional boundaries
call for the application of labor laws, and SanMig's cause's of of regular Courts. That claim for damages is interwoven with
action in the Court below are inextricably linked with those a labor dispute existing between the parties and would have
issues. to be ventilated before the administrative machinery
established for the expeditious settlement of those disputes.
The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 To allow the action filed below to prosper would bring about
April 1965, 13 SCRA 738) relied upon by SanMig is not "split jurisdiction" which is obnoxious to the orderly
controlling as in that case there was no controversy over administration of justice (Philippine Communications,
terms, tenure or conditions, of employment or the Electronics and Electricity Workers Federation vs. Hon.
representation of employees that called for the application of Nolasco, L-24984, 29 July 1968, 24 SCRA 321).
labor laws. In that case, what the petitioning union
demanded was not a change in working terms and We recognize the proprietary right of SanMig to exercise an
conditions, or the representation of the employees, but that inherent management prerogative and its best business
its members be hired as stevedores in the place of the judgment to determine whether it should contract out the
members of a rival union, which petitioners wanted performance of some of its work to independent contractors.
discharged notwithstanding the existing contract of the However, the rights of all workers to self-organization,
arrastre company with the latter union. Hence, the ruling collective bargaining and negotiations, and peaceful
therein, on the basis of those facts unique to that case, that concerted activities, including the right to strike in
such a demand could hardly be considered a labor dispute. accordance with law (Section 3, Article XIII, 1987
Constitution) equally call for recognition and protection.
Those contending interests must be placed in proper JOVENCIO L. MAYOR petitioner,
perspective and equilibrium. vs.
HON. CATALINO MACARAIG, HON. GUILLERMO
WHEREFORE, the Writ of certiorari is GRANTED and the CARAGUE, HON. RIZALINA CAJUCOM, HON. FRANKLIN
Orders of respondent Judge of 25 March 1989 and 29 March DRILON, respondents. LOURDES A. SALES and RICARDO
1989 are SET ASIDE. The Writ of Prohibition is GRANTED and OLAIREZ, petitioners-intervenors.
respondent Judge is enjoined from taking any further action
in Civil Case No. 57055 except for the purpose of dismissing G.R. No. 90044 March 5, 1991
it. The status quo ante declaration of strike ordered by the
Court on 24 May 1989 shall be observed pending the PASCUAL V. REYES, petitioner,
proceedings in the National Conciliation Mediation Board- vs.
Department of Labor and Employment, docketed as NCMB- HON. FRANKLIN DRILON, respondent.
NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs. G.R. No. 91547 March 5, 1991
SO ORDERED. CEFERINO E. DULAY, ROSARIO G. ENCARNACION and
DANIEL LUCAS, JR., petitioners,
vs.
HON. CATALINO MACARAIG, JR., as Executive
Secretary, HON. GUILLERMO N. CARAGUE, as Secretary
of Budget and Management, HON. DIONISIO DE LA
SERNA, as Acting Secretary of Labor & Employment,
BARTOLOME CARALE, VICENTE S.E. VELOSO III, ROMEO
B. TUOMO, EDNA BONTO PEREZ, DOMINGO H.
ZAPANTA, RUSTICO L. DIOKNO, LOURDES C. JAVIER,
IRINEO B. BARNALDO, ROGELIO I. RAYALA, ERNESTO G.
LADRINO III, IRENEA E. CENIZA, BERNABE S. BATUHAN,
MUSIB M. BUAT, L.B. GONZAGA, JR. and OSCAR
ABELLA, respondents.

G.R. No. 91730 March 5, 1991

CONRADO B. MAGLAYA, petitioner,


vs.
HON. CATALINO MACARAEG, HON. GUILLERMO
CARAGUE, HON. RIZALINA CAJOCUM, and the
HONORABLE SECRETARY OF LABOR, respondents.
G.R. No. 87211 March 5, 1991
G.R. No. 94518 March 5, 1991
ROLANDO D. GAMBITO, petitioner, Executive Labor Arbiters and Labor Arbiters of the present
vs. National Labor Relations Commission are hereby declared
THE SECRETARY OF LABOR AND EMPLOYMENT and THE vacant. However, subject officials shall continue to
EXECUTIVE SECRETARY, respondents. temporarily discharge their duties and functions until their
successors shall have been duly appointed and qualified.
NARVASA, J.:p
The first of these five consolidated cases was filed by Labor
Five (5) special civil actions are hereby jointly decided Arbiter Jovencio Ll. Mayor on March 8, 1989. In the year that
because they involve one common, fundamental issue, the followed, eight other officers of the Commission, as initiators
constitutionality of Republic Act No. 6715, effective March 21, of their own separate actions or as intervenors, joined Mayor
1989, in so far as it declares vacant "all positions of the in the attempt to invalidate the reorganization and to be
Commissioners, Executive Labor Arbiters and Labor Arbiters reinstated to their positions in the Government service.
of the National Labor Relations Commission," and operates to
remove the incumbents upon the appointment and G.R. No. 87211: Jovencio Mayor; and Intervenors Lourdes
qualification of their successors. The law is entitled, "AN ACT A. Sales and Ricardo Olairez
TO EXTEND PROTECTION TO LABOR, STRENGTHEN THE
CONSTITUTIONAL RIGHTS OF WORKERS TO SELF- Jovencio Ll. Mayor, a member of the Philippine Bar for fifteen
ORGANIZATION, COLLECTIVE BARGAINING AND PEACEFUL (15) years, was appointed Labor Arbiter in 1986 after he had,
CONCERTED ACTIVITIES, FOSTER INDUSTRIAL PEACE AND according to him, met the prescribed qualifications and
HARMONY, PROMOTE THE PREFERENTIAL USE OF VOLUNTARY passed "a rigid screening process." Fearing that he would be
MODES OF SETTLING LABOR DISPUTES AND RE-ORGANIZE removed from office on account of the expected
THE NATIONAL LABOR RELATIONS COMMISSION, AMENDING reorganization, he filed in this Court the action now docketed
PRESIDENTIAL DECREE NO. 441, AS AMENDED, OTHERWISE as G.R. No. 87211. His fears proved groundless, however. He
KNOWN AS THE LABOR CODE OF THE PHILIPPINES, was in fact reappointed a Labor Arbiter on March 8, 1990.
APPROPRIATING FUNDS THEREFOR AND FOR OTHER Hence, as he himself says, the case became moot as to him.
PURPOSES." 1 The provision directly dealing with the Like Mayor, both intervenors Lourdes A. Sales and Ricardo N.
reorganization of the National Labor Relations Commission is Olairez were appointed Labor Arbiters in 1986, but unlike
Section 35. It reads as follows: 2 Mayor, were not among the one hundred fifty-one (151)
Sec. 35. Equity of the Incumbent. Incumbent career Labor Arbiters reappointed by the President on March 8,
officials and rank-and-file employees of the National labor 1990.
Relations Commission not otherwise affected by the Act shall G.R. No. 90044; Pascual Y Reyes; and Intervenor Eugenio L
continue to hold office without need of reappointment. Sagmit, Jr.
However, consistent with the need to professionalize the
higher levels of officialdom invested with adjudicatory powers At the time of the effectivity of R.A. No. 6715, Pascual Y.
and functions, and to upgrade their qualifications, ranks, and Reyes was holding the office of Executive Director of the
salaries or emoluments, all positions of the Commissioners, National Labor Relations Commission in virtue of an
appointment extended to him on May 30, 1975. As specified Later, or more precisely on November 19, 1986, Lucas was
by Administrative Order No. 10 of the Secretary of Labor, designated Presiding Commissioner of the Commission's
dated July 14, 1975, the functions of his office were "to take Second Division; and Commissioner Ceferino E. Dulay was
charge of all administrative matters of the Commission and appointed Presiding Commissioner of the Third Division.
to have direct supervision overall units and personnel
assigned to perform administrative tasks;" and Article 213 of Executive Order No. 252, issued by the President on July 25,
the Labor Code, as amended, declared that the "Executive 1987, amended Article 215 of the Labor Code by providing
Director, assisted by a Deputy Executive Director, shall that "the Commissioners appointed under Executive Order
exercise the administrative functions of the Commission." No. 47 dated September 10, 1986 shall hold office for a term
Reyes states that he has been "a public servant for 42 of six (6) years . . . (but of those thus appointed) three shall
years," and "is about to retire at sixty-five (65)," in 1991. hold office for four (4) years, and three for two (2) years . . .
without prejudice to reappointment." Under Executive Order
The petitioner-in-intervention, Eugenio I. Sagmit, Jr., was No. 252, the terms of Encarnacion and Lucas would expire on
Reyes' Deputy Executive Director, appointed as such on October 23, 1992, and that of Dulay, on December 18, 1992.
October 27, 1987 after twenty-five (25) years of government
service. On November 18, 1989, R.A. No. 6715 being then already in
effect, the President extended to Encarnacion, Lucas and
Both Reyes and Sagmit were informed that they had been Dulay new appointments as Commissioners of the NLRC
separated from employment upon the effectivity of R.A. No. despite the fact that, according to them, they had not been
6715, pursuant to a Memorandum-Order issued by then served with notice of the termination of their services as
Secretary of Labor Franklin Drilon on August 17, 1989 to the incumbent commissioners, and no vacancy existed in their
effect that the offices of Executive Director and Deputy positions. Their new appointments were submitted to
Executive Director had been abolished by Section 35, in Congress, but since Congress adjourned on December 22,
relation to Section 5 of said Act, and "their functions 1989 without approving their appointments, said
transferred to the Chairman, aided by the Executive Clerk. appointments became functus officio.

Reyes moved for reconsideration on August 29, 1989, but No other appointments were thereafter extended to
when no action was allegedly taken thereon, he instituted the Encarnacion and Dulay. Lucas was however offered the
action at bar, G.R. No. 90044. Sagmit was afterwards granted position of Assistant Regional Director by Secretary Drilon
leave to intervene in the action. and then by Acting Secretary Dionisio de la Serna (by letter
dated January 9, 1990 which referred to his appointment as
G.R. No. 91547: Ceferino Dulay, Rosario G. Encarnacion, and such Assistant Regional Director supposedly "issued by the
Daniel M. Lucas President on November 8, 1989"). Lucas declined the offer,
Petitioners Rosario G. Encarnacion and Daniel M. Lucas, Jr. believing it imported a demotion.
were appointed National Labor Relations Commissioners on They all pray that their removal be pronounced
October 20, 1986, after the Commission was reorganized unconstitutional and void and they be declared
pursuant to Executive Order No. 47 of President Aquino. Commissioners lawfully in office, or, alternatively, that they
be paid all salaries, benefits and emoluments accruing to No. 161 dated November 18, 1989, issued by Labor Secretary
them for the unexpired portions of their six-year terms and Drilon.
allowed to enjoy retirement benefits under applicable laws
(pursuant to R.A. 910 and the Resolution re Judge Mario Ortiz, G.R. No. 94518: Rolando D. Gambito
G. R. No. 78951, June 28, 1988). Rolando Gambito passed the bar examinations in 1971,
Of the incumbent Commissioners as of the effectivity of R.A. joined the Government service in 1974, serving for sixteen
6715, six (6) were reappointed, namely: (1) Hon. Edna Bonto years in the Department of Health, and as Labor Arbiter in
Perez (as Presiding Commissioner, Second Division NCR]), (2) the Department of Labor and Employment from October,
Domingo H. Zapanta (Associate Commissioner, Second 1986. He was not included in the list of newly appointed
Division), (3) Lourdes C. Javier (Presiding Commissioner, Third Labor Arbiters released on March 8, 1990; and his attempt to
Division [Luzon except NCR]), (4) Ernesto G. Ladrido III obtain a recosideration of his exclusion therefrom and bring
(Presiding Commissioner, Fourth Division [Visayas]), (5) about his reinstatement as Labor Arbiter was unavailing.
Musib M. Buat (Presiding Commissioner, Fifth Division The Basic Issue
[Mindanao]), and (6) Oscar N. Abella (Associate
Commissioner, Fifth Division). Other members appointed to A number of issues have been raised and ventilated by the
the reorganized Commission were Vicente S.E. Veloso III, petitioners in their separate pleadings. They may all be
Romeo B. Putong, Rustico L. Diokno, Ireneo B. Bernardo, reduced to one basic question, relating to the
Rogelio I. Rayala, Irenea E. Ceniza, Bernabe S. Batuhan, and constitutionality of the provisions of Republic Act No. 6715
Leon G. Gonzaga, Jr. Appointed Chairman was Hon. DECLARING VACANT "all positions of the Commissioners,
Bartolome Carale, quondam Dean of the College of Law of Executive Labor Arbiters and Labor Arbiters of the present
the University of the Philippines. National Labor Relations Commission," 3 according to which
the public respondents
G.R. No. 91730: Conrado Maglaya
1) considered as effectively separated from the service inter
Petitioner Conrado Maglaya alleges that he has been "a alia, all holders of said positions at the time of the effectivity
member of the Philippine Bar for thirty-six (36) years of which of said Republic Act No. 6715, including the positions
31 years . . . (had been) devoted to public service, the last 24 of Executive Director and Deputy Executive Director of the
years in the field of labor relations law;" that he was Commission, and
appointed Labor Arbiter on May 30, 1975 and "was retained
in such position despite the reorganization under the 2) consequently, thereafter caused the appointment of other
Freedom Constitution of 1986 . . . (and) later promoted to persons to the new positions specified in said statute: of
and appointed by the President as Commissioner of the . . . Chairman Commissioners, Executive Clerk, Deputy Executive
(NLRC) First Division on October 23, 1986." He complains that Clerk, and Labor Arbiters of the reorganized National Labor
he was effectively removed from his position as a result of Relations Commission. The old positions were declared
the designation of the full complement of Commissioners in vacant because, as the statute states, of "the need to
and to all Five Divisions of the NLRC by Administrative Order professionalize the higher levels of officialdom invested with
adjudicatory powers and functions, and to upgrade their security of tenure, and will have to be struck down on that
qualifications, ranks, and salaries or emoluments." account. It can not be justified by the professed "need to
professionalize the higher levels of officialdom invested with
As everyone knows, security of tenure is a protected right adjudicatory powers and functions, and to upgrade their
under the Constitution. The right is secured to all employees qualifications, ranks, and salaries or emoluments."
in privates as well as in public employment. "No officer or
employee in the civil service," the Constitution declares, The Constitution does not, of course, ordain the abolition of
"shall be removed or suspended except for cause provided by the petitioners' positions of their removal from their offices;
law." 4 There can scarcely be any doubt that each of the and there is no claim that the petitioners' separation from the
petitioners commissioner, administrative officer, or labor service is due to a cause other than RA 6715. The inquiry
arbiter falls within the concept of an "officer or employee therefore should be whether or not RA 6715 has worked such
in the civil service" since the civil service "embraces all an abolition of the petitioners' offices, expressly or impliedly.
branches, subdivisions, instrumentalities, and agencies of the This is the only mode by which, under the circumstances, the
Government, including governmentowned or controlled petitioners' removal from their positions may be defended
corporations with original charters." 5 The Commissioners and sustained.
thus had the right to remain of office until the expiration of
the terms for which they had been appointed, unless sooner It is immediately apparent that there is no express abolition
removed "for cause provided by law." So, too, the Executive in RA 6715 of the petitioners' positions. So, justification must
Director and Deputy Executive Director, and the Labor be sought, if at all, in an implied abolition thereof; i.e., that
Arbiters had the right to retain their positions until the age of resulting from an irreconcilable inconsistency between the
compulsory retirement, unless sooner removed "for cause nature, duties and functions of the petitioners' offices under
provided by law." None of them could be deemed to be the old rules and those corresponding thereof under the new
serving at the pleasure of the President. law. An examination of the relevant provisions of RA 6715,
with a view to discovering the changes thereby effected on
Now, a recognized cause for several or termination of the nature, composition, powers, duties and functions of the
employment of a Government officer or employee is the Commission and the Commissioners, the Executive Director,
abolition by law of his office as a result of reorganization the Deputy Executive Director, and the labor Arbiters under
carried out by reason of economy or to remove redundancy the prior legislation, fails to disclose such essential
of functions, or clear and explicit constitutional mandate for inconsistencies.
such termination of employment. 6Abolition of an office is
obviously not the same as the declaration that that office is 1. Amendments as Regards the NLRC and the Commissioners
vacant. While it is undoubtedly a prerogative of the First, as regards the National Labor Relations Commissioners.
legislature to abolish certain offices, it can not be conceded
the power to simply pronounce those offices vacant and A. Nature and Composition of the Commission, Generally
thereby effectively remove the occupants or holders thereof
from the civil service. Such an act would constitute, on its 1. Prior to its amendment by RA 6715, Article 213 of the
face, an infringement of the constitutional guarantee of Labor Code envisaged the NLRC as being an integral part of
the Department of labor and Employment. "There shall," it banc and those by a division were determined by rules laid
said, "be a National Labor Relations Commissionin the down by the Commission with the approval of the ex officio,
Department of Labor and Employment . . . ." RA 6715 would Chairman (the Secretary of labor) said Commission, in
appear to have made the Commission somewhat more other words, then exerciseboth administrative and
autonomous. Article 213 now declares that, "There shall be a adjudicatory powers the law now, as amended by RA 6715,
National labor Relations Commission which shall be attached provides that
to the Department of labor and Employment for program
coordination only . . . ." 1) the Commission "shall sit en banc only for purposes of
promulgating rules and regulations governing the hearing
2. Tripartite representation was to a certain extent restored in and disposition of cases before any of its divisions and
the Commission. The same Section 213, as amended, now regional branches and formulating policies affecting its
provides that the Chairman and fourteen (14) members administration and operations;" but
composing the NLRC shall be chosen from the workers',
employers' and the public sectors, as follows: 2) it "shall exercise its adjudicatory and all other powers,
functions and duties through its divisions."
Five (5) members each shall be chosen from among the
nominees of the workers and employers organization, C. Official Stations, and Appellate Jurisdiction over Fixed
respectively. The Chairman and the four (4) remaining Territory
members shall come from the public sector, with the latter to Other changes related to the official station of the
be chosen from among the recommendees of the Secretary Commission and its divisions, and the territory over which
of Labor and Employment. the divisions could exercise exclusive appellate jurisdiction.
However, once they assume office," the members nominated 1. Under the old law, the Commission en banc and its
by the workers and employers organizations shall divest divisions had their main office in Metropolitan Manila; and
themselves of any affiliations with or interest in the appeals could be taken to them from decisions of Labor
federation or association to which they belong." Arbiters regardless of the regional office whence the case
B. Allocation of Powers Between NLRC En Banc and its originated.
Divisions 2. Under the law now, the First and Second Divisions have
Another amendment was made in respect of the allocation of their official station in Metropolitan Manila and "handle cases
powers and functions between the Commission en banc, on coming from the National Capital Region;" the Third Division
the one hand, and its divisions, on the other. Both under the has its main office also in Metropolitan Manila but would have
old and the amended law, the Commission was vested with appellate jurisdiction over "cases from other parts of Luzon;"
rule-making and administrative authority, as well as and the Fourth and Fifth Divisions have their main offices in
adjudicatory and other powers, functions and duties, and Cebu and Cagayan de Oro City, and exercise jurisdiction over
could sit en banc or in divisions of three (3) members each. cases "from the Visayas and Mindanao," respectively; and the
But whereas under the old law, the cases to be decided en
appellate authority of the divisions is exclusive "within their The old law declared that Executive Labor Arbiters and Labor
respective territorial jurisdiction." Arbiters should be members of the Bar, with at least two (2)
years experience in the field of labor management relations.
D. Qualifications and Tenure of Commissioners They were appointed by the President upon recommendation
Revisions were also made by RA 6715 with respect to the of the Chairman, and were "subject to the Civil Service Law,
qualifications and tenure of the National Labor Relations rules and regulations."
Commissioners. On the other hand, RA 6715 requires that the "Executive
Prescribed by the old law as qualifications for commissioners Labor Arbiters and Labor Arbiters shall likewise be members
appointed for a term of six (6) years were that they (a) of the Philippine Bar," but in addition "must have been in the
by members of the Philippine bar, and (b) have at least five practice of law in the Philippines for at least seven (7) years,
years' experience in handling labor-management relations. 7 with at least three (3) years experience or exposure in the
field of labor-management relations." For "purposes of
RA 6715, on the other hand, requires (a) membership in the reappointment," however, "incumbent Executive Labor
bar, (b) engagement in the practice of law for at least 15 Arbiters and Labor Arbiters who have been engaged in the
years, (c) at least five years' experience or exposure in the practice of law for at least five (5) years may be considered
field of labor-management relations, and (d) preferably, as already qualified." They are appointed by the President, on
residence in the region where the commissioner is to hold recommendation of the Secretary of Labor and Employment,
office. The commissioners appointed shall hold office during and are subject to the Civil Service Law, rules and
good behavior until they reach the age of sixty-five (65) regulations.
years, unless they are sooner removed for cause as provided
by law or become incapacited to discharge the duties of their B. Exclusive Original Jurisdiction
office. Before the effectivity of RA 6715, the exclusive original
2. Amendments Regarding Executive Labor Arbiters and jurisdiction of labor arbiters comprehended the following
Labor Arbiters cases involving all workers, whether agricultural or non-
agricultural:
A. Qualifications
(1) Unfair labor practice cases;
The old provided for one hundred fifty (150) labor arbiters
assigned to the different regional offices or branches of the (2) Those that workers may file involving wages, hours of
Department of Labor and Employment (including sub- work and other terms and conditions of employment;
regional branches or provincial extension units), each (3) All money claims of workers, including those based on
regional branch being headed by an Executive Labor Arbiter. non-payment or underpayment of wages, overtime
RA 6715 does not specify any fixed number of labor arbiters, compensation, separation pay and other benefits provided by
but simply provides that there shall be as many labor arbiters law or appropriate agreement, except claims for employees'
as may be necessary for the effective and efficient operation
of the Commission.
compensation, social security, medicare and maternity to decide the case, without extension, except that the
benefits; present statute stresses that "even in the absence of
stenographic notes," the period to decide is still thirty days,
(4) Cases involving household services; and without extension.
(5) Cases arising from any violation of Article 265 of this Furthermore, RA 6715 provides that "Cases arising from the
Code, including questions involving the legality of strikes and interpretation or implementation of collective bargaining
lockouts. agreements and those arising from the interpretation or
Some changes were introduced by RA 6715, indicated by enforcement of company personnel policies shall be disposed
italics in the enumeration which shortly follows. The of by the Labor Arbiter by referring the same to the
exclusive, original jurisdiction of Labor Arbiters now grievance machinery and voluntary arbitration as may be
embraces the following involving all workers, whether provided in said agreements."
agricultural or non-agricultural: 3. Amendments as Regards the Executive Director and
(1) Unfair labor practice cases; Deputy Executive Director

(2) Termination disputes; Prior to RA 6715, there was, as earlier stated, an Executive
Director, assisted by a Deputy Executive Director, who was
(3) If accompanies with a claim for reinstatement, those charged with the "exercise (of) the administrative functions
cases that workers may file involving wages, rates of pay, of the Commission." 9 More particularly, his chief functions
hours of work and other terms and conditions of were "to take charge of all administrative matters of the
employment; Commission and to have direct supervision over all units and
personnel assigned to perform administrative
(4) Claims for actual, moral, exemplary and other forms of 10
tasks." Although not so stated in the law, in the
damages arising from the employer-employee relations;8 performance of their functions, the Executive Director and
the Deputy Executive Director were obviously themselves
(5) Cases arising from any violation of Article 264 of this
subject to the supervision and control of the head of office,
Code, including questions involving the legality of strikes and
the ex officio Chairman of the National Labor Relations
lockouts;
Commission (the Secretary of Labor), or the Commission
(6) Except claims for employees compensation, social itself.
security, medicare and maternity benefits, all other claims
Under RA 6715, the Secretary of Labor is no longer ex
arising from employer-employee relations, including those of
officio Chairman of the Commission. There has been created
persons in domestic or household service, involving an
the office of Chairman, who "shall have the administrative
amount exceeding five thousand pesos (P5,000.00), whether
supervision over the Commission and its regional branches
or not accompanies with a claim for reinstatement.
and all its personnel, including the Executive Labor Arbiters
Now, as before, the Labor Arbiters are given thirty (30) and Labor Arbiters." In this function, the law says, he shall be
calendar days after the submission of the case by the parties "aided by the Executive Clerk of the Commission."
The Executive Clerk appears to be the officer who used to be 2. Similar considerations yield the same conclusion as far as
known under the old law as the Executive Director. The office the positions of Labor Arbiters are concerned, there being no
of Executive Director is nowhere mentioned in RA 6715. Said essential inconsistency on that score between Republic Act
Executive Clerk is given the additional responsibility of No. 6715 and the old law. The Labor Arbiters continue to
assisting the Commission en banc and the First Division, in exercise the same basic power and function: the
performing "such similar or equivalent functions and duties adjudication, in the first instance, of certain classes of labor
as are discharged by the Clerk of Court . . . of the Court of disputes. Their original and exclusive jurisdiction remains
Appeals." The position of Deputy Executive Clerks have also substantially the same under both the old law and the new.
been created whose main role is to assist the other divisions Again, their incumbents' constitutionally guaranteed security
of the Commission (the second, third, fourth and fifth) "in the of tenure cannot be defeated by the provision for higher or
performance of such similar or equivalent functions and other qualifications than were prescribed under the old law;
duties as are discharged by the . . . Deputy Clerk(s) of the said provision can only operate prospectively and as to new
Court of Appeals." appointees to positions regularly vacated; and there is,
besides, also no showing that the petitioning Arbiters do not
Summing up qualify under the new law.
1. Republic Act No. 6715 did not abolish the NLRC, or change 3. The position titles of "Executive Clerk" and "Deputy
its essential character as a supervisory and adjudicatory Executive Clerk(s)" provided for in RA 6715 are obviously not
body. Under said Act, as under the former law, the NLRC those of newly-created offices, but new appellations or
continues to act collegially, whether it performs designations given to the existing positions of Executive
administrative or rule-making functions or exercises Director and Deputy Executive Director. There is no essential
appellate jurisdiction to review decisions and final orders of change from the prescribed and basically administrative
the Labor Arbiters. The provisions conferring a somewhat duties of these positions and, at the same time, no mention
greater measure of autonomy; requiring that its membership in the Act of the former titles, from which the logical
be drawn from tripartite sectors (workers, employees and the conclusion is that what was intended was merely a change in
public sector); changing the official stations of the nomenclature, not an express or implied abolition. Neither
Commission's divisions, and even those prescribing higher or does the Act specify the qualifications for Executive Clerk and
other qualifications for the positions of Commissioner which, Deputy Executive Clerks. There is no reason to suppose that
if at all, should operate only prospectively, not to mention the these could be higher than those for Executive Director and
fact that the petitioners (in G.R. No. 91547) have asserted Deputy Executive Director, or that anything inheres in these
without dispute that they possess the new qualifications positions that would preclude their incumbents from being
none of these can be said to work so essential or radical a named Executive Clerk and Deputy Executive Clerks.
revision of the nature, powers and duties of the NLRC as to
justify a conclusion that the Act in truth did not merely WHEREFORE, the petitions are, as they must be, GRANTED ,
declare vacant but actually abolished the offices of and the following specific dispositions are hereby RENDERED:
commissioners and created others in their place.
1. In G.R. No. 91547, and G.R. No. 91730, the removal of No pronouncement as to costs.
petitioners Rosario G. Encarnacion, Daniel M. Lucas, Jr.,
Ceferino E. Dulay, and Conrado Maglaya as Commissioners of SO ORDERED.
the NLRC is ruled unconstitutional and void; however, to
avoid displacement of any of the incumbent Commissioners
now serving, it not appearing that any of them is unfit or has
given cause for removal, and conformably to the alternative
prayer of the petitioners themselves, it is ORDERED that said
petitioners be paid all salaries, benefits and emoluments
accruing to them for the unexpired portions of their six-year
terms and allowed to enjoy retirement benefits under
applicable laws, pursuant to RA No. 910 and this Court's
Resolution in Ortiz vs. Commission on Elections, G.R. No. G.R. No. 91636 April 23, 1992
79857, 161 SCRA 812;
PETER JOHN D. CALDERON, petitioner,
This disposition does not involve or apply to respondent Hon. vs.
Bartolome Carale, who replaced the Secretary of Labor as ex BARTOLOME CARALE, in his capacity as Chairman of
officio Chairman of the NLRC pursuant to RA 6715, none of the National Labor Relations Commission, EDNA
the petitioners having been affected or in any manner BONTO PEREZ, LOURDES C. JAVIER, ERNESTO G.
prejudiced by his appointment and incumbency as such; LADRIDO III, MUSIB M. BUAT, DOMINGO H. ZAPANTA,
VICENTE S.E. VELOSO III, IRENEO B. BERNARDO,
2. In G.R. No. 90044, the removal of petitioner Pascual Y. IRENEA E. CENIZA, LEON G. GONZAGA, JR., ROMEO B.
Reyes and petitioner-in-intervention Eugenio L. Sagmit, Jr. as PUTONG, ROGELIO I. RAYALA, RUSTICO L. DIOKNO,
NLRC Executive Director and Deputy Executive Director, BERNABE S. BATUHAN and OSCAR N. ABELLA, in their
respectively, is likewise declared unconstitutional and void, capacity as Commissioners of the National Labor
and they are ordered reinstated as Executive Clerk and Relations Commission, and GUILLERMO CARAGUE, in
Deputy Executive Clerk, respectively, unless they opt for his capacity as Secretary of Budget and
retirement, in either case with full back salaries, emoluments Management, respondents.
and benefits from the date of their removal to that of their
reinstatement; and

3. In G.R. Nos. 87211, and 94518, petitioners-intervenors PADILLA, J.:


Lourdes A. Sales and Ricardo Olairez and petitioner Rolando
Controversy is focused anew on Sec. 16, Art. VII of the 1987
D. Gambito, having also been illegally removed as Labor
Constitution which provides:
Arbiters, are ordered reinstated to said positions with full
back salaries, emoluments and benefits from the dates of Sec. 16. The President shall nominate and, with the consent
their removal up to the time they are reinstated. of the Commission on Appointments, appoint the heads of
the executive departments, ambassadors, other public his nomination to the Commission on Appointments for
ministers and consuls, or officers of the armed forces from confirmation. . . .
the rank of colonel or naval captain, and other officers whose
appointments are vested in him in this Constitution. He shall . . . In the 1987 Constitution, however, as already pointed
also appoint all other officers of the Government whose out, the clear and expressed intent of its framers was to
appointments are not otherwise provided for by law, and exclude presidential appointments from confirmation by the
those whom he may be authorized by law to appoint. The Commission on Appointments, except appointments to
Congress may, by law, vest the appointment of other officers offices expressly mentioned in the first sentence of Sec. 16,
lower in rank in the President alone, in the courts, or in the Art. VII. Consequently, there was no reason to use in the third
heads of departments, agencies, commissions, or boards. sentence of Sec. 16, Article VII the word "alone" after the
word "President" in providing that Congress may by law vest
The President shall have the power to make appointments the appointment of lower-ranked officers in the President
during the recess of the Congress, whether voluntary or alone, or in the courts, or in the heads of departments,
compulsory, but such appointments shall be effective only because the power to appoint officers whom he (the
until disapproval by the Commission on Appointments or until president) may be authorized by law to appoint is already
the next adjournment of the Congress. 1 vested in the President, without need of confirmation by the
Commission on Appointments, in the second sentence of the
The power of the Commission on Appointments (CA for same Sec. 16, Article VII." (emphasis supplied)
brevity) to confirm appointments, contained in the
aforequoted paragraph 1 of Sec. 16, Art. VII, was first Next came Mary Concepcion Bautista v. Salonga, 3 this time
construed in Sarmiento III vs. Mison 2 as follows: involving the appointment of the Chairman of the
Commission on Human Rights. Adhering to the doctrine
. . . it is evident that the position of Commissioner of the in Mison, the Court explained:
Bureau of Customs (a bureau head) is not one of those within
the first group of appointments where the consent of the . . . Since the position of Chairman of the Commission on
Commission on Appointments is required. As a matter of fact, Human Rights is not among the positions mentioned in the
as already pointed out, while the 1935 Constitution includes first sentence of Sec. 16, Art. VII of the 1987 Constitution,
"heads of bureaus" among those officers whose appointments to which are to be made with the confirmation
appointments need the consent of the Commission on of the Commission on Appointments, it follows that the
Appointments, the 1987 Constitution, on the other hand, appointment by the President of the Chairman of the CHR is
deliberately excluded the position of "heads of bureaus" from to be made without the review or participation of the
appointments that need the consent (confirmation) of the Commission on Appointments. To be more precise, the
Commission on Appointments. appointment of the Chairman and Members of the
Commission on Human Rights is not specifically provided for
. . . Consequently, we rule that the President of the in the Constitution itself, unlike the Chairmen and Members
Philippines acted within her constitutional authority and of the Civil Service Commission, the Commission on Elections
power in appointing respondent Salvador Mison, and the Commission on Audit, whose appointments are
Commissioner of the Bureau of Customs, without submitting
expressly vested by the Constitution in the president with the constitutional commissions of Audit, Civil Service and
consent of the Commission on Appointments. The president Election).
appoints the Chairman and Members of The Commission on
Human Rights pursuant to the second sentence in Section 2. Confirmation is not required when the President appoints
16, Art. VII, that is, without the confirmation of the other government officers whose appointments are not
Commission on Appointments because they are among the otherwise provided for by law or those officers whom he may
officers of government "whom he (the President) may be be authorized by law to appoint (like the Chairman and
authorized by law to appoint." And Section 2(c), Executive Members of the Commission on Human Rights). Also, as
Order No. 163, 5 May 1987, authorizes the President to observed in Mison, when Congress creates inferior offices but
appoint the Chairman and Members of the Commission on omits to provide for appointment thereto, or provides in an
Human Rights. unconstitutional manner for such appointments, the officers
are considered as among those whose appointments are not
Consistent with its rulings in Mison and Bautista, in Teresita otherwise provided for by law.
Quintos Deles, et al. v. The Commission on Constitutional
Commissions, et al., 4 the power of confirmation of the Sometime in March 1989, RA 6715 (Herrera-Veloso Law),
Commission on Appointments over appointments by the amending the Labor Code (PD 442) was approved. It provides
President of sectoral representatives in Congress was upheld in Section 13 thereof as follows:
because: xxx xxx xxx
. . . Since the seats reserved for sectoral representatives in The Chairman, the Division Presiding Commissioners and
paragraph 2, Section 5, Art. VI may be filled by appointment other Commissioners shall all be appointed by the President,
by the President by express provision of Section 7, Art. XVIII subject to confirmation by the Commission on Appointments.
of the Constitution, it is indubitable that sectoral Appointments to any vacancy shall come from the nominees
representatives to the House of Representatives are among of the sector which nominated the predecessor. The
the "other officers whose appointments are vested in the Executive Labor Arbiters and Labor Arbiters shall also be
President in this Constitution," referred to in the first appointed by the President, upon recommendation of the
sentence of Section 16, Art. VII whose appointments are Secretary of Labor and Employment, and shall be subject to
subject to confirmation by the Commission on Appointments. the Civil Service Law, rules and regulations. 5
From the three (3) cases above-mentioned, these doctrines Pursuant to said law (RA 6715), President Aquino appointed
are deducible: the Chairman and Commissioners of the NLRC representing
1. Confirmation by the Commission on Appointments is the public, workers and employers sectors. The appointments
required only for presidential appointees mentioned in the stated that the appointees may qualify and enter upon the
first sentence of Section 16, Article VII, including, those performance of the duties of the office. After said
officers whose appointments are expressly vested by the appointments, then Labor Secretary Franklin Drilon issued
Constitution itself in the president (like sectoral Administrative Order No. 161, series of 1989, designating the
representatives to Congress and members of the places of assignment of the newly appointed commissioners.
This petition for prohibition questions the constitutionality the Constitution, such as the members of the various
and legality of the permanent appointments extended by the Constitutional Commissions. With respect to the other
President of the Philippines to the respondents Chairman and officers whose appointments are not otherwise provided for
Members of the National Labor Relations Commission (NLRC), by the law and to those whom the President may be
without submitting the same to the Commission on authorized by law to appoint, no confirmation by the
Appointments for confirmation pursuant to Art. 215 of the Commission on Appointments is required.
Labor Code as amended by said RA 6715.
Had it been the intention to allow Congress to expand the list
Petitioner insists on a mandatory compliance with RA 6715 of officers whose appointments must be confirmed by the
which has in its favor the presumption of validity. RA 6715 is Commission on Appointments, the Constitution would have
not, according to petitioner, an encroachment on the said so by adding the phrase "and other officers required by
appointing power of the executive contained in Section 16, law" at the end of the first sentence, or the phrase, "with the
Art. VII, of the Constitution, as Congress may, by law, require consent of the Commission on Appointments" at the end of
confirmation by the Commission on Appointments of other the second sentence. Evidently, our Constitution has
officers appointed by the President additional to those significantly omitted to provide for such additions.
mentioned in the first sentence of Section 16 of Article VII of
the Constitution. Petitioner claims that The original text of Section 16 of Article VII of the present
the Mison and Bautista rulings are not decisive of the issue in Constitution as embodied in Resolution No. 517 of the
this case for in the case at bar, the President issued Constitutional Commission reads as follows:
permanent appointments to the respondents without "The President shall nominate and, with the consent of the
submitting them to the CA for confirmation despite passage Commission on Appointments, shall appoint the heads of the
of a law (RA 6715) which requires the confirmation by the executive departments and bureaus, ambassadors, other
Commission on Appointments of such appointments. public ministers and consuls, or officers of the armed forces
The Solicitor General, on the other hand, contends that RA from the rank of captain or commander, and all other officers
6715 which amended the Labor Code transgressesSection of the Government whose appointments are not herein
16, Article VII by expanding the confirmation powers of the otherwise provided for by law, and those whom he may be
Commission on Appointments without constitutional authorized by law to appoint. The Congress may by law vest
basis. Mison and Bautista laid the issue to rest, says the the appointment of inferior officers in the President alone, in
Solicitor General, with the following exposition: the courts or in the heads of the department."

As interpreted by this Honorable Court in the Mison case, Three points should be noted regarding sub-section 3 of
confirmation by the Commission on Appointments is required Section 10 of Article VII of the 1935 Constitution and in the
exclusively for the heads of executive departments, original text of Section 16 of Article VII of the present
ambassadors, public ministers, consuls, officers of the armed Constitution as proposed in Resolution No. 517.
forces from the rank of colonel or naval captain, and other
officers whose appointments are vested in the President by
First, in both of them, the appointments of heads of bureaus appointments require confirmation by the Commission on
were required to be confirmed by the Commission on Appointments.
Appointments.
To resolve the issue, we go back to Mison where the Court
Second, in both of them, the appointments of other officers, stated:
"whose appointments are not otherwise provided for by law
to appoint" are expressly made subject to confirmation by . . . there are four (4) groups of officers whom the President
the Commission on Appointments. However, in the final shall appoint. These four (4) groups, to which we will
version of Resolution No. 517, as embodied in Section 16 of hereafter refer from time to time, are:
Article VII of the present Constitution, the appointment of the First, the heads of the executive departments, ambassadors,
above mentioned officers (heads of bureaus; other officers other public ministers and consuls, officers of the armed
whose appointments are not provided for by law; and those forces from the rank of colonel or naval captain, and other
whom he may be authorized by law to appoint) are excluded officers whose appointments are vested in him in this
from the list of those officers whose appointments are to be Constitution;
confirmed by the Commission on Appointments. This
amendment, reflected in Section 16 of Article VII of the Second, all other officers of the Government whose
Constitution, clearly shows the intent of the framers to appointments are not otherwise provided for by law;
exclude such appointments from the requirement of
confirmation by the Commission on Appointments. Third, those whom the president may be authorized by law to
appoint;
Third, under the 1935 Constitution the word "nominate"
qualifies the entire Subsection 3 of Section 10 of Article VII Fourth, officers lower in rank whose appointments the
thereof. Congress may by law vest in the President alone. 7

Respondent reiterates that if confirmation is required, the Mison also opined:


three (3) stage process of nomination, confirmation and
In the course of the debates on the text of Section 16, there
appointment operates. This is only true of the first group
were two (2) major changes proposed and approved by the
enumerated in Section 16, but the word nominate does not
Commission. These were (1) the exclusion of the
any more appear in the 2nd and 3rd sentences. Therefore,
appointments of heads of bureaus from the requirement of
the president's appointment pursuant to the 2nd and 3rd
confirmation by the Commission on Appointments; and (2)
sentences needs no confirmation. 6
the exclusion of appointments made under the second
The only issue to be resolved by the Court in the present sentence of the section from the same requirement. . . .
case is whether or not Congress may, by law, require
The second sentence of Sec. 16, Art. VII refers to all other
confirmation by the Commission on Appointments of
officers of the government whose appointments are not
appointments extended by the president to government
otherwise provided for by law and those whom the President
officers additional to those expressly mentioned in the first
may be authorized by law to appoint.
sentence of Sec. 16, Art. VII of the Constitution whose
Indubitably, the NLRC Chairman and Commissioners fall Court in a decision rendered en banc or in division may be
within the second sentence of Section 16, Article VII of the modified or reversed except by the Court sitting en banc. 9
Constitution, more specifically under the "third groups" of
appointees referred to in Mison, i.e. those whom the . . . The interpretation upon a law by this Court constitutes, in
President may be authorized by law to appoint. Undeniably, a way, a part of the law as of the date that law was originally
the Chairman and Members of the NLRC are not among the passed, since this Court's construction merely establishes the
officers mentioned in the first sentence of Section 16, Article contemporaneous legislative intent that the law thus
VII whose appointments requires confirmation by the construed intends to effectuate. The settled rule supported
Commission on Appointments. To the extent that RA 6715 by numerous authorities is a restatement of the legal maxim
requires confirmation by the Commission on Appointments of "legis interpretado legis vim obtinent" the interpretation
the appointments of respondents Chairman and Members of placed upon the written law by a competent court has the
the National Labor Relations Commission, it is force of law. 10
unconstitutional because: The rulings in Mison, Bautista and Quintos-Deles have
1) it amends by legislation, the first sentence of Sec. 16, Art. interpreted Art. VII, Sec. 16 consistently in one manner. Can
VII of the Constitution by adding thereto appointments legislation expand a constitutional provision after the
requiring confirmation by the Commission on Appointments; Supreme Court has interpreted it?
and In Endencia and Jugo vs. David, 11
the Court held:
2) it amends by legislation the second sentence of Sec. 16, By legislative fiat as enunciated in Section 13, Republic Act
Art. VII of the Constitution, by imposing the confirmation of No. 590, Congress says that taxing the salary of a judicial
the Commission on Appointments on appointments which are officer is not a decrease of compensation. This is a clear
otherwise entrusted only with the President. example of interpretation or ascertainment of the meaning of
Deciding on what laws to pass is a legislative prerogative. the phrase "which shall not be diminished during their
Determining their constitutionality is a judicial function. The continuance in office," found in Section 9, Article VIII of the
Court respects the laudable intention of the legislature. Constitution, referring to the salaries of judicial officers.
Regretfully, however, the constitutional infirmity of Sec. 13 of xxx xxx xxx
RA 6715 amending Art. 215 of the Labor Code, insofar as it
requires confirmation of the Commission on Appointments The rule is recognized elsewhere that the legislature cannot
over appointments of the Chairman and Member of the pass any declaratory act, or act declaratory of what the law
National Labor Relations Commission (NLRC) is, as we see it, was before its passage, so as to give it any binding weight
beyond redemption if we are to render fealty to the mandate with the courts. A legislative definition of a word as used in a
of the Constitution in Sec. 16, Art. VII thereof. statute is not conclusive of its meaning as used elsewhere;
otherwise, the legislature would be usurping a judicial
Supreme Court decisions applying or interpreting the function in defining a term. (11 Am. Jur., 914, emphasis
Constitution shall form part of the legal system of the supplied).
Philippines. 8 No doctrine or principle of law laid down by the
The legislature cannot, upon passing law which violates a it came from the hands of its framers, and was voted and
constitutional provision, validate it so as to prevent an attack adopted by the people . . . 16
thereon in the courts, by a declaration that it shall be so
construed as not to violate the constitutional inhibition. (11 The function of the Court in passing upon an act of Congress
Am., Jur., 919, emphasis supplied). is to "lay the article of the Constitution which is invoked
beside the statute which is challenged and to decide whether
We have already said that the Legislature under our form of the latter squares with the former" and to "announce its
government is assigned the task and the power to make and considered judgment upon the question." 17
enact laws, but not to interpret them. This is more true with
regard to the interpretation of the basic law, the Constitution, It can not be overlooked that Sec. 16, Art. VII of the 1987
which is not within the sphere of the Legislative Constitution was deliberately, not unconsciously, intended by
department. If the Legislature may declare what a law the framers of the 1987 Constitution to be a departure from
means, or what a specific portion of the Constitution means, the system embodied in the 1935 Constitution where the
especially after the courts have in actual case ascertained its Commission on Appointments exercised the power of
meaning by interpretation and applied it in a decision, this confirmation over almost all presidential appointments,
would surely cause confusion and instability in judicial leading to many cases of abuse of such power of
processes and court decisions. Under such a system, a final confirmation. Subsection 3, Section 10, Art. VII of the 1935
court determination of a case based on a judicial Constitution provided:
interpretation of the law or of the Constitution may be 3. The President shall nominate and with the consent of the
undermined or even annulled by a subsequent and different Commission on Appointments, shall appoint the heads of the
interpretation of the law or of the Constitution by the executive departments and bureaus, officers of the Army
Legislative department that would be neither wise nor from the rank of colonel, of the Navy and Air Forces from the
desirable, being clearly violative of the fundamental rank of captain or commander, and all other officers of the
principles of our constitutional system of government, Government whose appointments are not herein otherwise
particularly those governing the separation of provided for, and those whom he may be authorized by law
14
powers. (Emphasis supplied) to appoint; . . .
Congress, of course, must interpret the Constitution, must The deliberate limitation on the power of confirmation of the
estimate the scope of its constitutional powers when it sets Commission on Appointments over presidential
out to enact legislation and it must take into account the appointments, embodied in Sec. 16, Art. VII of the 1987
relevant constitutional prohibitions. 15 Constitution, has undoubtedly evoked the displeasure and
. . . The Constitution did not change with public opinion. disapproval of members of Congress. The solution to the
apparent problem, if indeed a problem, is not judicial or
It is not only the same words, but the same in meaning . . . legislative but constitutional. A future constitutional
and as long as it it speaks not only in the same words, but convention or Congress sitting as a constituent
with the same meaning and intent with which it spoke when (constitutional) assembly may then consider either a return
to the 1935 Constitutional provisions or the adoption of a
hybrid system between the 1935 and 1987 constitutional v. Salonga (172 SCRA 160 [1989]), I reiterated my dissent
provisions. Until then, it is the duty of the Court to apply the and urged a re-examination of the doctrine stated
1987 Constitution in accordance with what it says and not in in Sarmiento v. Mison.
accordance with how the legislature or the executive would
want it interpreted. The issue is again before us. Even as I continue to believe
that the majority was wrong in
WHEREFORE, the petition is DISMISSED. Art. 215 of the Labor the Sarmiento andBautista cases, I think it is time to finally
Code as amended by RA 6715 insofar as it requires the accept the majority opinion as the Court's ruling on the
confirmation of the Commission on Appointments of matter and one which everybody should respect. There will
appointments of the Chairman and Members of the National be no end to litigation if, everytime a high government
Labor Relations Commission (NLRC) is hereby declared official is appointed without confirmation by the Commission
unconstitutional and of no legal force and effect. on Appointments, another petition is filed with this Court.

SO ORDERED. I, therefore, VOTE with the majority to DISMISS the PETITION.

Narvasa, C.J., Melencio-Herrera, Paras, Feliciano, Bidin, Grio- CRUZ, J., dissenting:
Aquino, Medialdea, Regalado, Davide, Jr., Romero and Nocon,
JJ., concur. I dissent on the basis of my dissent in Sarmiento v. Mison,
which I believe should be re-examined instead of being
Bellosillo, J., took no part. automatically re-affirmed simply because of its original
adoption. I do not believe we should persist in error on the
ground merely of adherence to judicial precedent, however
unsound.

Separate Opinion

Separate Opinions GUTIERREZ, JR., J., concurring:

When the issues in this petition were first raised in Sarmiento


III v. Mison (156 SCRA 549 [1987]), I joined Justice Cruz in a
GUTIERREZ, JR., concurring: dissent because I felt that the interpretation of Section 16,
Article VII by the majority of the Court results in absurd or
When the issues in this petition were first raised in Sarmiento irrational consequences. The framers could not have
III v. Mison (156 SCRA 549 [1987]), I joined Justice Cruz in a intended what the majority ruled to be the meaning of the
dissent because I felt that the interpretation of Section 16, provision. When the question was again raised in Bautista
Article VII by the majority of the Court results in absurd or v. Salonga (172 SCRA 160 [1989]), I reiterated my dissent
irrational consequences. The framers could not have and urged a re-examination of the doctrine stated
intended what the majority ruled to be the meaning of the in Sarmiento v. Mison.
provision. When the question was again raised in Bautista
The issue is again before us. Even as I continue to believe
that the majority was wrong in
the Sarmiento andBautista cases, I think it is time to finally
accept the majority opinion as the Court's ruling on the
matter and one which everybody should respect. There will
be no end to litigation if, everytime a high government G.R. No. 106231 November 16, 1994
official is appointed without confirmation by the Commission
on Appointments, another petition is filed with this Court. HAWAIIAN-PHILIPPINE COMPANY, petitioner,
vs.
I, therefore, VOTE with the majority to DISMISS the PETITION. REYNALDO J. GULMATICO, Labor Arbiter, Regional
Arbitration Branch No. VI, AND NATIONAL FEDERATION
CRUZ, J., dissenting: OF SUGAR WORKERS-FOOD AND GENERAL TRADES
I dissent on the basis of my dissent in Sarmiento v. Mison, representing all the sugar farm workers of the
which I believe should be re-examined instead of being HAWAIIAN PHILIPPINE MILLING DISTRICT, respondents.
automatically re-affirmed simply because of its original Angara, Abella, Concepcion, Regala & Cruz for petitioner.
adoption. I do not believe we should persist in error on the
ground merely of adherence to judicial precedent, however Manlapao, Ymballa and Chaves for private respondent.
unsound.

BIDIN, J.:

This petition for certiorari and prohibition with preliminary


injunction seeks to annul the Order dated June 29, 1992
issued by public respondent Labor Arbiter Reynaldo J.
Gulmatico denying petitioner's motion for "Claims on R.A.
809" in RAB VI Case No. 06-07-10256-89, the dispositive
portion of which reads, in part:

WHEREFORE, premises considered, the motion to dismiss


dated July 31, 1989 and the supplement thereto dated
September 19, 1989 filed by respondent company together
with the motion to dismiss filed by respondent Ramon Jison
dated August 27, 1990 and Francisco Jison dated September
20, 1990, respectively, are hereby DENIED.

xxx xxx xxx


(Rollo, p. 59) On October 3,1989, petitioner applied a "Reply to Opposition"
followed by a "Citation of Authorities in Support of Motion to
The antecedent facts are as follows: Dismiss."
On July 4, 1989, respondent union, the National Federation of On December 20, 1989, respondent union filed an amended
Sugar Workers-Food and General Trades (NFSW-FGT) filed complaint additionally impleading as complainants Efren
RAB VI Case No. 06-07-10256-89 against herein petitioner Elaco, Bienvenido Gulmatico, Alberto Amacio, Narciso
Hawaiian-Philippine Company for claims under Republic Act Vasquez, Mario Casociano and all the other farm workers of
809 (The Sugar Act of 1952). Respondent union claimed that the sugar planters milling with petitioner from 1979 up to the
the sugar farm workers within petitioner's milling district present, and as respondents, Jose Maria Regalado, Ramon
have never availed of the benefits due them under the law. Jison, Rolly Hernaez, Rodolfo Gamboa, Francisco Jison and all
Under Section 9 of R.A 809, otherwise known as the Sugar other sugar planters milling their canes with petitioner from
Act of 1952, it is provided, to wit: 1979 up to the present.

Sec. 9. In addition to the benefits granted by the Minimum On August 27, 1990, Ramon Jison, one of the respondents
Wage Law, the proceeds of any increase in participation impleaded in the amended complaint, filed a "Motion to
granted to planters under this Act and above their present Dismiss and/or to Include Necessary Parties," praying for the
share shall be divided between the planter and his laborers inclusion as co-respondents of the Asociacion de Hacenderos
in the following proportions; de Silan-Saravia, Inc. and the Associate Planters of Silay-
Saravia, Inc.
Sixty per centum of the increase participation for the laborers
and forty per centum for the planters. The distribution of the On June 29, 1992, public respondent promulgated the
share corresponding to the laborers shall be made under the assailed Order denying petitioner's Motion to Dismiss and
supervision of the Department of Labor. Supplemental Motion to Dismiss.

xxx xxx xxx Hence, this petition filed by Hawaiian-Philippine Company.

(Emphasis supplied.) Petitioner reasserts the two lesson earlier raised in its Motion
to Dismiss which public respondent unfavorably resolved in
On July 31, 1989, petitioner filed a "Motion to Dismiss," the assailed Order.
followed by a "Supplemental Motion to Dismiss" on
September 19, 1989. Petitioner contended that public These two issues are first, whether public respondent Labor
respondent Labor Arbiter has no jurisdiction to entertain and Arbiter has jurisdiction to hear and decide the case against
resolve the case, and that respondent union has no cause of petitioner; and the second, whether respondent union and/or
action against petitioner. the farm workers represented by it have a cause of action
against petitioner.
On August 23, 1989, respondent union filed an "Opposition to
Motion to Dismiss." Petitioner contends that the complaint filed against it cannot
be categorized under any of the cases falling within the
jurisdiction of the Labor Arbiter as enumerated in Article 217 In support of the contention that the Labor Arbiter has no
of the Labor Code, as amended, considering that no jurisdiction to hear and decide the case against petitioner,
employer-employee relationship exists between petitioner the latter cites the ruling in San Miguel Corporation
milling company and the farm workers represented by vs. NLRC, 161 SCRA 719 [1988], wherein it was held that a
respondent union. Article 217 of the Labor Code provides: single unifying element runs through the cases and disputes
falling under the jurisdiction of the Labor Arbiter and that is
Art. 217. Jurisdiction of Labor Arbiters and the Commission. that all the enumerated cases and disputes arise out of or
(a) Except as otherwise provided under this Code, the are in connection with an employer-employee relationship, or
Labor Arbiters shall have original and exclusive jurisdiction to some aspect or incident of such relationship. Likewise,
hear and decide, within thirty (30) calendar days after the in Federation of Free Farmers vs. Court of Appeals, 107 SCRA
submission of the case by the parties for decision without 411 [1981], this Court held that:
extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or . . . . From the beginning of the sugar industry, the centrals
non-agricultural: have never had any privity with the plantation laborers, since
they had their own laborers to take care of. . . . Nowhere in
1. Unfair labor practice cases; Republic Act 809 (the Sugar Act of 1952) can we find
2. Termination disputes; anything that creates any relationship between the laborers
of the planters and the centrals. . . .
3. If accompanied with a claim for reinstatement, those cases
that workers may file involving wages, rates of pay, hours of . . . Under no principle of law or equity can we impose on the
work and other terms and conditions of employment; central . . . any liability to the plantation laborers. . . .
(Emphasis supplied)
4. Claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations; On the strength of the aforecited authorities, petitioner
contends that it is not a proper party and has no involvement
5. Cases arising from any violation of Article 264 of this Code, in the case filed by respondent union as it is not the
including questions involving the legality of strikes and employer of the respondent sugar workers.
lockouts; and
Furthermore, to bolster its contention, petitioner cites the
6. Except claims for employees' compensation, social Rules and Regulations Implementing RA 809 issued by the
security, medicare from maternity benefits, all other claims then Wage Administration Service pursuant to the
arising from employer-employee relations, including those of Administrative Order of the Labor Secretary dated October 1,
persons in domestic or household service, involving an 1952. Section 1 thereof states:
amount exceeding Five Thousand Pesos (P5,000.00), whether
or not accompanied with a claim for reinstatement. Sec. 1. The payment of the proceeds derived from the
(Emphasis supplies) sixty per centum of any increase in the participation due the
laborers shall be directly paid to the individual
laborer concerned at the end of each milling season by his
respective planter under the Supervision of the Secretary of whether an employer-employee relationship indeed exists
Labor or his duly authorized representative by means of between petitioner milling company and the sugar workers.
payrolls prepared by said planter. (Emphasis supplied) He did not categorically rule thereon but instead relied on the
observation that when petitioner delivered to its planters the
In addition, under Letter of Instruction No. 854 dated May 1, quedans representing its share, petitioner did not first
1979, it is provided: ascertain whether the shares of all workers or claimants were
1. Payment subject to supervision. The workers' share shall fully paid/covered pursuant to LOI No. 854, and that
be paid directly by the planter concerned to the workers or petitioner did not have the necessary certification from the
claimants entitled thereto subject to the supervision of the Department of Labor attesting to such fact of delivery. In
Minister of Labor or his duly designated representative. view of these observations, public respondent subscribed to
the possibility that petitioner may still have a liability vis-a-
The responsibility for the payment of the sugar workers' vis the workers' share. Consequently, in order that the
benefits under R.A. 809 was categorically ruled upon in workers would not have to litigate their claim separately,
the Federation of Free Farmers case, supra., to wit: which would be tantamount to tolerating the splitting of a
cause of action, public respondent held that petitioner should
. . . the matter of paying the plantation laborers of the still be included in this case as an indispensable party
respective planters becomes exclusively the concern of the without which a full determination of this case would not be
planters, the laborers and the Department of Labor. Under no obtained.
principle of law or equity can we impose on the Central
here VICTORIAS any liability to the respective plantation We find for petitioner.
laborers, should any of their respective planters-employers
fail to pay their legal share. After all, since under the law it is The Solicitor General, in its adverse Comment, correctly
the Department of Labor which is the office directly called agreed with petitioner's contention that while the jurisdiction
upon to supervise such payment, it is but reasonable to over controversies involving agricultural workers has been
maintain that if any blame is to be fixed for the unfortunate transferred from the Court of Agrarian Relations to the Labor
situation of the unpaid laborers, the same should principally Arbiters under the Labor Code as amended, the said
be laid on the planters and secondarily on the Department of transferred jurisdiction is however, not without limitations.
Labor, but surely never on the central. The dispute or controversy must still fall under one of the
cases enumerated under Article 217 of the Labor Code,
Whatever liability there exists between favor of the which cases, as ruled in San Miguel, supra., arise out of or
plantation laborers should be pinned on the PLANTERS, their are in connection with an employer-employee relationship.
respective employers. (Emphasis supplied)
In the case at bar, it is clear that there is no employer-
On the other hand, public respondent and respondent union employee relationship between petitioner milling company
maintain the position that privity exists between petitioner and respondent union and/or its members-workers, a fact
and the sugar workers. Actually, public respondent, in which, the Solicitor General notes, public respondent did not
resolving petitioner's Motion to Dismiss, skirted the issue of dispute or was silent about. Absent the jurisdictional requisite
of an employer-employee relationship between petitioner and In the case at bar, it is disputed that petitioner milling
private respondent, the inevitable conclusion is that public company has already distributed to its planters their
respondent is without jurisdiction to hear and decide the case respective shares. Consequently, petitioner has fulfilled its
with respect to petitioner. part and has nothing more to do with the subsequent
distribution by the planters of the workers' share.
Anent the issue of whether respondent union and/or its
members-workers have a cause of action against petitioner, Public respondent's contention that petitioner is an
the same must be resolved in the negative. To have a cause indispensable party is not supported by the applicable
of action, the claimant must show that he has a legal right provisions of the Rules of Court. Under Section 7, Rule 3
and the respondent a correlative duty in respect thereof, thereof, indispensable parties are "parties in interest" without
which the latter violated by some wrongful act or omission whom no final determination of the action can be obtained. In
(Marquez vs. Varela, 92 Phil. 373 [1952]). In the instant case, this case, petitioner cannot be deemed as a party in interest
a simple reading of Section 9 of R.A. 809 and Section 1 of LOI since there is no privity or legal obligation linking it to
845 as aforequoted, would show that the payment of the respondent union and/or its members-workers.
workers' share is a liability of the planters-employers, and not
of the milling company/sugar central. We thus reiterate Our In order to further justify petitioner's compulsory joinder as a
ruling on this matter, as enunciated in Federation of Free party to this case, public respondent relies on petitioners'
Farmers, supra., to wit: lack of certification from the Department of Labor of its
delivery of the planters' shares as evidence of an alleged
. . . . Nowhere in Republic Act No. 809 can we find anything "conspicuous display of concerted conspiracy between the
that creates any relationship between the laborers of the respondent sugar central (petitioner) and its adherent
planters and the centrals. Under the terms of said Act, the planters to deprive the workers or claimants of their shares in
old practice of the centrals issuing the quedans to the the increase in participation of the adherent planters." (Rollo,
respective PLANTERS for their share of the proceeds of milled p. 56)
sugar per their milling contracts has not been altered or
modified. In other words, the language of the Act does not in The assertion is based on factual conclusions which have yet
any manner make the central the insurer on behalf of the to be proved. And even assuming for the sake of argument
plantation laborers that the latter's respective employers- that public respondent's conclusions are true, respondent
planters would pay them their share. . . . union's and/or its workers' recourse lies with the Secretary of
Labor, upon whom authority is vested under RA 809 to
. . . . Accordingly, the only obligation of the centrals (under supervise the payment of the workers' shares. Any act or
Section 9 of the Act), like VICTORIAS, is to give to the omission involving the legal right of the workers to said
respective planters, like PLANTERS herein, the planters' share shares may be acted upon by the Labor Secretary
in the proportion stipulated in the milling contract which either motu proprio or at the instance of the workers. In this
would necessarily include the portion of 60% pertaining to case however, no such action has been brought by the
the laborers. Once this has been done, the central is already subject workers, thereby raising the presumption that no
out of the picture. . . . (Emphasis supplied) actionable violation has been committed.
Public respondent is concerned that the respondent planters
may easily put up the defense that the workers' share is with
petitioner milling company, giving rise to multiplicity of suits.
The Solicitor General correctly postulates that the planters
cannot legally set up the said defense since the payment of
the workers' share is a direct obligation of the planters to
their workers that cannot be shifted to the miller/central.
Furthermore, the Solicitor General notes that there is nothing
in RA 809 which suggests directly or indirectly that the
obligation of the planter to pay the workers' share is
dependent upon his receipt from the miller of his own share.
If indeed the planter did not receive his just and due share
from the miller, he is not without legal remedies to enforce
his rights. The proper recourse against a reneging miller or
central is for the planter to implead the former not as an
indispensable party but as a third party defendant under
Section 12, Rule 6 of the Rules of Court. In such case, herein
petitioner milling company would be a proper third party
dependent because it is directly liable to the planters (the
original defendants) for all or part of the workers' claim.
However, the planters involved in this controversy have not
filed any complaint of such a nature against petitioner,
thereby lending credence to the conclusion that petitioner
has fulfilled its part vis-a-vis its obligation under RA 809.

WHEREFORE, premises considered, the petition is GRANTED.


Public respondent Reynaldo J. Gulmatico is hereby ORDERED
to DISMISS RAB VI Case No. 06-07-10256-89 with respect to
herein petitioner Hawaiian-Philippine Company and to
PROCEED WITH DISPATCH in resolving the said case.

SO ORDERED.
On January 30, 1993, William Dayag asked for permission to
go to Manila to attend to family matters. He was allowed to
G.R. No. 124193 March 6, 1998 do so but was not paid for the period January 23-30, 1993,
WILLIAM DAYAG, EDUARDO CORTON, EDGARDO allegedly due to his accountability for the loss of certain
CORTON, LEOPOLDO NAGMA, ALOY FLORES, ROMEO construction tools. Eduardo Corton had earlier left on January
PUNAY and EDWIN DAYAG, petitioners, 16, 1993, purportedly due to harassment by Young. In
vs. February 1993, Edgardo Corton, Aloy Flores and Edwin Dayag
HON. POTENCIANO S. CANIZARES, JR., NATIONAL also left Cebu for Manila, allegedly for the same reason.
LABOR RELATIONS COMMISSION and YOUNG'S Thereafter, petitioners banded together and filed the
CONSTRUCTION CORPORATION, respondents. complaint previously mentioned.

Instead of attending the initial hearings set by the labor


arbiter, Young filed, on July 6, 1993, a motion to transfer the
ROMERO, J.: case to the Regional Arbitration Branch, Region VII of the
NLRC. He claimed that the workplace where petitioners were
On March 11, 1993, petitioners William Dayag, Edwin Dayag, regularly assigned was in Cebu City and that, in consonance
Eduardo Corton, Edgardo Corton, Leopoldo Nagma, Aloy with Section 1(a) of Rule IV of the New Rules of Procedure of
Flores, and Romeo Punay filed a complaint for illegal the NLRC, 1 the case should have been filed in Cebu City.
dismissal, non-payment of wages, overtime pay, premium Young submitted in evidence a certificate of registration of
pay, holiday pay, service incentive leave, 13th month pay, business name showing his company's address as "Corner
and actual, moral and exemplary damages against Alfredo Sudlon-Espaa Streets, Pari-an, Cebu City"; its business
Young, a building contractor doing business under the firm permit issued by the Office of the Mayor of Cebu City and a
name Young's Construction. They filed the complaint with the certification by the Philippine National Police-Cebu City Police
National Capital Region Arbitration Branch of the NLRC which Station 2 that petitioners had been booked therein for
docketed the same as NLRC-NCR-Case No. 00-03-01891-93. qualified theft upon the complaint of Young's Construction.
The case was subsequently assigned to Labor Arbiter
Potenciano Canizares, Jr. Petitioners opposed the same, arguing that all of them,
except for Punay, were, by that time, residents of Metro
Petitioners alleged that they were hired in 1990 by Young to Manila and that they could not afford trips to Cebu City.
work as tower crane operators at the latter's construction site Besides, they claimed that respondent had its main office at
at Platinum 2000 in San Juan, Metro Manila. In November Corinthian Gardens in Quezon City. Young, in reply, declared
1991, they were transferred to Cebu City to work at the that the Corinthian Gardens address was not his principal
construction of his Shoemart Cebu project. Petitioners worked place of business, but actually his residence, which he also
in Cebu until February 1993, except for Punay who stayed up used as a correspondent office for his construction firm.
to September 29, 1992 only and Nagma, until October 21,
1992. Agreeing that petitioners' workplace when the cause of
action accrued was Cebu City, the labor arbiter, on
September 8, 1993, granted Young's motion and ordered the AND IN DECLARING THAT THE PROPER VENUE IS AT CEBU
transmittal of the case to the regional arbitration branch of CITY.
Region VII. Petitioners promptly appealed said order to the
NLRC, which, however, dismissed the same on January 31, Petitioner contends that the labor arbiter acted with grave
1995, for lack of merit. abuse of discretion when it entertained Young's motion to
transfer venue since it did not specify the time and date
Citing Nestle Philippines, Inc. vs. NLRC 2 and Cruzvale, when it would be heard by the labor arbiter. They raise the
Inc. vs. Laguesma 3 petitioners moved for a reconsideration suppletory application of the Rules of Court, specifically
of the January 31, 1995 resolution of the Commission. Acting Sections 4 and 5 of Rule 15, 4 in relation to Section 3 of Rule I
favorably on said motion, the Commission, on August 25, of the New Rules of Procedure of the NLRC, in support of their
1995, annulled and set aside its resolution of January 31, contention.
1995, and remanded the case to the original arbitration
branch of the National Capital Region for further proceedings. We find no merit in petitioners' argument. In a long line of
This prompted Young, in turn, to file his own motion for decisions, 5 this Court has consistently ruled that the
reconsideration seeking the reversal of the August 25, 1995 application of technical rules of procedure in labor cases may
resolution of the Commission. Finding the two above-cited be relaxed to serve the demands of substantial justice. As
cases to be inapplicable to instant case, the Commission provided by Article 221 of the Labor Code "rules of evidence
made a volte-face and reconsidered its August 25, 1995 prevailing in courts of law or equity shall not be controlling
resolution. It reinstated the resolution of January 31, 1995, and it is the spirit and intention of this Code that the
directing the transfer of the case to Cebu City. In addition, it Commission and its members and the Labor Arbiters shall
ruled that no further motion of a similar nature would be use every and all reasonable means to ascertain the facts in
entertained. Hence, the recourse to this Court by petitioners, each case speedily and objectively and without regard to
who raise the following as errors: technicalities of law or procedure, all in the interest of due
process." Furthermore, while it is true that any motion that
1. THE LABOR ARBITER A QUO ERRED IN ISSUING THE does not comply with the requirements of Rule 15 should not
DISPUTED ORDER DATED SEPTEMBER 8, 1993 WHEN, be accepted for filing and, if filed, is not entitled to judicial
OBVIOUSLY, THE SAID MOTION TO TRANSFER VENUE WAS cognizance, this Court has likewise held that where a rigid
FILED IN VIOLATION OF SECTIONS 4 AND 5 OF RULE 15 OF application of the rule will result in a manifest failure or
THE REVISED RULES OF COURT. miscarriage of justice, technicalities may be disregarded in
order to resolve the case. Litigations should, as much as
2. PUBLIC RESPONDENTS ERRED IN ISSUING THE DISPUTED possible, be decided on the merits and not on
JUDGMENT WHEN, OBVIOUSLY, THE RESPONDENT, BY FILING technicalities. 6 Lastly, petitioners were able to file an
ITS POSITION PAPER, HAS WAIVED ITS RIGHT TO QUESTION opposition to the motion to transfer venue which,
THE VENUE OF THE INSTANT CASE. undisputedly, was considered by the labor arbiter when he
3. THE PUBLIC RESPONDENTS ERRED IN CONCLUDING THAT issued the disputed order of September 8, 1993. There is,
THE WORKPLACE OF THE COMPLAINANTS IS AT CEBU CITY hence, no showing that petitioners have been unduly
prejudiced by the motion's failure to give notice of hearing.
Given the foregoing, it seems improper to nullify Young's Finally, while it is true that objections to venue are deemed
motion on a mere technicality. Petitioners' averments should waived if the respondent, through conduct, manifests
be given scant consideration to give way to the more satisfaction with the venue until after the trial, or abides by it
substantial matter of equitably determining the rights and until the matter has proceeded to a hearing, 8 no waiver of
obligations of the parties. It need not be emphasized that the defense of venue on the ground of estoppel by conduct
rules of procedure must be interpreted in a manner that will can be attributed to Young, who consistently and persistently
help secure and not defeat justice. 7 contested the same even before trial.

Likewise, petitioners harp on Young's so-called "waiver" of his Similarly, petitioners' reliance on Nestle 9 and Cruzvale 10 is
right to contest the venue of the instant case. They argue likewise misplaced. While Nestle ruled that Rule IV of the New
that Young is estopped from questioning the venue herein as Rules of Procedure of the NLRC does not constitute a
his motion to transfer venue was actually a position paper, a complete rule on venue in cases cognizable by labor arbiters,
close scrutiny of the same purportedly showing that he Section 2, Rule 4 of the Rules of Court 11 having suppletory
admitted and denied certain allegations found in petitioners' effect, it also held that the foregoing provision of the Rules of
complaint. Court applies only where the petitioners are labor unions or
where a single act of an employer gives rise to a cause of
Petitioners' contention rings hollow. Even if the questioned action common to many of its employees working in different
motion was at the same time a position paper, Section 1(c) of branches or workplaces of the former. It is not denied that
Rule IV provides: "(w)hen improper venue is not objected to petitioners herein are not represented by a union; nor were
before or at the time of the filing of position papers, such they assigned to different workplaces by Young.
question shall be deemed waived" (Emphasis supplied). Likewise, Cruzvale is inapplicable to the case at bar, the issue
Consequently, there is no waiver of improper venue if a party involved therein being the propriety of the DOLE Region IV
questions venue simultaneously with the filing of a position Office's taking cognizance of a petition for certification
paper. Moreover, nowhere in the New Rules of Procedure of election when the company's place of business was in Cubao,
the NLRC is there a requirement that a party must Quezon City, while the workplace of the petitioning union was
object solely to venue, on penalty of waiving the same. In elsewhere. The instant case does not involve any certification
fact, Section 1(d) provides that: election; nor are the workplace of the employees and place
The venue of an action may be changed or transferred to a of business of the employer different.
different Regional Arbitration Branch other than where the Young cannot, however, derive comfort from the foregoing,
complaint was filed by written agreement of the parties or this petition having been overtaken by events. In the recent
when the Commission or Labor Arbiter before whom the case case of Sulpicio Lines, Inc. vs. NLRC 12 this Court held that the
is pending so orders, upon motion by the proper party in question of venue essentially pertains to the trial and relates
meritorious cases (Emphasis supplied). more to the convenience of the parties rather than upon the
Young's acts are in consonance with this provision, for he substance and merits of the case. It underscored the fact
seasonably made representations to transfer the venue of that the permissive rules underlying provisions on venue are
the action in the proper motion. intended to assure convenience for the plaintiff and his
witnesses and to promote the ends of justice. With more action at all. The condition will thus defeat, instead of
reason does the principle find applicability in cases involving enhance, the ends of justice. Upon the other hand, petitioner
labor and management because of the doctrine well- had branches or offices in the respective ports of call of the
entrenched in our jurisdiction that the State shall afford full vessels and could afford to litigate in any of these places.
protection to labor. The Court held that Section 1(a), Rule IV Hence, the filing of the suit in the CFI of Misamis Oriental, as
of the NLRC Rules of Procedure on Venue was merely was done in the instant case will not cause inconvenience to,
permissive. In its words: much less prejudice petitioner.

This provision is obviously permissive, for the said section In the case at hand, the ruling specifying the National Capital
uses the word "may," allowing a different venue when the Region Arbitration Branch as the venue of the present action
interests of substantial justice demand a different one. In any cannot be considered oppressive to Young. His residence in
case, as stated earlier, the Constitutional protection accorded Corinthian Gardens also serves as his correspondent office.
to labor is a paramount and compelling factor, provided the Certainly, the filing of the suit in the National Capital Region
venue chosen is not altogether oppressive to the employer. Arbitration Branch in Manila will not cause him as much
inconvenience as it would the petitioners, who are now
The rationale for the rule is obvious. The worker, being the residents of Metro Manila, if the same was heard in Cebu.
economically-disadvantaged partywhether as Hearing the case in Manila would clearly expedite
complainant/petitioner or as respondent, as the case may be, proceedings and bring about the speedy resolution of instant
the nearest governmental machinery to settle the dispute case.
must be placed at his immediate disposal, and the other
party is not to be given the choice of another competent WHEREFORE, premises considered, the resolution of February
agency sitting in another place as this will unduly burden the 12, 1996, of public respondent NLRC, transferring the instant
former. 13 In fact, even in cases where venue has been case to the Seventh Regional Arbitration Branch, Cebu City, is
stipulated by the parties, this Court has not hesitated to set SET ASIDE. Instead, its resolution dated August 25, 1995,
aside the same if it would lead to a situation so grossly remanding the case to the Arbitration Branch of Origin, is
inconvenient to one party as to virtually negate his claim. hereby REINSTATED and AFFIRMED.
Again, in Sulpicio Lines, this Court, citing Sweet
14
Lines vs. Teves, held that: SO ORDERED.

An agreement will not be held valid where it practically


negates the action of the claimant, such as the private
respondents herein. The philosophy underlying the provisions
on transfer of venue of actions is the convenience of the
plaintiffs as well as his witnesses and to promote the ends of
justice. Considering the expense and trouble a passenger
residing outside Cebu City would incur to prosecute a claim in
the City of Cebu, he would probably decide not to file the
G.R. No. L-56431 January 19, 1988

NATIONAL UNION OF BANK EMPLOYEES, In Its Own


Right And In Behalf Of CBTC EMPLOYEES Affiliated
With It; CBTC EMPLOYEES UNION, In Its Own Right And
Interest And In Behalf Of All CBTC Rank And File
Employees Including Its Members, BENJAMIN GABAT,
BIENVENIDO MORALEDA, ELICITA GAMBOA, FAUSTINO
TEVES, SALVADOR LISING, and NESTOR DE LOS
SANTOS, petitioners,
vs.
THE HON. JUDGE ALFREDO M. LAZARO, CFI-MANILA
BRANCH XXXV; COMMERCLKL BANK AND TRUST
COMPANY OF THE PHILIPPINES; BANK OF THE
PHILIPPINE ISLANDS; AYALA CORPORATION; MANUEL J.
MARQUEZ; ENRIQUE ZOBEL; ALBERTO VILLA-ABRILLE;
VICENTE A. PACIS, JR.; and DEOGRACIAS A.
FERNANDO, respondents.

SARMIENTO, J.:

The sole issue in this special civil action for certiorari is


whether or not the courts may take cognizance of claims for
damages arising from a labor controversy.

The antecedent facts are not disputed.

On July 1, 1977, the Commercial Bank and Trust Company, a


Philippine banking institution, entered into a collective
bargaining agreement with the Commercial Bank and Trust
Company Union, representing the rank and file of the bank
with a membership of over one thousand employees, and an
affiliated local of the National Union of Bank Employees, a
national labor organization.
The agreement was effective until June 30, 1980, with an 54. In virtually suppressing the collective bargaining rights of
automatic renewal clause until the parties execute a new plaintiffs under the law and as provided in the CURRENT CBA,
agreement. through shadow bargaining, calculated delay, suspension of
negotiations, concealment of bargainable issues and high-
On May 20, 1980, the union, together with the National Union handed dictation, the CBTC and its defendant officials, as well
of Bank Employees, submitted to the bank management as the BANK OF P.I. and its defendant officials, were all
proposals for the renegotiation of a new collective bargaining actuated by a dishonest purpose to secure an undue
agreement. The following day, however, the bank suspended advantage; on the part of the CBTC it was to avoid fresh and
negotiations with the union. The bank had meanwhile additional contractual commitments, which would
entered into a merger with the Bank of the Philippine Islands, substantially lessen and diminish the profitability of the sale;
another Philippine banking institution, which assumed all and on the part of the BANKOF P.I., it was to avoid having to
assets and liabilities thereof. face higher compensation rates of CBTC employees in the
As a consequence, the union went to the then Court of First course of integration and merger which could force the
Instance of Manila, presided over by the respondent Judge, upgrading of the benefit package for the personnel of the
on a complaint for specific performance, damages, and merged operations, and thereby pushed personnel costs
preliminary injunction against the private respondents. upwards; substantial outlays and costs thereby entailed were
Among other things, the complaint charged: all deftly avoided and evaded, through the expedient of
deliberate curtailment and suppression of contractual
xxx xxx xxx bargaining rights;

51. In entering in to such arrangement for the termination of 55. All the other defendants have actively cooperated with
the CURRENT CBA, and the consequent destruction to and abetted the CBTC and its defendant officers in
existing rights, interests and benefits thereunder,CBTC is negotiating, contriving and effecting the above arrangements
liable for wilful injury to the contract and property rights for the attainment of its dishonest purpose, for abuse of its
thereunder as provided in Article 2220 of the Civil Code of rights, and for taking undue advantage of its very own
the Philippines; employees, through the secret sale and scheduled merger;
the collective participation therein evinces machination,
52. By arranging for the termination of the CURRENT CBA in deceit, wanton attitude, bad faith, and oppressive intent,
the manner above described, CBTC committed breach of said wilfully causing loss or injury to plaintiffs in a manner that is
contract in bad faith, in that CBTC had taken undue contrary to law, morals, good customs and public policy, in
advantage of its own employees, by concealing and hiding violation of Articles 21 and 28 of the Civil Code; 1
the negotiations towards an agreement on the sales and
merger, when it was under a statutory duty to disclose and xxx xxx xxx
bargain on the effects thereof, according to law;
Predictably, the private respondents moved for the dismissal
xxx xxx xxx of the case on the ground, essentially, of lack of jurisdiction
of the court.
On November 26, 1980, the respondent Judge issued an The civil implications thereof do not defeat its nature as a
order, dismissing the case for lack of jurisdiction. According fundamental labor offense.
to the court, the complaint partook of an unfair labor practice
dispute notwithstanding the incidental claim for damages, As we stated, the damages (allegedly) suffered by the
jurisdiction over which is vested in the labor arbiter. This petitioners only form part of the civil component of the injury
order, as well as a subsequent one denying reconsideration, arising from the unfair labor practice. Under Article 247 of
is now alleged as having been issued 'in excess of his the Code, "the civil aspects of all cases involving unfair labor
jurisdiction amounting to a grave abuse of discretion." practices, which may include claims for damages and other
affirmative relief, shall be under the jurisdiction of the labor
We sustain the dismissal of the case, which is, as correctly arbiters. 4
held by the respondent court, an unfair labor practice
controversy within the original and exclusive jurisdiction of The petitioners' claimed injury as a consequence of the tort
the labor arbiters and the exclusive appellate jurisdiction of allegedly committed by the private respondents, specifically,
the National Labor Relations Commission. The claim against the Bank of the Philippine Islands, under Article 1314 of the
the Bank of Philippine Islands the principal respondent Civil Code, 5 does not necessarily give the courts jurisdiction
according to the petitioners for allegedly inducing the to try the damage suit. Jurisdiction is conferred by law 6 and
Commercial Bank and Trust Company to violate the existing not necessarily by the nature of the action. Civil
collective bargaining agreement in the process of re- controversies are not the exclusive domain of the courts. In
negotiation, consists mainly of the civil aspect of the unfair the case at bar, Presidential Decree No. 442, as amended by
labor practice charge referred to under Article 247 2 of the Batas Blg. 70, has vested such a jurisdiction upon the labor
Labor Code. arbiters, a jurisdiction the courts may not assume.

Under Article 248 3


of the Labor Code, it shall be an unfair Jurisdiction over unfair labor practice cases, moreover,
labor practice: belongs generally to the labor department of the
government, never the courts. In Associated Labor Union v.
(a) To interfere with, restrain or coerce employees in the Gomez, 7 we said:
exercise of their right to self-organization;
A rule buttressed upon statute and reason that is frequently
xxx xxx xxx reiterated in jurisprudence is that labor cases involving unfair
practice are within the exclusive jurisdiction of the CIR. By
(g) To violate the duty to bargain collectively as prescribed by now, this rule has ripened into dogma. It thus commands
this Code; adherence, not breach.
xxx xxx xxx The fact that the Bank of the Philippine Islands is not a party
The act complained of is broad enough to embrace either to the collective bargaining agreement, for which it "cannot
provision. Since it involves collective bargaining whether be sued for unfair labor practice at the time of the
or not it involved an accompanying violation of the Civil Code action," 8 cannot bestow on the respondent court the
it may rightly be categorized as an unfair labor practice.
jurisdiction it does not have. In Cebu Portland Cement Co. v. As far back as Associated Labor Union vs. Gomez [L-25999,
Cement Workers' Union, 9 we held: February 9, 1967, 19 SCRA 304] the exclusive jurisdiction of
the Court of Industrial Relations in disputes of this character
xxx xxx xxx was upheld. "To hold otherwise," as succinctly stated by the
There is no merit in the allegation. In the first place, it must ponente, Justice Sanchez, "is to sanction split jurisdiction-
be remembered that jurisdiction is conferred by law; it is not which is obnoxious to the orderly administration of justice."
determined by the existence of an action in another tribunal. Then, in Progressive Labor Association vs. Atlas Consolidated
In other words, it is not filing of an unfair labor case in the Mining and Development Corporation [L-27585, May 29,
Industrial Court that divests the court of first instance 1970, 33 SCRA 349] decided three years later, Justice J.B.L.
jurisdiction over actions properly belonging to the former. It is Reyes, speaking for the Court, stressed that to rule that such
the existence of a controversy that properly falls within the demand for damages is to be passed upon by the regular
exclusive jurisdiction of the Industrial Court and to which the courts of justice, instead of leaving the matter to the Court of
civil action is linked or connected that removes said civil case Industrial Relations, 'would be to sanction split jurisdiction,
from the competence of the regular courts. It is for this which is prejudicial to the orderly administration of justice'.
reason that civil actions found to be intertwined with or Thereafter, this Court, in the cases of Leoquinco vs. Canada
arising out of, a dispute exclusively cognizable by the Court Dry Bottling Co. [L-28621, February 22, 1971, 37 SCRA 535]
of Industrial Relations were dismissed, even if the cases were and Associated Labor Union v. Cruz ([L-28978, September 22,
commenced ahead of the unfair labor practice proceeding, 1971, 41 SCRA 12], with the opinions coming from the same
and jurisdiction to restrain picketing was decreed to belong distinguished jurist, adhered to such a doctrine. The latest
to the Court of Industrial Relations although no unfair labor case in point, as noted at the outset, is the Goodrich
practice case has as yet been instituted. For the court of first Employees Association decision [L-30211, October 5, 1976,
instance to lose authority to pass upon a case, therefore, it is 73 SCRA 297].
enough that unfair labor practice case is in fact involved in or xxx xxx xxx
attached to the action, such fact of course being established
by sufficient proof. 10 The petitioners' reliance upon Calderon v. Court of
Appeals 12 is not well-taken. Calderon has since lost its
xxx xxx xxx persuasive force, beginning with our ruling in PEPSI-COLA
Furthermore, to hold that the alleged tortious act now BOTTLING COMPANY v. MARTINEZ, 13 EBON v. DE
14
attributed to the Bank of the Philippine Islands may be the GUZMAN, and AGUSAN DEL NORTE ELECTRIC COOP., INC. v.
subject of a separate suit is to sanction split jurisdiction long SUAREZ, 15 and following the promulgation of Presidential
recognized to be an offense against the orderly Decree No. 1691, restoring the jurisdiction to decide money
administration of justice. As stated in Nolganza v. Apostol: 11 claims unto the labor arbiters.

xxx xxx xxx Neither does the fact that the Bank of the Philippine Islands
"was not an employer at the time the act was committed'
abate a recourse to the labor arbiter. It should be noted
indeed that the Bank of the Philippine Islands assumed "all
the assets and liabilities" 16 of the Commercial Bank and Trust
Company. Moreover, under the Corporation Code:

xxx xxx xxx

5. The surviving or consolidated corporation shall be


responsible and liable for all the liabilities and obligations of
each of the constituent corporations in the same manner as if
such surviving or consolidated corporation had itself incurred
such liabilities or obligations; and any claim, action or
proceeding pending by or against any of such constituent
corporations may be prosecuted by or against the surviving
or consolidated corporation, as the case may be. Neither the
rights of creditors nor any lien upon the property of any of
such constituent corporations shall be impaired by such
merger or consolidation. 17

xxx xxx xxx

In sum, the public respondent has not acted with grave


abuse of discretion.

WHEREFORE, the petition is DISMISSED. No costs.

G.R. No. L-68544 October 27, 1986


LORENZO C. DY, ZOSIMO DY, SR., WILLIAM IBERO, was not re-elected as bank manager, 3 Because of this
RICARDO GARCIA AND RURAL BANK OF AYUNGON, development, the Board, on July 2, 1983, passed Resolution
INC., petitioners, No. 5, series of 1983, relieving him as bank manager.
vs.
NATIONAL LABOR RELATIONS COMMISSION AND On August 3, 1983, Vailoces filed a complaint for illegal
EXECUTIVE LABOR ARBITER ALBERTO L. DALMACION, dismissal and damages with the Ministry of Labor and
AND CARLITO H. VAILOCES, respondents. Employment against Lorenzo Dy and Zosimo Dy, Sr. The
complaint was amended on September 22, 1983 to include
Marcelino C. Maximo and Ramon Barrameda for petitioners. additional respondents-William Ibero, Ricardo Garcia and the
Rural Bank of Ayungon, and additional causes of action for
Carlito H. Vailoces for private respondent. underpayment of salary and non-payment of living
allowance.

NARVASA, J.: In his complaint and position paper, Vailoces asserted that
Lorenzo Dy, after obtaining control of the majority stock of
Petitioners assail in this Court the resolution of the National the bank by buying the shares of Marcelino Maximo, called
Labor Relations Commission (NLRC) dismissing their appeal an illegal stockholders' meeting and elected a Board of
from the decision of the Executive Labor Arbiter 1 in Cebu Directors controlled by him; that after its illegal constitution,
City which found private respondent to have been illegally said Board convened on July 2, 1983 and passed a resolution
dismissed by them. dismissing him as manager, without giving him the
opportunity to be heard first; that his dismissal was
Said private respondent, Carlito H. Vailoces, was the manager motivated by Lorenzo Dy's desire to take over the
of the Rural Bank of Ayungon (Negros Oriental), a banking management and control of the bank, not to mention the fact
institution duly organized under Philippine laws. He was also that he (Dy) harbored ill feelings against Vailoces on account
a director and stockholder of the bank. of the latter's filing of a complaint for violation of the
corporation code against him and another complaint for
On June 4, 1983, a special stockholders' meeting was called
compulsory recognition of natural child with damages against
for the purpose of electing the members of the bank's Board
Zosimo Dy, Sr. 4
of Directors. Immediately after the election the new Board
proceeded to elect the bank's executive officers. In their answer, Lorenzo Dy, et al. denied the charge of illegal
dismissal. They pointed out that Vailoces' position was an
Pursuant to Article IV of the bank's by-laws, 2 providing for
elective one, and he was not re-elected as bank manager
the election by the entire membership of the Board of the
because of the Board's loss of confidence in him brought
executive officers of the bank, i.e., the president, vice-
about by his absenteeism and negligence in the performance
president, secretary, cashier and bank manager, in that
of his duties; and that the Board's action was taken to protect
board meeting of June 4, 1983, petitioners Lorenzo Dy,
the interest of the bank and was "designed as an internal
William Ibero and Ricardo Garcia were elected president,
vice-president and corporate secretary, respectively. Vailoces
control measure to secure the check and balance of authority received a copy of the minutes of said meeting while he was
within the organization." 5 still the bank manager (his removal was to take effect only on
August 15, 1983), instead of which he simply abandoned the
The Executive Labor Arbiter found that Vailoces was: work he was supposed to perform up to the effective date of
(a) Illegally dismissed, first not because of absenteeism and his relief; and that the matter of his relief was within the
negligence, but of the resentment of petitioners against adjudicatory powers of the Securities and Exchange
Vailoces which arose from the latter's filing of the cases for Commission. 7
recognition as natural child against Zosimo Dy, Sr. and for The NLRC, however bypassed the issues raised and simply
violation of the corporation code against Lorenzo Dy; and dismissed the appeal for having been filed late. It ruled that:
second, because he was not afforded the due process of law
when he was dismissed during the Board meeting of July 2, The record shows that a copy of the decision sent by
1983 the validity of which is seriously doubted; registered mail to respondents' counsel, Atty. Edmund Tubio,
was received on January 11, 1984 by a certain Atty. Ramon
(b) Not paid his cost of living allowance; and Elesteria, a law office partner of Atty. Tubio. ... This fact is
(c) Underpaid with only P500 monthly salary, corroborated by the certification issued by the Postmaster of
Dumaguete City... Moreover, the same is admitted by no less
and consequently ordered the individual petitioners than Atty. Ramon Elesteria himself in his affidavit. It further
Lorenzo Dy and Zosimo Dy-but not the Bank itself, to: appears in the record that on January 30, 1984 a certain Atty.
Francisco Zerna, a new lawyer engaged by the respondents
(a) Pay Vailoces jointly and severally, the sum of P111,480.60 for the appeal, received a copy of the decision in this case as
representing his salary differentials, cost of living allowances, certified by Julia Pepito in an affidavit subscribed before the
back wages from date of dismissal up to the date of the Senior Labor Arbitration Specialist. The appeal was filed only
decision (November 29, 1983), moral and exemplary on February 17, 1984.
damages, and attorney's fees; and
Considering that it was a law partner of the respondents'
(b) Reinstate Vailoces to his position as bank manager, with counsel who received on January 11, 1984 the registered
additional backwages from December 1, 1983 on the letter, his actual receipt thereof completes the service. ...
adjusted salary rate of P620.00 r month until he is actually And even assuming that such was not a valid service, since
reinstated, plus cost-of-living allowance. 6 the respondents received another copy of the decision on
January 30, 1984, through their newly engaged counsel, it is
Lorenzo Dy, et al. appealed to the NLRC, assigning error to
therefore our opinion that the appeal herein was filed out of
the decision of the Labor Arbiter on various grounds, among
time, whether the time is reckoned from the receipt by Atty.
them: that Vailoces was not entitled to notice of the Board
Elesteria or Atty. Zerna, and, for this reason, we can not give
meeting of July 2, 1983 which decreed his relief because he
due course to his appeal. 8
was no longer a member of the Board on said date; that he
nonetheless had the opportunity to refute the charges In this Court, petitioners assail said ruling as an arbitrary
against him and seek a formal investigation because he deprivation of their right to appeal through unreasonable
adherence to procedural technicality. They argue that they the organizational meeting of November 17, 1979. 10 He lost
should not be bound by the service of the Labor Arbiter's that position because the Board that was elected in the
decision by Atty. Elesteria on January 11, 1984 or by Atty. special stockholders' meeting of June 4, 1983 did not re-elect
Zerna on January 30, 1984, because neither lawyer was him. And when Vailoces, in his position paper submitted to
authorized to accept service for their counsel Atty. Tubio, and the Labor Arbiter, impugned said stockholders' meeting as
that their 10 day period of appeal should be counted from illegally convoked and the Board of Directors thereby elected
February 10, 1984 when they actually received the copy of as illegally constituted, 11 he made it clear that at the heart
the decision from Atty. Zerna. On the merits, they assert that of the matter was the validity of the directors' meeting of
the Arbiter's finding of illegal dismissal was without June 4, 1983 which, by not re-electing him to the position of
evidentiary basis, that it was error to impose the obligation to manager, in effect caused termination of his services.
pay damages upon the individual petitioners, instead of the
Rural Bank of Ayungon, which was Vailoces' real employer, The case thus falls squarely within the purview of Section 5,
and that the damages awarded are exorbitant and par. (c), No. 902-A just cited. In PSBA vs. Leao, 12 this Court,
oppressive. confronted with a similar controversy, ruled that the
Securities and Exchange Commission, not the NLRC, has
While the comment of Vailoces traverses the averments of jurisdiction:
the petition, that of the Solicitor General on behalf of public
respondents perceives the matter as an intracorporate It was at a Board regular monthly meeting held on August 1,
controversy of the class described in Section 5, par. (c), of 1981, that three directors were elected to fill vacancies. And,
Presidential Decree No. 902-A, namely: it was at the regular Board meeting of September 5, 1981
that all corporate positions were declared vacant in order to
(c) Controversies in the election or appointments of directors, effect a reorganization, and at the ensuing election of
trustees, officers or managers of such corporations, officers, Tan was not re-elected as Executive Vice-President.
partnerships or associations.
Basically, therefore, the question is whether the election of
explicitly declared to be within the original and exclusive directors on August 1, 1981 and the election of officers on
jurisdiction of the Securities and Exchange Commission, and September 5, 1981, which resulted in Tan's failure to be re-
recommends that the questioned resolution of the NLRC as elected, were validly held. This is the crux of the question
well as the decision of the Labor Arbiter be set aside as null that Tan has raised before the SEC. Even in his position paper
and void. 9 before the NLRC, Tan alleged that the election on August 1,
1981 of the three directors was in contravention of the PSBA
In truth, the issue of jurisdiction is decisive and renders By-Laws providing that any vacancy in the Board shall be
unnecessary consideration of the other questions raised. filled by a majority vote of the stockholders at a meeting
There is no dispute that the position from which private specially called for the purpose. Thus, he concludes, the
respondent Vailoces claims to have been illegally dismissed Board meeting on September 5, 1981 was tainted with
is an elective corporate office. He himself acquired that irregularity on account of the presence of illegally elected
position through election by the bank's Board of Directors at directors without whom the results could have been different.
Tan invoked the same allegations in his complaint filed with corporation, partnership or association and the state insofar
the SEC. So much so, that on December 17, 1981, the SEC as it concerns their individual franchise or right to exist as
(Case No. 2145) rendered a Partial Decision annulling the such entity;
election of the three directors and ordered the convening of a
stockholders' meeting for the purpose of electing new c) Controversies in the election or appointments of directors,
members of the Board. The correctness of d conclusion is not trustees, officers or managers of such corporations,
for us to pass upon in this case. Tan was present at said partnership or associations.
meeting and again sought the issuance of injunctive relief This is not a case of dismissal. The situation is that of
from the SEC. a corporate office having been declared vacant, and of Tan's
The foregoing indubitably show that, fundamentally, the not having been elected thereafter. The matter of whom to
controversy is intra-corporate in nature. It revolves around elect is a prerogative that belongs to the Board, and involves
the election of directors, officers or managers of the PSBA, the exercise of deliberate choice and the faculty of
the relation between and among its stockholders, and discriminative selection. Generally speaking, the relationship
between them and the corporation. Private respondent also of a person to corporation, whether as officer or as agent or
contends that his "ouster" was a scheme to intimidate him employee, is not determined by the nature of the services
into selling his shares and to deprive him of his just and fair performed, but by the incidents of the relationship as they
return on his investment as a stockholder received through actually exist.
his salary and allowances as Executive Vice-President. Vis-a- Respondent Vailoces' invocation of estoppel as against
vis the NLRC, these matters fall within the jurisdiction of the petitioners with respect to the issue of jurisdiction is
SEC. Presidential Decree No. 902-A vests in the Securities unavailing. In the first place, it is not quite correct to state
and Exchange Commission: that petitioners did not raise the point in the lower tribunal.
... Original and exclusive jurisdiction to hear and decide cases Although rather off handedly, in their appeal to the NLRC
involving: they called attention to the Labor Arbiter's lack of jurisdiction
to rule on the validity of the meeting of July 2, 1983, but the
a) Devices or schemes employed by or any acts, of the board dismissal of the appeal for alleged tardiness effectively
of directors, business associates, its officers or partners, precluded consideration of that or any other question raised
amounting to fraud and misrepresentation) which may be in the appeal. More importantly, estoppel cannot be invoked
detrimental to the interest of the public and/or of the to prevent this Court from taking up the question of
stockholders, partners, members of associations or jurisdiction, which has been apparent on the face of the
organizations registered with the Commission. pleadings since the start of litigation before the Labor Arbiter.
It is well settled that the decision of a tribunal not vested
b) Controversies arising out of intracorporate or partnership with appropriate jurisdiction is null and void. Thus,
relations, between and among stockholders, members or in Calimlim vs. Ramirez, 13 this Court held:
associates; between any of all of them and the corporation,
partnership or association of which they are stockholders, A rule that had been settled by unquestioned acceptance and
members or associates, respectively; and between such upheld in decisions so numerous to cite is that the
jurisdiction of a court over the subject matter of the action is at once be deemed sufficient basis of estoppel. It could have
a matter of law and may not be conferred by consent or been the result of an honest mistake or of divergent
agreement of the parties. The lack of jurisdiction of a court interpretation of doubtful legal provisions. If any fault is to be
may be raised at any stage of the proceedings, even on imputed to a party taking such course of action, part of the
appeal. This doctrine has been qualified by recent blame should be placed on the court which shall entertain
pronouncements which stemmed principally from the ruling the suit, thereby lulling the parties into believing that they
in the cited case of Sibonghanoy. It is to be regretted, pursued their remedies in the correct forum. Under the rules,
however, that the holding in said case had been applied to it is the duty of the court to dismiss an action 'whenever it
situations which were obviously not contemplated therein. appears that court has no jurisdiction over the subject
The exceptional circumstances involved matter.' (Section 2, Rule 9, Rules of Court) Should the Court
in Sibonghanoy which justified the departure from the render a judgment without jurisdiction, such judgment may
accepted concept of non-waivability of objection to be impeached or annulled for lack of jurisdiction (Sec. 30,
jurisdiction has been ignored and, instead a blanket doctrine Rule 132, Ibid), within ten (10) years from the finality of the
had been repeatedly upheld that rendered the supposed same (Art. 1144, par. 3, Civil Code).
ruling in Sibonghanoy not as the exception, but rather the
general rule, virtually overthrowing altogether the time- To be sure, petitioners failed to raise the issue of jurisdiction
honored principle that the issue of jurisdiction is not lost by in their petition before this Court. But this, too, is no
waiver or by estoppel. hindrance to the Court's considering said issue.

xxx xxx xxx The failure of the appellees to invoke anew the
aforementioned solid ground of want of jurisdiction of the
It is neither fair nor legal to bind a party by the result of a lower court in this appeal should not prevent this Tribunal to
suit or proceeding which was taken cognizance of in a court take up that issue as the lack of jurisdiction of the lower court
which lacks jurisdiction over the same irrespective of the is apparent upon the face of the record and it is fundamental
attendant circumstances. The equitable defense of estoppel that a court of justice could only validly act upon a cause of
requires knowledge or consciousness of the facts upon which action or subject matter of a case over which it has
it is based . The same thing is true with estoppel by conduct jurisdiction and said jurisdiction is one conferred only by law;
which may be asserted only when it is shown, among others, and cannot be acquired through, or waived by, any act or
that the representation must have been made with omission of the parties (Lagman vs. CA, 44 SCRA 234
knowledge of the facts and that the party to whom it was [1972]); hence may be considered by this court motu proprio
made is ignorant of the truth of the matter (De Castro vs. (Gov't. vs. American Surety Co., 11 Phil. 203 [1908])... 14
Gineta, 27 SCRA 623). The filing of an action or suit in a court
that does not possess jurisdiction to entertain the same may These considerations make inevitable the conclusion that the
not be presumed to be deliberate and intended to secure a judgment of the Labor Arbiter and the resolution of the NLRC
ruling which could later be annulled if not favorable to the are void for lack of cause of jurisdiction, and this Court must
party who filed such suit or proceeding in a court that lacks set matters aright in the exercise of its judicial power. It is of
jurisdiction to take cognizance of the same, such act may not no moment that Vailoces, in his amended complaint, seeks
other relief which would seemingly fan under the jurisdiction
of the Labor Arbiter, because a closer look at these-
underpayment of salary and non-payment of living
allowance-shows that they are actually part of the perquisites
of his elective position, hence, intimately linked with his
relations with the corporation. The question of remuneration,
involving as it does, a person who is not a mere employee
but a stockholder and officer, an integral part, it might be
said, of the corporation, is not a simple labor problem but a
matter that comes within the area of corporate affairs and
management, and is in fact a corporate controversy in
contemplation of the Corporation Code.
G.R. No. 79762 January 24, 1991
WHEREFORE, the questioned decision of the Labor Arbiter
and the Resolution of the NLRC dismissing petitioners' appeal FORTUNE CEMENT CORPORATION, petitioner,
from said decision are hereby set aside because rendered vs.
without jurisdiction. The amended complaint for illegal NATIONAL LABOR RELATIONS COMMISSION (First
dismissal, etc., basis of said decision and Resolution, is Division) and ANTONIO M. LAGDAMEO, respondents.
ordered dismissed, without prejudice to private respondent's
De Leon, Diokno & Associates Law Offices for petitioner.
seeking recourse in the appropriate forum.
Romarie G. Villonco and George C. Nograles for private
SO ORDERED.
respondent.

GRIO-AQUINO, J.:p

This is a petition for certiorari with prayer to annul the


resolution dated May 29, 1987 of respondent National Labor
Relations Commission (NLRC) reversing the order dated
December 3, 1985 of the Labor Arbiter which dismissed
private respondent Antonio M. Lagdameo's (Lagdameo for
brevity) complaint for Illegal Dismissal (NLRC NCR Case No.
1-228-85) against petitioner Fortune Cement Corporation
(FCC for brevity) for lack of jurisdiction.

Lagdameo is a registered stockholder of FCC.


On October 14, 1975, at the FCC Board of Directors' regular We find merit in the petition.
monthly meeting, he was elected Executive Vice-President of
FCC effective November 1, 1975 (p. 3, Rollo). The sole issue to be resolved is whether or not the NLRC has
jurisdiction over a complaint filed by a corporate executive
Some eight (8) years later, or on February 10, 1983, during a vice-president for illegal dismissal, resulting from a board
regular meeting, the FCC Board resolved that all of its resolution dismissing him as such officer.
incumbent corporate officers, including Lagdameo, would be
"deemed" retained in their respective positions without Section 5 of Presidential Decree No. 902-A vests in the SEC
necessity of yearly reappointments, unless they resigned or original and exclusive jurisdiction over this controversy:
were terminated by the Board (p. 4, Rollo). Sec. 5. In addition to the regulatory and adjudicative
At subsequent regular meetings held on June 14 and 21, functions of the Securities and Exchange Commission over
1983, the FCC Board approved and adopted a resolution corporations, partnerships and other forms of associations
dismissing Lagdameo as Executive Vice-President of the registered with it as expressly granted under existing laws
company, effective immediately, for loss of trust and and decrees, it shall have original and exclusive jurisdiction
confidence (p. 4, Rollo). to hear and decide cases involving:

On June 21, 1983, Lagdameo filed with the National Labor a) Devices and schemes employed by or any acts, of the
Relations Commission (NLRC), National Capital Region, a board of directors, business associates, its officers or
complaint for illegal dismissal against FCC (NLRC-NCR Case partners, amounting to fraud and misrepresentation which
No. 1-228-85) alleging that his dismissal was done without a may be detrimental to the interest of the public and/or
formal hearing and investigation and, therefore, without due stockholders, partners, members of associations or
process (p. 63, Rollo). organization registered with the Commission;

On August 5, 1985, FCC moved to dismiss Lagdameo's b) Controversies arising out of intra-corporate or partnership
complaint on the ground that his dismiss as a corporate relations, between and among stockholders, members, or
officer is a purely intra-corporate controversy over which the associates; between any or all of them and the corporation,
Securities and Exchange Commission (SEC) has original and partnership or association of which they are stockholders,
exclusive jurisdiction. members or associates, respectively; and between such
corporation, partnership or association and the state insofar
The Labor Arbiter granted the motion to dismiss (p. as it concerns their individual franchise or right to exist as
22, Rollo). On appeal, however, the NLRC set aside the Labor such entity;
Arbiter's order and remanded the case to the Arbitration
Branch "for appropriate proceedings" (NLRC Resolution dated c) Controversies in the election or appointments of directors,
April 30, 1987). The NLRC denied FCC's motion for trustees, officers or managers of such corporations,
reconsideration (p. 5, Rollo). Dissatisfied, FCC filed this partnership or associations." (Section 5, P.D. 902-A; Emphasis
petition for certiorari. supplied.)
In reversing the decision of Labor Arbiter Porfirio E. And it must be, not only because it is a practice observed in
Villanueva, respondent NLRC held: petitioner Fortune Cement Corporation, but more so, because
of an express mandate of law. (p. 65, Rollo.)
. . . . It is not disputed that complainant Lagdameo was an
employee of respondent Fortune Cement Corporation, being The Solicitor General pointed out that "a corporate officer's
then the Executive Vice-President. For having been dismissed dismissal is always a corporate act and/or intra-corporate
for alleged loss of trust and confidence, complainant controversy and that nature is not altered by the reason or
questioned his dismissal on such ground and the manner in wisdom which the Board of Directors may have in taking such
which he was dismissed, claiming that no investigation was action." The dispute between petitioner and Lagdameo is of
conducted, hence, there was and is denial of due process. the class described in Section 5, par. (c) of Presidential
Predicated on the above facts, it is clear to Us that a labor Decree No. 902-A, hence, within the original and exclusive
dispute had arisen between the appellant and the respondent jurisdiction of the SEC. The Solicitor General recommended
corporation, a dispute which falls within the original and that the petition be granted and NLRC-NCR Case No. 1-228-
exclusive jurisdiction of the NLRC. A labor dispute as defined 85 be dismissed by respondent NLRC for lack of jurisdiction
in the Labor Code includes any controversy or matter (p. 95, Rollo).
concerning terms or conditions of employment or the
association or representation of persons in negotiating, In PSBA vs. Leao (127 SCRA 778), this Court, confronted
fixing, maintaining, changing or arranging the terms and with a similar controversy, ruled that the SEC, not the NLRC,
conditions of employment regardless of whether or not the has jurisdiction:
disputants stand in the proximate relations of employers and This is not a case of dismissal. The situation is that of a
employees." (pp. 16-17, Rollo). corporate office having been declared vacant, and of Tan's
The Solicitor General, declining to defend public respondent not having been elected thereafter. The matter of whom to
in its pleading entitled "Manifestation in Lieu of Comment," elect is a prerogative that belongs to the Board, and involves
aptly observed: the exercise of deliberate choice and the faculty of
discriminative selection. Generally speaking, the relationship
The position of "Executive Vice-President," from which private of a person to a corporation, whether as officer or as agent or
respondent Lagdameo claims to have been illegally employee is not determined by the nature of the services
dismissed, is an elective corporate office. He himself performed, but by the incidents of the relationship as they
acquired that position through election by the corporation's actually exist.
Board of Directors, although he also lost the same as a
consequence of the latter's resolution. Lagdameo claims that his dismissal was wrongful, illegal, and
arbitrary, because the "irregularities" charged against him
Indeed the election, appointment and/or removal of an were not investigated (p. 85, Rollo); that the case of PSBA
executive vice-president is a prerogative vested upon a vs. Leao (supra) cited by the Labor Arbiter finds no
corporate board. application to his case because it is not a matter of corporate
office having been declared vacant but one where a
corporate officer was dismissed without legal and factual
basis and without due process; that the power of dismissal
should not be confused with the manner of exercising the
same; that even a corporate officer enjoys security of tenure
regardless of his rank (p. 97, Rollo); and that the SEC is
without power to grant the reliefs prayed for in his complaint
(p. 106, Rollo).

The issue of the SEC's power or jurisdiction is decisive and


renders unnecessary a consideration of the other questions
raised by Lagdameo. Thus did this Court rule in the case
of Dy vs. National Labor Relations Commission (145 SCRA
211) which involved a similar situation:

It is of no moment that Vailoces, in his amended complaint,


seeks other reliefs which would seemingly fall under the
jurisdiction of the Labor Arbiter, because a closer look at
these underpayment of salary and non-payment of living
allowance shows that they are actually part of the
perquisites of his elective position, hence, intimately linked
with his relations with the corporation. The question of
remuneration, involving as it does, a person who is not a
mere employee but a stockholder and officer, an integral
part, it might be said, of the corporation, is not a simple labor
problem but a matter that comes within the area of
corporate affairs and management, and is in fact a corporate
controversy in contemplation of the Corporation Code.
(Emphasis ours.)

WHEREFORE, the questioned Resolution of the NLRC


reversing the decision of the Labor Arbiter, having been
rendered without jurisdiction, is hereby reversed and set
aside. The decision of the Labor Arbiter dated December 3,
1985 dismissing NLRC-NCR Case No. 1-228-85 is affirmed,
without prejudice to private respondent Antonio M.
Lagdameo's seeking recourse in the appropriate forum. No
costs.
G.R. No. 118088 November 23, 1995
SO ORDERED.
MAINLAND CONSTRUCTION, CO., INC., and/or LUCITA in 1977. Thereafter, he was promoted to the position of
LU CARABUENA, ROBERT L. CARABUENA, ELLEN LU Administrative Officer with a monthly salary of P4,700.00. 1
CARABUENA, and MARTIN LU, petitioners,
vs. Ernesto Movilla, recorded as receiving a fixed salary of
MILA MOVILLA, ERNESTO MOVILLA, JR., MILA JUDITH C. P4,700.00 a month, was registered with the Social Security
MOVILLA, JUDE BRIX C. MOVILLA, JONARD ELLERY C. System (SSS) as an employee of petitioner Corporation. His
MOVILLA, AND MAILA JONAH M. QUIMBO, surviving contributions to the SSS, Medicare and Employees
heirs of ERNESTO MOVILLA, and THE HONORABLE Compensation Commission (ECC) were deducted from his
COMMISSIONER of the NATIONAL LABOR RELATIONS monthly earnings by his said employer. 2
COMMISSION-5TH DIVISION,respondents. On April 12, 1987, during petitioner corporation's annual
meeting of stockholders, the following were elected members
of the Board of Directors, viz.: Robert L. Carabuena, Ellen L.
HERMOSISIMA, JR., J.: Carabuena, Lucita Lu Carabuena, Martin G. Lu and Ernesto L.
Movilla.
Petitioners urge this Court to set aside the Decision of the
National Labor Relations Commission (NLRC), dated May 30, On the same day, an organizational meeting was held and
1994, in NLRC-CA No. the Board of Directors elected Ernesto Movilla as
M-000949-92 for having been rendered with grave abuse of Administrative Manager. 3 He occupied the said position up to
discretion amounting to lack of jurisdiction. This reversed the the time of his death.
decision of the Labor Arbiter in case No. RAB-11-10-99883-
91. Petitioners' motion for reconsideration of the NLRC On April 2, 1991, the Department of Labor and Employment
decision was denied in a Resolution, dated August 31, 1994. (DOLE) conducted a routine inspection on petitioner
corporation and found that it committed such irregularities in
Mainland Construction Co., Inc. is a domestic corporation, the conduct of its business as:
duly organized and existing under Philippine laws, having
been issued a certificate of registration by the Securities and 1. Underpayment of wages under R.A. 6727 and RTWPB-XI-
Exchange Commission (SEC) on July 26, 1977, under Registry 01;
Number 74691. Its principal line of business is the general 2. Non-implementation of Wage Order No. RTWPB-XI-02;
construction of roads and bridges and the operation of a
service shop for the maintenance of equipment. Respondents 3. Unpaid wages for 1989 and 1990;
on the other hand, are the surviving heirs of complainant,
Ernesto Movilla, who died during the pendency of the action 4. Non-payment of holiday pay and service incentive leave
with the Labor Arbiter. pay; and

Records show that Ernesto Movilla, who was a Certified Public 5. Unpaid 13th month pay (remaining balance for 1990). 4
Accountant during his lifetime, was hired as such by Mainland
On the basis of this finding, petitioner corporation was
ordered by DOLE to pay to its thirteen employees, which
included Movilla, the total amount of P309,435.89, Corporation v. NLRC, et al., G.R. No. 79762, January 24,
representing their salaries, holiday pay, service incentive 1991). 5
leave pay differentials, unpaid wages and 13th month pay.
Aggrieved by this decision, respondents appealed to the
All the employees listed in the DOLE's order were paid by National Labor Relations Commission (NLRC). The NLRC ruled
petitioner corporation, except Ernesto Movilla. that the issue in the case was one which involved a labor
dispute between an employee and petitioner corporation
On October 8, 1991, Ernesto Movilla filed a case against and, thus, the NLRC had jurisdiction to resolve the case. The
petitioner corporation and/or Lucita, Robert, and Ellen, all dispositive portion of the NLRC decision reads:
surnamed Carabuena, for unpaid wages, separation pay and
attorney's fees, with the Department of Labor and WHEREFORE, the assailed decision is Reversed and Set
Employment, Regional Arbitration, Branch XI, Davao City. Aside. Respondents are ordered to pay the heirs of
complainant the following:
On February 29, 1992, Ernesto Movilla died while the case
was being tried by the Labor Arbiter and was promptly 1. Unpaid salaries from January 1989 to September 1991 in
substituted by his heirs, private respondents herein, with the the sum of P155,100.00;
consent of the Labor Arbiter.
2. Separation pay in the sum of P65,800.00;
The Labor Arbiter rendered judgment on June 26, 1992,
dismissing the complaint on the ground of lack of jurisdiction. 3. Moral damages in the sum of P10,000.00;
Specifically, the Labor Arbiter made the following 4. Indemnity in the sum of P3,000.00; and,
ratiocination:
5. Attorney's fees equivalent to 10% of the total award. 6
It is clear that in the case at bar, the controversy presented
by complainant is intra-corporate in nature and is within the The pivotal issue in this case is which of the two agencies of
jurisdiction of the Securities and Exchange Commission, the government the NLRC or the SEC has jurisdiction
pursuant to P.D. 902-A (Phil. School of Business over the controversy.
Administration, et al. v. Leano, G.R. No. L-58468, February 24,
1984; Dy et al. v. NLRC, et al., G.R. No. L-68544, October 27, As we stated earlier, it is of course the contention of
1986). What Movilla is claiming against respondents are his petitioners that the NLRC committed grave abuse of
alleged unpaid salaries and separation pay as Administrative discretion when it nullified the decision of the Labor Arbiter
Manager of the corporation for which position he was which dismissed the complaint of Movilla for unpaid wages,
appointed by the Board of Directors. His claims therefore fall separation pay and attorney's fees on the ground of lack of
under the jurisdiction of the Securities and Exchange jurisdiction. Petitioners take the position that, since Ernesto
Commission because this is not a simple labor problem; but a Movilla was a corporate officer, the controversy as to his
matter that comes within the area of corporate affairs and compensation is within the jurisdiction of the SEC as
management, and is in fact a corporate controversy in mandated by P.D. 902-A and not with the NLRC.
contemplation of the Corporation Code. (Fortune Cement
We find for the respondents, it appearing that petitioners' Directors. What comes to the fore is whether there was a
contention is bereft of merit. change in the nature of his functions and not merely the
nomenclature or title given to his job.
In order that the SEC can take cognizance of a case, the
controversy must pertain to any of the following Indeed, Ernesto Movilla worked as an administrative officer of
relationships: a) between the corporation, partnership or the company for several years and was given a fixed salary
association and the public; b) between the corporation, every month. To further sustain this assertion Movilla also
partnership or association and its stockholders, partners, submitted a joint affidavit executed by Juanito S. Malubay
members or officers; and Delia S. Luciano, Project Engineer and Personnel-In-
c) between the corporation, partnership or association and Charge, respectively, of petitioner corporation, attesting that
the State as far as its franchise, permit or license to operate they personally knew Movilla and that he was employed in
is concerned; and d) among the stockholders, partners or the company. A Premium Certification issued by an
associates themselves. 7 The fact that the parties involved in authorized representative of petitioners was also presented
the controversy are all stockholders or that the parties to show his actual monthly earnings as well as his monthly
involved are the stockholders and the corporation does not contributions to the SSS, Medicare and ECC. 10 Movilla's
necessarily place the dispute within the ambit of the registration in the SSS by petitioner corporation added
jurisdiction of SEC. The better policy to be followed in strength to the conclusion that he was petitioner
determining jurisdiction over a case should be to consider corporation's employee as coverage by the said law is
concurrent factors such as the status or relationship of the predicated on the existence of an employer-employee
parties or the nature of the question that is the subject of relationship. 11 Furthermore, petitioner corporation failed to
their controversy. 8 In the absence of any one of these present evidence which showed that, after his election as
factors, the SEC will not have jurisdiction. Furthermore, it Administrative Manager, he was excluded from the coverage
does not necessarily follow that every conflict between the of the SSS, Medicare and ECC.
corporation and its stockholders would involve such
corporate matters as only the SEC can resolve in the exercise He also presented, appearing to be relevant to the issue, the
of its adjudicatory or quasi-judicial powers. 9 result of the investigation conducted by DOLE which found
that petitioner corporation has transgressed several labor
In the case at bench, the claim for unpaid wages and standard laws against its employees.
separation pay filed by the complainant against petitioner
corporation involves a labor dispute. It does not involve an As correctly ruled by the NLRC:
intra-corporate matter, even when it is between a The claims for unpaid salaries/monetary benefits and
stockholder and a corporation. It relates to an employer- separation pay, are not a corporate conflict as respondents
employee relationship which is distinct from the corporate presented them to be. If complainant is not an employee,
relationship of one with the other. Moreover, there was no respondent should have contested the DOLE inspection
showing of any change in the duties being performed by report, What they did was to exclude complainant from the
complainant as an Administrative Officer and as an order of payment . . . and worse, he was not both given
Administrative Manager after his election by the Board of responsibilities and paid his salaries for the succeeding
months . . . . This is a clear case of constructive dismissal REGALADO, J.:
without due process . . . 12
This is a petition for certiorari which seeks to annul the
The existence of an employer-employee relationship is a resolution of the National Labor Relations Commission
factual question and public respondent's findings are (NLRC), dated June 26, 1995, affirming in toto the order of
accorded great weight and respect as the same are the labor arbiter, dated April 26, 1994, which dismissed
supported by substantial evidence. 13 Hence, we uphold the petitioner's complaint for illegal dismissal with money claims
conclusion of public respondent that Ernesto Movilla was an for lack of jurisdiction.
employee of petitioner corporation.
The records show that petitioner Purificacion Tabang was a
It is pertinent to note that petitioner corporation is not founding member, a member of the Board of Trustees, and
prohibited from hiring its corporate officers to perform the corporate secretary of private respondent Pamana
services under a circumstance which will make him an Golden Care Medical Center Foundation, Inc., a non-stock
employee. 14 Moreover, although a director of a corporation is corporation engaged in extending medical and surgical
not, merely by virtue of his position, its employee, said services.
director may act as an employee or accept duties that make
him also an employee. 15 On October 30, 1990, the Board of Trustees issued a
memorandum appointing petitioner as Medical Director and
Since Ernesto Movilla's complaint involves a labor dispute, it Hospital Administrator of private respondent's Pamana
is the NLRC, under Article 217 of the Labor Code of the Golden Care Medical Center in Calamba, Laguna.
Philippines, which has jurisdiction over the case at bench.
Although the memorandum was silent as to the amount of
WHEREFORE, the petition is DISMISSED for lack of showing of remuneration for the position, petitioner claims that she
any grave abuse of discretion on the part of public received a monthly retainer fee of five thousand pesos
respondent NLRC. The assailed decision of public respondent (P5,000.00) from private respondent, but the payment
is thus AFFIRMED. thereof was allegedly stopped in November, 1991.

SO ORDERED. As medical director and hospital administrator, petitioner was


tasked to run the affairs of the aforesaid medical center and
G.R. No. 121143 January 21, 1997 perform all acts of administration relative to its daily
PURIFICACION G. TABANG, petitioner, operations.
vs. On May 1, 1993, petitioner was allegedly informed personally
NATIONAL LABOR RELATIONS COMMISSION and by Dr. Ernesto Naval that in a special meeting held on April
PAMANA GOLDEN CARE MEDICAL CENTER 30, 1993, the Board of Trustees passed a resolution relieving
FOUNDATION, INC., respondents. her of her position as Medical Director and Hospital
Administrator, and appointing the latter and Dr. Benjamin
Donasco as acting Medical Director and acting Hospital
Administrator, respectively. Petitioner averred that she executive position in a corporate ladder structure." hence,
thereafter received a copy of said board resolution. petitioner's removal from the said position was an intra-
corporate controversy within the original and exclusive
On June 6, 1993, petitioner filled a complaint for illegal jurisdiction of the SEC. 3
dismissal and non-payment of wages, allowances and 13th
month pay before the labor arbiter. Aggrieved by the decision, petitioner filed the instant petition
which we find, however, to be without merit.
Respondent corporation moved for the dismissal of the
complaint on the ground of lack of jurisdiction over the We agree with the findings of the NLRC that it is the SEC
subject matter. It argued that petitioner's position as Medical which has jurisdiction over the case at bar. The charges
Director and Hospital Administrator was interlinked with her against herein private respondent partake of the nature of an
position as member of the Board of Trustees, hence, her intra-corporate controversy. Similarly, the determination of
dismissal is an intra-corporate controversy which falls within the rights of petitioner and the concomitant liability of
the exclusive jurisdiction of the Securities and Exchange private respondent arising from her ouster as a medical
Commission (SEC). director and/or hospital administrator, which are corporate
offices, is an intra-corporate controversy subject to the
Petitioner opposed the motion to dismiss, contending that jurisdiction of the SEC.
her position as Medical Director and Hospital Administrator
was separate and distinct from her position as member of the Contrary to the contention of petitioner, a medical director
Board of Trustees. She claimed that there is no intra- and a hospital administrator are considered as corporate
corporate controversy involved since she filed the complaint officers under the by-laws of respondent corporation. Section
in her capacity as Medical Director and Hospital 2(i), Article I thereof states that one of the powers of the
Administrator, or as an employee of private respondent. Board of Trustees is "(t)o appoint a Medical Director,
Comptroller/Administrator, Chiefs of Services and such other
On April 26, 1994, the labor arbiter issued an order officers as it may deem necessary and prescribe their powers
dismissing the complaint for lack of jurisdiction. He ruled that and duties." 4
the case falls within the jurisdiction of the SEC, pursuant to
Section 5 of Presidential Decree No. The president, vice-president, secretary and treasurer are
902-A. 1 commonly regarded as the principal or executive officers of a
corporation, and modern corporation statutes usually
Petitioner's motion for reconsideration was treated as an designate them as the officers of the corporation. 5 However,
appeal by the labor arbiter who consequently ordered the other offices are sometimes created by the charter or by-laws
elevation of the entire records of the case to public of a corporation, or the board of directors may be
respondent NLRC for appellate review. 2 empowered under the by-laws of a corporation to create
On appeal, respondent NLRC affirmed the dismissal of the additional offices as may be necessary. 6 It has been held
case on the additional ground that "the position of a Medical that an "office'' is created by the charter of the corporation
Director and Hospital Administrator is akin to that of an and the officer is elected by the directors or
stockholders. 7 On the other hand, an "employee" usually
occupies no office and generally is employed not by action of Medical Director and Hospital Administrator. The
13
the directors or stockholders but by the managing officer of vouchers submitted by petitioner show that the said
the corporation who also determines the compensation to be amount was paid to her by PAMANA, Inc., a stock corporation
paid to such employee. 8 which is separate and distinct from herein private
respondent. Although the payments were considered
In the case at bar, considering that herein petitioner, unlike advances to Pamana Golden Care, Calamba branch, there is
an ordinary employee, was appointed by respondent no evidence to show that the Pamana Golden Care stated in
corporation's Board of Trustees in its memorandum of the vouchers refers to herein respondent Pamana Golden
October 30, 1990, 9 she is deemed an officer of the Care Medical Center Foundation, Inc.
corporation. Perforce, Section 5(c) of Presidential Decree No.
902-A, which provides that the SEC exercises exclusive Pamana Golden Care is a division of Pamana, Inc., while
jurisdiction over controversies in the election appointment of respondent Pamana Golden Care Medical Center Foundation,
directors, trustees, officers or managers of corporations, Inc. is a non-stock, non-profit corporation. It is stated in the
partnerships or associations, applies in the present dispute. memorandum of petitioner that Pamana, Inc. is a stock and
Accordingly, jurisdiction over the same is vested in the SEC, profit corporation selling pre-need plan for education,
and not in the Labor Arbiter or the NLRC. pension and health care. The health care plan is called
Pamana Golden Care Plan and the holders are called Pamana
Moreover, the allegation of petitioner that her being a Golden Care Card Holders or, simply, Pamana Members. 14
member of the Board of Trustees was not one of the
considerations for her appointment is belied by the tenor of It is an admitted fact that herein petitioner is a retained
the memorandum itself. It states: "We hope that you will physician of Pamana, Inc., whose patients are holders of the
uphold and promote the mission of our foundation," 10 and Pamana Golden Care Card. In fact, in her complaint 15 filed
this cannot be construed other than in reference to her before the Regional Trial Court of Calamba, herein petitioner
position or capacity as a corporate trustee. is asking among others, for professional fees and/or retainer
fees earned for her treatment of Pamana Golden Care card
A corporate officer's dismissal is always a corporate act, or holders. 16 Thus, at most, said vouchers can only be
an intra-corporate controversy, and the nature is not altered considered as proof of payment of retainer fees made by
by the reason or wisdom with which the Board of Directors Pamana, Inc. to herein petitioner as a retained physician of
may have in taking such action. 11 Also, an intra-corporate Pamana Golden Care.
controversy is one which arises between a stockholder and
the corporation. There is no distinction, qualification, nor any Moreover, even assuming that the monthly payment of
exemption whatsoever. The provision is broad and covers all P5,000.00 was a valid claim against respondent corporation,
kinds of controversies between stockholders and this would not operate to effectively remove this case from
12
corporations. the jurisdiction of the SEC. In the case ofCagayan de Oro
Coliseum, Inc. vs. Office of the Minister of Labor and
With regard to the amount of P5,000,00 formerly received by Employment, etc., et al., 17 we ruled that "(a)lthough the
herein petitioner every month, the same cannot be reliefs sought by Chavez appear to fall under the jurisdiction
considered as compensation for her services rendered as
of the labor arbiter as they are claims for unpaid salaries and
other remunerations for services rendered, a close scrutiny
thereof shows that said claims are actually part of the
perquisites of his position in, and therefore interlinked with,
his relations with the corporation. In Dy, et al., vs. NLRC, et
al., the Court said: "(t)he question of remuneration involving
as it does, a person who is not a mere employee but a
stockholder and officer, an integral part, it might be said, of
the corporation, is not a simple labor problem but a matter
that comes within the area of corporate affairs and
management and is in fact a corporate controversy in
contemplation of the Corporation Code."

WHEREFORE, the questioned resolution of the NLRC is hereby


AFFIRMED, without prejudice to petitioner's taking recourse
to and seeking relief through the appropriate remedy in the
proper forum.
G.R. No. 144767 March 21, 2002
SO ORDERED.
DILY DANY NACPIL, petitioner,
vs.
INTERNATIONAL BROADCASTING
CORPORATION, respondent.

KAPUNAN, J.:

This is a petition for review on certiorari under Rule 45,


assailing the Decision of the Court of Appeals dated
November 23, 1999 in CA-G.R. SP No. 527551 and the
Resolution dated August 31, 2000 denying petitioner Dily
Dany Nacpil's motion for reconsideration. The Court of
Appeals reversed the decisions promulgated by the Labor
Arbiter and the National Labor Relations Commission (NLRC),
which consistently ruled in favor of petitioner.

Petitioner states that he was Assistant General Manager for


Finance/Administration and Comptroller of private respondent
Intercontinental Broadcasting Corporation (IBC) from 1996
until April 1997. According to petitioner, when Emiliano 1. To reinstate complainant to his former position without
Templo was appointed to replace IBC President Tomas Gomez diminution of salary or loss of seniority rights, and with full
III sometime in March 1997, the former told the Board of backwages computed from the time of his illegal dismissal on
Directors that as soon as he assumes the IBC presidency, he May 16, 1997 up to the time of his actual reinstatement
would terminate the services of petitioner. Apparently, which is tentatively computed as of the date of this decision
Templo blamed petitioner, along with a certain Mr. Basilio and on August 21, 1998 in the amount of P1,231,750.00 (i.e.,
Mr. Gomez, for the prior mismanagement of IBC. Upon his P75,000.00 a month x 15.16 months = P1,137,000.00 plus
assumption of the IBC presidency, Templo allegedly harassed, 13th month pay equivalent to 1/12 of P 1,137,000.00 =
insulted, humiliated and pressured petitioner into resigning P94,750.00 or the total amount of P 1,231,750.00). Should
until the latter was forced to retire. However, Templo refused complainant be not reinstated within ten (10) days from
to pay him his retirement benefits, allegedly because he had receipt of this decision, he shall be entitled to additional
not yet secured the clearances from the Presidential backwages until actually reinstated.
Commission on Good Government and the Commission on
Audit. Furthermore, Templo allegedly refused to recognize 2. Likewise, to pay complainant the following:
petitioner's employment, claiming that petitioner was not the a) P 2 Million as and for moral damages;
Assistant General Manager/Comptroller of IBC but merely
usurped the powers of the Comptroller. Hence, in 1997, b) P500,000.00 as and for exemplary damages; plus and (sic)
petitioner filed with the Labor Arbiter a complaint for illegal
dismissal and non-payment of benefits.1wphi1.nt c) Ten (10%) percent thereof as and for attorney's fees.

Instead of filing its position paper, IBC filed a motion to SO ORDERED.3


dismiss alleging that the Labor Arbiter had no jurisdiction
IBC appealed to the NLRC, but the same was dismissed in a
over the case. IBC contended that petitioner was a corporate
Resolution dated March 2, 1999, for its failure to file the
officer who was duly elected by the Board of Directors of IBC;
required appeal bond in accordance with Article 223 of the
hence, the case qualifies as an intra-corporate dispute falling
Labor Code.4 IBC then filed a motion for reconsideration that
within the jurisdiction of the Securities and Exchange
was likewise denied in a Resolution dated April 26, 1999. 5
Commission (SEC). However, the motion was denied by the
Labor Arbiter in an Order dated April 22, 1998. 2 IBC then filed with the Court of Appeals a petition for
certiorari under Rule 65, which petition was granted by the
On August 21, 1998, the Labor Arbiter rendered a Decision
appellate court in its Decision dated November 23, 1999. The
stating that petitioner had been illegally dismissed. The
dispositive portion of said decision states:
dispositive portion thereof reads:
WHEREFORE, premises considered, the petition for Certiorari
WHEREFORE, in view of all the foregoing, judgment is hereby
is GRANTED. The assailed decisions of the Labor Arbiter and
rendered in favor of the complainant and against all the
the NLRC are REVERSED and SET ASIDE and the complaint is
respondents, jointly and severally, ordering the latter:
DISMISSED without prejudice.
SO ORDERED.6 a) Devices or schemes employed by or any acts of the board
of directors, business associates, its officers or partners,
Petitioner then filed a motion for reconsideration, which was amounting to fraud and misrepresentation which may be
denied by the appellate court in a Resolution dated August detrimental to the interest of the public and/or of the
31, 2000. stockholders, partners, members of associations or
Hence, this petition. organizations registered with the Commission;

Petitioner Nacpil submits that: b) Controversies arising out of intra-corporate or partnership


relations, between and among stockholders, members or
I. associates; between any or all of them and the corporation,
partnership or association of which they are stockholders,
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER members or associates, respectively; and between such
WAS APPOINTED BY RESPONDENT'S BOARD OF DIRECTORS corporation, partnership or association and the State insofar
AS COMPTROLLER. THIS FINDING IS CONTRARY TO THE as it concerns their individual franchise or right to exist as
COMMON, CONSISTENT POSITION AND ADMISSION OF BOTH such entity;
PARTIES. FURTHER, RESPONDENT'S BY-LAWS DOES NOT
INCLUDE COMPTROLLER AS ONE OF ITS CORPORATE c) Controversies in the election or appointment of
OFFICERS. directors, trustees, officers, or managers of such
corporations, partnerships or associations;
II.
d) Petitions of corporations, partnerships, or associations to
THE COURT OF APPEALS WENT BEYOND THE ISSUE OF THE be declared in the state of suspension of payments in cases
CASE WHEN IT SUBSTITUTED THE NATIONAL LABOR where the corporation, partnership or association possesses
RELATIONS COMMISSION'S DECISION TO APPLY THE APPEAL property to cover all of its debts but foresees the
BOND REQUIREMENT STRICTLY IN THE INSTANT CASE. THE impossibility of meeting them when they respectively fall due
ONLY ISSUE FOR ITS DETERMINATION IS WHETHER NLRC or in cases where the corporation, partnership or association
COMMITTED GRAVE ABUSE OF DISCRETION IN DOING THE has no sufficient assets to cover its liabilities, but is under the
SAME.7 Management Committee created pursuant to this decree.
(Emphasis supplied.)
The issue to be resolved is whether the Labor Arbiter had
jurisdiction over the case for illegal dismissal and non- The Court has consistently held that there are two elements
payment of benefits filed by petitioner. The Court finds that to be considered in determining whether the SEC has
the Labor Arbiter had no jurisdiction over the same. jurisdiction over the controversy, to wit: (1) the status or
relationship of the parties; and (2) the nature of the question
Under Presidential Decree No. 902-A (the Revised Securities
that is the subject of their controversy. 8
Act), the law in force when the complaint for illegal dismissal
was instituted by petitioner in 1997, the following cases fall Petitioner argues that he is not a corporate officer of the IBC
under the exclusive of the SEC: but an employee thereof since he had not been elected nor
appointed as Comptroller and Assistant Manager by the IBC's An "office" has been defined as a creation of the charter of a
Board of Directors. He points out that he had actually been corporation, while an "officer" as a person elected by the
appointed as such on January 11, 1995 by the IBC's General directors or stockholders. On the other hand, an "employee"
Manager, Ceferino Basilio. In support of his argument, occupies no office and is generally employed not by action of
petitioner underscores the fact that the IBC's By-Laws does the directors and stockholders but by the managing officer of
not even include the position of comptroller in its roster of the corporation who also determines the compensation to be
corporate officers.9 He therefore contends that his dismissal paid to such employee.16
is a controversy falling within the jurisdiction of the labor
courts.10 As petitioner's appointment as comptroller required the
approval and formal action of the IBC's Board of Directors to
Petitioner's argument is untenable. Even assuming that he become valid,17 it is clear therefore holds that petitioner is a
was in fact appointed by the General Manager, such corporate officer whose dismissal may be the subject of a
appointment was subsequently approved by the Board of controversy cognizable by the SEC under Section 5(c) of P.D.
Directors of the IBC.11 That the position of Comptroller is not 902-A which includes controversies involving both election
expressly mentioned among the officers of the IBC in the By- and appointment of corporate directors, trustees, officers,
Laws is of no moment, because the IBC's Board of Directors is and managers.18 Had petitioner been an ordinary employee,
empowered under Section 25 of the Corporation Code 12 and such board action would not have been required.
under the corporation's By-Laws to appoint such other
officers as it may deem necessary. The By-Laws of the IBC Thus, the Court of Appeals correctly held that:
categorically provides: Since complainant's appointment was approved unanimously
XII. OFFICERS by the Board of Directors of the corporation, he is therefore
considered a corporate officer and his claim of illegal
The officers of the corporation shall consist of a President, a dismissal is a controversy that falls under the jurisdiction of
Vice-President, a Secretary-Treasurer, a General the SEC as contemplated by Section 5 of P.D. 902-A. The rule
Manager, and such other officers as the Board of is that dismissal or non-appointment of a corporate officer is
Directors may from time to time does fit to provide for. clearly an intra-corporate matter and jurisdiction over the
Said officers shall be elected by majority vote of the case properly belongs to the SEC, not to the NLRC. 19
Board of Directors and shall have such powers and duties
as shall hereinafter provide (Emphasis supplied). 13 As to petitioner's argument that the nature of his functions is
recommendatory thereby making him a mere managerial
The Court has held that in most cases the "by-laws may and officer, the Court has previously held that the relationship of
usually do provide for such other officers," 14 and that where a a person to a corporation, whether as officer or agent or
corporate office is not specifically indicated in the roster of employee is not determined by the nature of the services
corporate offices in the by-laws of a corporation, the board of performed, but instead by the incidents of the relationship as
directors may also be empowered under the by-laws to they actually exist.20
create additional officers as may be necessary. 15
It is likewise of no consequence that petitioner's complaint Considering the foregoing, the Court holds that no error was
for illegal dismissal includes money claims, for such claims committed by the Court of Appeals in dismissing the case
are actually part of the perquisites of his position in, and filed before the Labor Arbiter, without prejudice to the filing
therefore linked with his relations with, the corporation. The of an appropriate action in the proper court. 1wphi1.nt
inclusion of such money claims does not convert the issue
into a simple labor problem. Clearly, the issues raised by It must be noted that under Section 5.2 of the Securities
petitioner against the IBC are matters that come within the Regulation Code (Republic Act No. 8799) which was signed
area of corporate affairs and management, and constitute a into law by then President Joseph Ejercito Estrada on July 19,
corporate controversy in contemplation of the Corporation 2000, the SEC's jurisdiction over all cases enumerated in
Code.21 Section 5 of P.D. 902-A has been transferred to the Regional
Trial Courts.25
Petitioner further argues that the IBC failed to perfect its
appeal from the Labor Arbiter's Decision for its non-payment WHEREFORE, the petition is hereby DISMISSED and the
of the appeal bond as required under Article 223 of the Labor Decision of the Court of Appeals in CA-G.R. SP No. 52755
Code, since compliance with the requirement of posting of a is AFFIRMED.
cash or surety bond in an amount equivalent to the monetary SO ORDERED.
award in the judgment appealed from has been held to be
both mandatory and jurisdictional. 22 Hence, the Decision of
the Labor Arbiter had long become final and executory and
thus, the Court of Appeals acted with grave abuse of
discretion amounting to lack or excess of jurisdiction in giving
due course to the IBC's petition for certiorari, and in deciding
the case on the merits.

The IBC's failure to post an appeal bond within the period


mandated under Article 223 of the Labor Code has been
rendered immaterial by the fact that the Labor Arbiter did not
have jurisdiction over the case since as stated earlier, the
same is in the nature of an intra-corporate controversy. The
Court has consistently held that where there is a finding that
any decision was rendered without jurisdiction, the action
shall be dismissed. Such defense can be interposed at any
time, during appeal or even after final judgment. 23 It is a well-
settled rule that jurisdiction is conferred only by the
Constitution or by law. It cannot be fixed by the will of the
parties; it cannot be acquired through, enlarged or
diminished by, any act or omission of the parties. 24
collection of foreign bills or checks purchased, including the
signing of transmittal letters covering the same.

After proceedings duly undertaken by the parties, judgment


was rendered by labor Arbiter Cornelio L. Linsangan, the
dispositive portion of which reads:

"WHEREFORE, finding the dismissal of complainant to be


without factual and legal basis, judgment is hereby rendered
G.R. No. 141093 February 20, 2001 ordering the respondent bank to pay her back wages for
three (3) years in the amount of P540,000.00 (P15,000.00 x
PRUDENTIAL BANK and TRUST COMPANY, petitioner, 36 mos.). In lieu of reinstatement, the respondent is also
vs. ordered to pay complainant separation pay equivalent to one
CLARITA T. REYES, respondent. month salary for every year of service, in the amount of
P420,000.00 (P15,000 x 28 mos.). In addition, the respondent
GONZAGA-REYES, J.:
should. also pay complainant profit sharing and unpaid fringe
Before the Court is a petition for review on certiorari of the benefits. Attorney's fees equivalent to ten (10%) percent of
Decision,1 dated October 15, 1999 of the Court of Appeals in the total award should likewise be paid by respondent.
C.A.-G.R. SP No. 30607 and of its Resolution, dated December
SO ORDERED."4
6, 1999 denying petitioner's motion for reconsideration of
said decision. The Court of Appeals reversed and set aside Not satisfied, the Bank appealed to the NLRC which, as
the resolution2 of the National Labor Relations Commission mentioned at the outset, reversed the Labor Arbiter's
(NLRC) in NLRC NCR CA No.009364-95, reversing and setting decision in its Resolution dated 24 March 1997. Private
aside the labor arbiter's decision and dismissing for lack of respondent sought reconsideration which, however, was
merit private respondent's complaint.3 denied by the NLRC in its Resolution of 28 July 1998.
Aggrieved, private respondent commenced on October 28,
The case stems from NLRC NCR Case No.00-06-03462-92,
1998, a petition for certiorari before the Supreme Court. 5 The
which is a complaint for illegal suspension and illegal
subject petition was referred to the Court of Appeals for
dismissal with prayer for moral and exemplary damages,
appropriate action and disposition per resolution of this Court
gratuity, fringe benefits and attorney's fees filed by Clarita
dated November 25, 1998, in accordance with the ruling
Tan Reyes against Prudential Bank and Trust Company (the
in St. Marlin Funeral Homes vs. NLRC. 6
Bank) before the labor arbiter. Prior to her dismissal, private
respondent Reyes held the position of Assistant Vice In its assailed decision, the Court of Appeals adopted the
President in the foreign department of the Bank, tasked with following antecedent facts leading to Reyes's dismissal as
the duties, among others, to collect checks drawn against summarized by the NLRC:
overseas banks payable in foreign currency and to ensure the
"The auditors of the Bank discovered that two checks, of the checks, (Exhibits 6, 22 to 22-A and 23 to 23-A). On the
No.011728-7232-146, in the amount of US$109,650.00, and following day, a transmittal letter was prepared by Ms. Cecilia
No. 011730-7232-146, in the amount of US$115,000.00, Joven, a remittance clerk then assigned in the Foreign
received by the Bank on April 6, 1989, drawn ,by the Sanford Department, for the purpose of sending out the two (2) HSBC
Trading against Hongkong and Shanghai Banking checks for collection. She then requested complainant to sign
Corporation, Jurong Branch, Singapore, in favor of Filipinas the said transmittal letters (Exhibits 1, 7 and 25; TSN, 11
Tyrom, were not sent out for collection to Hongkong Shanghai March 1993, pp. 42-52), as it is complainant who gives her
Banking Corporation on the alleged order of the complainant instructions directly concerning the transmittal of foreign bills
until the said checks became stale. purchased. All other transmittal letters are in fact signed by
complainant.
The Bank created a committee to investigate the findings of
the auditors involving the two checks which were not b) After Ms. Joven delivered the transmittal letters and the
collected and became stale. checks to the Accounting Section of the Foreign Department,
complainant instructed her to withdraw the same for the
On March 8, 1991, the president of the Bank issued a purpose of changing the addressee thereon from American
memorandum to the complainant informing her of the Express Bank to Bank of Hawaii (ibid.) under a special
findings of the auditors and asked her to give her side. In collection scheme (Exhibits 4 and 5 to 5-B).
reply, complainant requested for an extension of one week to
submit her explanation. In a "subsequent letter, dated March c) After complying with complainant's instruction, Ms. Joven
14, 1991, to the president, complainant stated that in view of then returned to complainant for the latter to sign the new
the refusal of the Bank that she be furnished copies of the transmittal letters. However, complainant told Ms. Joven to
pertinent documents she is requesting and the refusal to just hold on to the letters and checks and await further
grant her a reasonable period to prepare her answer, she was instructions (ibid.). Thus, the new transmittal letters
constrained to make a general denial of any misfeasance or remained unsigned. (See Exhibits 5 to 5-B).
malfeasance on her part and asked that a formal
investigation be made. d) In June 1989, Ms. Joven was transferred to another
department. Hence, her duties, responsibilities and functions,
As the complainant failed to attend and participate in the including the responsibility over the two (2) HSBC checks,
formal investigation conducted by the Committee on May 24, were turned over to another remittance clerk, Ms. Analisa
1991, despite due notice, the Committee proceeded with its Castillo (Exhibit 14; TSN, 4 June 1993, pp. 27-29).
hearings and heard the testimonies of several witnesses.
e) When asked by Ms. Castillo about the two (2) HSBC
The Committee's findings were: checks, Ms. Joven relayed to the latter complainant's
instruction (Exhibit 14; TSN, 4 June 1993, p. 42).
'a) The two (2) HSBC checks were received by the Foreign
Department on 6 April 1989. On the same day, complainant f) About fifteen (15) months after the HSBC checks were
authorized the crediting of the account of Filipinas Tyrom in received by the Bank, the said checks were discovered in the
the amount of P4,780,102.70 corresponding to the face value course of an audit conducted by the Bank's auditors. Atty.
Pablo Magno, the Bank's legal counsel, advised complainant closed.' To date, the value of said checks have not been paid
to send the checks for collection despite the lapse of fifteen by Filipinas Tyrom, which as payee of the checks, had been
(15) months. credited with their peso equivalent;

g) Complainant, however, deliberately withheld Atty. Magno's 2. You tried to influence the decision of Atty. Pablo P. Magno,
advice from her superior, the Senior Vice-President, Mr. Bank legal counsel, by asking him to do something allegedly
Renato Santos and falsely informed the latter that Atty . upon instructions of a Senior Vice President of the Bank or
Magno advised that a demand letter be sent instead, thereby else lose his job when in truth and in fact no such instructions
further delaying the collection of the HSBC checks. was given; and

h) On 10 July 1990, the HSBC checks were finally sent for 3. You deliberately withheld from Mr. Santos, Senior Vice
collection, but were returned on 16 July 1990 for the reason President, the advice given by the legal counsel of the Bank
'account closed' (Exhibits 2-A and 3-A).' which Mr. Santos had asked you to seek. As a matter of fact,
you even relayed a false advice which delayed further the
After a review of the Committee's findings, the Board of sending of the two checks for collection. Likewise, you
Directors of the Bank resolved not to re-elect complainant refused to heed the advice of the Bank's legal counsel to
any longer to the position of assistant president pursuant to send the checks for collection.
the Bank's By-laws.
These findings have given rise to the Bank's loss of trust and
On July 19, 1991, complainant was informed of her confidence in you, the same being acts of serious misconduct
termination of employment from the Bank by Senior Vice in the performance of your duties resulting in monetary loss
President Benedicto L. Santos, in a letter the text of which is to the Bank. In view thereof, the Board has resolved not to re-
quoted in full: elect you to the position of Assistant Vice President of the
'Dear Mrs. Reyes: Bank. Accordingly, your services are terminated effective
immediately. In relation thereto, your monetary and
After a thorough investigation and appreciation of the retirement benefits are forfeited except those that have
charges against you as contained in the Memorandum of the vested in you.'
President dated March 8, 1991, the Fact Finding Committee
which was created to investigate the commission and/or In her position paper, complainant alleged that the real
omission of the acts alluded therein, has found the following: reason for her dismissal was her filing of the criminal cases
against the bank president, the vice president and the
1. You have deliberately held the clearing of Checks Nos. auditors of the Bank, such filing not being a valid ground for
11728 and 11730 of Hongkong and Shanghai Banking her dismissal. Furthermore, she alleged that it would be self-
Corporation in the total amount of US$224,650.00 by giving serving for the respondent to state that she was found guilty
instructions to the collection clerk not to send the checks for of gross misconduct in deliberately withholding the clearing
collection. In view thereof, when the said checks were finally of the two dollar checks. She further alleged that she was not
sent to clearing after the lapse of 15 months from receipt of afforded due process as she was not given the chance to
said checks, they were returned for the reason 'Account
refute the charges mentioned in the letter of dismissal. 20 JULY 1995 OF LABOR ARBITER CORNELIO L. LINSANGAN,
Hence, she was illegally dismissed. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED, IN
VIEW OF THE FOLLOWING:
On the other hand, respondent argues that there were
substantial bases for the bank to lose its trust and confidence I.
on the complainant and, accordingly, had just cause for
terminating her services. Moreover, for filing the clearly IT IS THE SEC (NOW THE REGIONAL TRIAL COURT) AND NOT
unfounded suit against the respondent's officers, THE NLRC WHICH HAS ORIGINAL AND EXCLUSIVE
complainant is liable to pay moral and exemplary damages JURISDICTION OVER CASES INVOLVING THE REMOVAL FROM
and attorney's fees."7 OFFICE OF CORPORATE OFFICERS.

The Court of Appeals found that the NLRC committed grave II.
abuse of discretion in ruling that the dismissal of Reyes is EVEN ASSUMING ARGUENDO THAT THE NLRC HAS
valid. In effect, the Court of Appeals reinstated the judgment JURISDICTION, THERE WAS SUBSTANTIAL EVIDENCE OF
of the labor arbiter with modification as follows: RESPONDENT'S MISCONDUCT JUSTIFYING THE BANK'S LOSS
"WHEREFORE, in the light of the foregoing, the decision OF TRUST AND CONFIDENCE ON (sic) HER.
appealed from is hereby REVERSED and SET ASIDE. In lieu III.
thereof, judgment is hereby rendered ordering respondent
Bank as follows: EVEN ASSUMING ARGUENDO THAT RESPONDENT WAS
ENTITLED TO BACKWAGES, THE HONORABLE COURT OF
1. To pay petitioner full backwages and other benefits from APPEALS ERRED IN AWARDING UNLIMITED AND UNQUALIFIED
July 19, 1991 up to the finality of this judgment; BACKWAGES THEREBY GOING FAR BEYOND THE LABOR
2. To pay petitioner separation pay equivalent to one (1) ARBITER'S DECISION LIMITING THE SAME TO THREE YEARS,
month salary for every year of service in lieu of WHICH DECISION RESPONDENT HERSELF SOUGHT TO
reinstatement; and EXECUTE."9

3. To pay attorney's fee equivalent to ten (10%) percent of In sum, the resolution of this petition hinges on (1) whether
the total award. the NLRC has jurisdiction over the complaint for illegal
dismissal; (2) whether complainant Reyes was illegally
SO ORDERED."8 dismissed; and (3) whether the amount of back wages
awarded was proper.
Hence, the Bank's recourse to this Court contending in its
memorandum that: On the first issue, petitioner seeks refuge behind the
argument that the dispute is an intra-corporate controversy
"IN SETTING ASIDE THE DECISION DATED 24 MARCH 1997 concerning as it does the non-election of private respondent
AND THE RESOLUTION DATED 28 JULY 1998 OF THE NLRC to the position of Assistant Vice-President of the Bank which
AND REINSTATING WITH MODIFICATION THE DECISION DATED falls under the exclusive and original, jurisdiction of the
Securities and Exchange Commission (now the Regional Trial consistently asserted in all its pleadings at all stages of the
Court) under Section 5 of Presidential Decree No. 902-A. More proceedings that respondent held the position of Assistant
specifically, petitioner contends that complainant is a Vice President, an elective position which she held by virtue
corporate officer, an elective position under the corporate by- of her having been elected as such by the Board of
laws and her non-election is an intra-corporate controversy Directors." As far as the records before this Court reveal
cognizable by the SEC invoking lengthily a number of this however, such an assertion was made only in the appeal to
Court's decisions.10 the NLRC and raised again before the Court of Appeals, not
for purposes of questioning jurisdiction but to establish that
Petitioner Bank can no longer raise the issue of jurisdiction private respondent's tenure was subject to the discretion of
under the principle of estoppel. The Bank participated in the the Board of Directors and that her non-reelection was a
proceedings from start to finish. It filed its position paper with mere expiration of her term. The Bank insists that private
the Labor Arbiter. When the decision of the Labor Arbiter was respondent was elected Assistant Vice President sometime in
adverse to it, the Bank appealed to the NLRC. When the NLRC 1990 to serve as such for only one year. This argument will
decided in its favor, the bank said nothing about jurisdiction. not do either and must be rejected.
Even before the Court of Appeals, it never questioned the
proceedings on the ground of lack of jurisdiction. It was only It appears that private respondent was appointed Accounting
when the Court of Appeals ruled in favor of private Clerk by the Bank on July 14, 1963. From that position she
respondent did it raise the issue of jurisdiction. The Bank rose to become supervisor. Then in 1982, she was appointed
actively participated in the proceedings before the Labor Assistant Vice-President which she occupied until her illegal
Arbiter, the NLRC and the Court of Appeals. While it is true dismissal on July 19, 1991. The bank's contention that she
that jurisdiction over the subject matter of a case may be merely holds an elective position and that in effect she is not
raised at any time of the proceedings, this rule presupposes a regular employee is belied by the nature of her work and
that laches or estoppel has not supervened. In this her length of service with the Bank. As earlier stated, she
regard, Baaga vs. Commission on the Settlement of Land rose from the ranks and has been employed with the Bank
Problems,11 is most enlightening. The Court therein stated: since 1963 until the termination of her employment in 1991.
As Assistant Vice President of the foreign department of the
"This Court has time and again frowned upon the undesirable Bank, she is tasked, among others, to collect checks drawn
practice of a party submitting his case for decision and then against overseas banks payable in foreign currency and to
accepting the judgment, only if favorable, and attacking it for ensure the collection of foreign bills or checks purchased,
lack of jurisdiction when adverse. Here, the principle of including the signing of transmittal letters covering the same.
estoppel lies. Hence, a party may be estopped or barred from It has been stated that "the primary standard of determining
raising the question of jurisdiction for the first time in a regular employment is the reasonable connection between
petition before the Supreme Court when it failed to do so in the particular activity performed by the employee in relation
the early stages of the proceedings." to the usual trade or business of the employer. 12 Additionally,
Undeterred, the Bank also contends that estoppel cannot lie "an employee is regular because of the nature of work and
considering that "from the beginning, petitioner Bank has the length of service, not because of the mode or even the
reason for hiring them."13 As Assistant Vice-President of the
Foreign Department of the Bank she performs tasks integral basis for such loss of confidence, is not absolute. The right of
to the operations of the bank and her length of service with an employer to dismiss employees on the ground that it has
the bank totaling 28 years speaks volumes of her status as a lost its trust and confidence in him must not be exercised
regular employee of the bank. In fine, as a regular employee, arbitrarily and without just cause. For loss of trust and
she is entitled to security of tenure; that is, her services may confidence to be valid ground for an employee's dismissal, it
be terminated only for a just or authorized cause. 14 This must be substantial and not arbitrary, and must be founded
being in truth a case of illegal dismissal, it is no wonder then on clearly established facts sufficient to warrant the
that the Bank endeavored to the very end to establish loss of employee's separation from work (Labor vs. NLRC, 248 SCRA
trust and confidence and serious misconduct on the part of 183).
private respondent but, as will be discussed later, to no avail.
SECOND. Respondent Bank's charge of deliberate withholding
This brings us to the second issue wherein the Bank insists of the two dollar checks finds no support in the testimony of
that it has presented substantial evidence to prove the Atty. Jocson, Chairman of the Investigating Committee. On
breach of trust on the part of private respondent warranting cross examination, Atty. Jocson testified that the documents
her dismissal. On this point, the Court of Appeals disagreed themselves do not show any direct withholding (pp. 186-187,
and set aside the findings of the NLRC that Reyes Rollo). There being conflict in the statement of witnesses, the
deliberately withheld the release of the two dollar checks; court must adopt the testimony which it believes to be true
that she is guilty of conflict of interest that she waived her (U.S. vs. Losada, 18 Phil. 90).
right to due process for not attending the hearing; and that
she was dismissed based on loss of trust and confidence. We THIRD. Settled is the rule that when the conclusions of the
quote pertinent portions of the decision, to wit: Labor Arbiter are sufficiently substantiated by the evidence
on record, the same should be respected by appellate
"FIRST: Respondent Bank heavily relied on the testimony and tribunals since he is in a better position to assess and
affidavit of Remittance Clerk Joven' in trying to establish loss evaluate the credibility of the contending parties (Ala Mode
of confidence. However, Joven's allegation that petitioner Garments, Inc. vs. NLRC, 268 SCRA 497). In this regard, the
instructed her to hold the subject two dollar checks Court quotes with approval the following disquisition of Labor
amounting to $224,650.00 falls short of the requisite proof to Arbiter Linsangan, thus:
warrant petitioner's dismissal. Except for Joven's bare
assertion to withhold the dollar checks per petitioner's This Office has repeatedly gone over the records of the case
instruction, respondent Bank failed to adduce convincing and painstakingly examined the testimonies of respondent
evidence to prove bad faith and malice. It bears emphasizing bank's witnesses. One thing was clearly established: that the
that respondent Bank's witnesses merely corroborate Joven's legality of complainant's dismissal based on the first ground
testimony. stated in respondent's letter of termination (exh. 25-J, supra)
will rise or fall on the credibility of Miss Joven who
Upon this point, the rule that proof beyond reasonable doubt undisputedly is the star witness for the bank. It will be
is not required to terminate an employee on the charge of observed that the testimonies of the bank's other witnesses,
loss of confidence and that it is sufficient that there is some Analiza Castillo, Dante Castor and Antonio Ragasa pertaining
to the non-release of the dollar checks and their accompanied by driver Celestino Banito, went to her
corresponding transmittal letters were all anchored on what residence and confronted her regarding the non-release of
was told them by Ms. Joven, that is: she was instructed by the dollar checks. It took Ms. Joven eighteen (18) months
complainant to hold the release of subject checks. In a before she explained her side on the controversy. As to what
nutshell, therefore, the issue boils down to who between prompted her to make her letter of explanation was not even
complainant and Ms. Joven is more credible. mentioned.

After painstakingly examining the testimonies of Ms. Joven On the other hand, the actions taken by the complainant
and respondent's other witnesses' this Office finds the were spontaneous. When complainant was informed by Mr.
evidence still wanting in proof of complainant's guilt. This Castor and Ms. Castillo regarding the non-release of the
Office had closely observed the demeanor of Ms. Joven while checks sometime in November, 1989 she immediately
testifying on the witness stand and was not impressed by her reported the matter to Vice President Santos, Head of the
assertions. The allegation of Ms. Joven in that her non-release Foreign Department. And as earlier mentioned, complainant
of the dollar checks was upon the instruction of complainant went to the residence of Ms. Joven to confront her. In this
Reyes is extremely doubtful. In the first place, the said regard, Celestino Bonito, complainant's driver, stated in his
instruction constitutes a gross violation of the bank's affidavit, thus:
standard operating procedure. Moreover, Ms. Joven was fully
aware that the instruction, if carried out, will greatly '1. Sometime on November 15, 1989 at about 7:00 o'clock in
prejudice her employer bank. It was incumbent upon Ms. the evening, Mrs. Clarita Tan Reyes and I were in the
Joven not only to disobey the instruction but even to report residence of one Ms. Cecille Joven, then a Processing Clerk in
the matter to management, if same was really given to her the Foreign Department of Prudential Bank;
by complainant. 2. Ms. Cecille Joven, her mother, myself, and Mrs. Clarita Tan
Our doubt on the veracity of Ms. Joven's allegation even Reyes were seated in the sala when the latter asked the
deepens as we consider the fact that when the non-release of former, Ms. Cecille Joven, how it came about that the two
the checks was discovered by Ms. Castillo the former dollar checks which she was then holding with the transmittal
contented herself by continuously not taking any action on letters, were found in a plastic envelope kept day-to-day by
the two dollar checks. Worse, Ms. Joven even impliedly told the former;
by Ms. Castillo (sic) to ignore the two checks and just 3. Hesitatingly, Cecille Joven said: "Eh, Mother (Mrs. Tan
withhold their release. In her affidavit Ms. Castillo said: Reyes had been intimately called Mother in the Bank) akala
'4. When I asked Cecille Joven what I was supposed to do with ko bouncing checks yon mga yon.
those checks, she said the same should be held as per 4. Mrs. Clarita Tan Reyes, upon hearing those words, was
instruction of Mrs. Reyes.' (Exh. "14", supra). surprised and she said: "Ano, papaano mong alam na
The evidence shows that it was only on 16 May 1990 that Ms. bouncing na hindi mo pa pinadadala:
Joven broke her silence on the matter despite the fact that on 5. Mrs. Cecille Joven turned pale and was not able to answer.'
15 November 1989, at about 8:00 p.m. the complainant,
There are other factors that constrain this Office to doubt We uphold the findings of the Court of Appeals that the
even more the legality of complainant's dismissal based on dismissal of private respondent on the ground of loss of trust
the first ground stated in the letter of dismissal. The non- and confidence was without basis. The charge was
release of the dollar checks was reported to top management predicated on the testimony of Ms. Joven and we defer to the
sometime on 15 November 1989 when complainant, findings of the Labor Arbiter as confirmed and adopted by the
accompanied by Supervisor Dante Castor and Analiza Court of Appeals on the credibility of said witness. This Court
Castillo, reported the matter to Vice President Santos. And is not a trier of facts and will not weigh anew the evidence
yet, it was only on 08 March 1991, after a lapse of sixteen already passed upon by the Court of Appeals. 16
(16) months from the time the non-release of the checks was
reported to the Vice President, that complainant was issued a On the third issue, the Bank questions the award of full
memorandum directing her to submit an explanation. And it backwages and other benefits from July 19, 1991 up to the
took the bank another four (4) months before it dismissed finality of this judgment; separation pay equivalent to one (1)
complainant. month salary for every year of service in lieu of
reinstatement; and attorney's fees equivalent to ten (10%)
The delayed action taken by respondent against complainant percent of the total award. The Bank argues, in the main,
lends credence to the assertion of the latter that her that private respondent is not entitled to full backwages in
dismissal was a mere retaliation to the criminal complaints view of the fact that she did not bother to appeal that portion
she filed against the bank's top officials. of the labor arbiter's judgment awarding back wages limited
to three years. It must be stressed that private respondent
It clearly appears from the foregoing that the complainant filed a special civil action for certiorari to review the decision
herein has no knowledge of, much less participation in, the of the NLRC17 and not an ordinary appeal. An ordinary appeal
non-release of the dollar checks under discussion. Ms. Joven is distinguished from the remedy of certiorari under Rule 65
is solely responsible for the same. Incidentally, she was not of the Revised Rules of Court in that in ordinary appeals it is
even reprimanded by the bank. settled that a party who did not appeal cannot seek
FOURTH. Respondent Bank having failed to furnish petitioner affirmative relief other than the ones granted in the decision
necessary documents imputing loss of confidence, petitioner of the court below. 18 On the other hand, resort to a judicial
was not amply afforded opportunity to prepare an intelligent review of the decisions of the National Labor Relations
answer. The Court finds nothing confidential in the auditor's Commission in a petition for certiorari under Rule 65 of Rules
report and the affidavit of Transmittal Clerk Joven. Due of Court is confined to issues of want or excess of jurisdiction
process dictates that management accord the employees and grave abuse of discretion. 19 In the instant case, the Court
every kind of assistance to enable him to prepare adequately of Appeals found that the NLRC gravely abused its discretion
for his defense, including legal representation. in finding that the private respondent's dismissal was valid
and so reversed the same. Corollary to the foregoing, the
The issue of conflict of interest not having been covered by appellate court awarded backwages in accordance with
the investigation, the Court finds it irrelevant to the current jurisprudence.
charge."15
Indeed, jurisprudence is clear on the amount of backwages
recoverable in cases of illegal dismissal. Employees illegally
dismissed prior to the effectivity of Republic Act No. 6715 on
March 21, 1989 are entitled to backwages up to three (3)
years without deduction or qualification, while those illegally
dismissed after are granted full backwages inclusive of
allowances and other benefits or their monetary equivalent
from the time their actual compensation was withheld from
them up to the time of their actual
20
reinstatement. Considering that private respondent was
terminated on July 19, 1991, she is entitled to full backwages
from the time her actual compensation was withheld from
her (which, as a rule, is from the time of her illegal dismissal)
up to the finality of this judgment (instead of reinstatement)
considering that reinstatement is no longer feasible as
correctly pointed out by the Court of Appeals on account of
the strained relations brought about by the litigation in this
case. Since reinstatement is no longer viable, she is also
entitled to separation pay equivalent to one (1) month salary
for every year of service.21 Lastly, since private respondent
was compelled to file an action for illegal dismissal with the
labor arbiter, she is likewise entitled to attorney's fees 22 at
the rate above-mentioned. There is no room to argue, as the
Bank does here, that its liability should be mitigated on
account of its good faith and that private respondent is not
entirely blameless. There is no showing that private
respondent is partly at fault or that the Bank acted in good
faith in terminating an employee of twenty-eight years. In
any event, Article 279 of Republic Act No. 671523 clearly and
plainly provides for "full backwages" to illegally dismissed
employees.1wphi1.nt

WHEREFORE, the instant petition for review on certiorari


is DENIED, and the assailed Decision of the Court of Appeals,
dated October 15, 1999, is AFFIRMED.

SO ORDERED.
complaint averred inter alia that Tumala was a salesman of
the company in Davao City from 1977 up to August 21, 1980;
that in the annual "Sumakwel" contest conducted by the
company in 1979, Tumala was declared winner of the "Lapu-
Lapu Award" for his performance as top salesman of the
year, an award which entitled him to a prize of a house and
lot; and that petitioners, despite demands, have unjustly
refused to deliver said prize Under the second cause of
action, it was alleged that on August 21, 1980, petitioners,
"in a manner oppressive to labor" and "without prior
clearance from the Ministry of Labor", "arbitrarily and
ilegally" terminated his employment. He prayed that
G.R. No. L-58877 March 15, 1982 petitioners be ordered, jointly and severally, to deliver his
prize of house and lot or its cash equivalent, and to pay his
PEPSI-COLA BOTTLING COMPANY, COSME DE ABOITIZ,
back salaries and separation benefits, plus moral and
and ALBERTO M. DACUYCUY, petitioners,
exemplary damages, attorney's fees and litigation expenses.
vs.
He did not ask for reinstatement.
HON. JUDGE ANTONIO M. MARTINEZ, in his official
capacity, and ABRAHAM TUMALA, JR., respondents. Petitioners moved to dismiss the complaint on grounds of
lack of jurisdiction and cause of action. Petitioners further
alleged that Tumala was not entitled to the "Sumakwel" prize
ESCOLIN, J.: for having misled the company into declaring him top
salesman for 1979 through various deceitful and fraudulent
This petition for certiorari, prohibition and mandamus raises manipulations and machinations in the performance of his
anew the legal question often brought to this Court: Which duties as salesman and depot in-charge of the bottling
tribunal has exclusive jurisdiction over an action filed by an company in Davao City, which manipulations consisted of
employee against his employer for recovery of unpaid "unremitted cash collections, fictitious collections of trade
salaries, separation benefits and damages the court of accounts, fictitious loaned empties, fictitious product deals,
general jurisdiction or the Labor Arbiter of the National Labor uncollected loaned empties, advance sales confirmed as
Relations Commission [NLRC]? fictitious, and route shortages which resulted to the damage
and prejudice of the bottling company in the amount of
The facts that gave rise to this petition are as follows:
P381,851.76." The alleged commission of these fraudulent
On September 19, 1980, respondent Abraham Tumala, Jr. acts was also advanced by petitioners to justify Tumala's
filed a complaint in the Court of First Instance of Davao, dismissal.
docketed as Civil Case No. 13494, against petitioners Pepsi-
Cola Bottling Co., Inc., its president Cosme de Aboitiz and
other company officers. Under the first cause of action, the
The court below, sustaining its jurisdiction over the case, compensation, social security, medicare and maternity
denied the motion for reconsideration. Hence the present benefits;
recourse.
4. Cases involving household services; and
We rule that the Labor Arbiter has exclusive jurisdiction over
the case. 5. All other claims arising from employer-employee relations,
unless expressly excluded by this Code.
Jurisdiction over the subject matter in a judicial proceeding is
conferred by the sovereign authority which organizes the Under paragraphs 3 and 5 of the above Presidential Decree,
court; and it is given only by law. 1 Jurisdiction is never the case is exclusively cognizable by the Labor Arbiters of the
presumed; it must be conferred by law in words that do not National Labor Relations Commission.
admit of doubt. 2 It is to be noted that P.D. 1691 is an exact reproduction of
Since the jurisdiction of courts and judicial tribunals is Article 217 of the Labor Code (P.D. 442), which took effect on
derived exclusively from the statutes of the forum, the issue May 1, 1974. In Garcia vs. Martinez 3, an action filed on
efore Us should be resolved on the basis of the law or statute August 2, 1976 in the Court of First Instance of Davao by a
now in force. We find that law in Presidential Decree 1691 dismissed employee against his employer for actual, moral
which took effect on May 1, 1980, Section 3 of which reads as and exemplary damages, We held that under Article 217 of
follows: the Labor Code, the law then in force, the case was within
the exclusive jurisdiction of the Labor Arbiters and the
SEC. 3. Article 217, 222 and 262 of Book V of the Labor Code National Labor Relations Commission [NLRC]. This Court, per
are hereby amended to read as follows: Justice Aquino, rational this holding thus:

Article 217. Jurisdiction of Labor Arbiters and the The provisions of paragraph 3 and 5 of Article 217 are broad
Commission. The Labor Arbiters shall have the original and and comprehensive enough to cover Velasco's [employee's]
exclusive jurisdiction to hear and decide the following cases claim for damages allegedly arising from his unjustified
involving all workers, whether agricultural or non-agricultural: dismissal by Garcia [employer]. His claim was a consequence
of the termination of their employer-employee relations
1. Unfair labor practice cases; [Compare with Ruby Industrial Corporation vs. Court of First
2. Unresolved issues in collective bargaining, including those Instance of Manila, L- 38893, August 31, 1977, 78 SCRA 499].
that involve waged hours of work and other terms and Article 217 of the Labor Code words amended by P.D. 1367,
conditions of employment; which was promulgated on May 1, 1978, the full text of which
3. All money claims of workers, including those based on non- is quoted as follows:
payment or underpayment of wages, overtime SECTION 1. Paragraph [a] of Art, 217 of the Labor Code as
compensation, separation pay and other benefits provided by amended is hereby further amended to read as follows:
law or appropriate agreement, except claims for employees'
[a] The Labor Arbiters shall have exclusive jurisdiction hear damages was beyond the periphery of the jurisdictional
and decide the following cases involving all workers, whether competence of the Labor Arbiters. Our ruling in Calderon,
agricultural or non-agricultural: however, no longer applaies to this case because P.D. 1367,
upon which said decision was based, had already been
1] Unfair labor practice cases; superceded by P.D. 1691. As heretofore stated, P.D. 1691
2] Unresolved issues in collective bargaining, including those restored to the Labor Arbiters their exlcusive jurisdiction over
which involve wages, hours of work, and other terms said classes of claims.
conditions of employment; and Respondent Tumala maintains that his action for delivery of
3] All other cases arising from employer-employee relations the house and lot, his prize as top salesman of the company
duly indorsed by the Regional Directors in accordance with for 1979, is a civil controversy triable exclusively by the court
the provisions of this Code. of the general jurisdiction. We do not share this view. The
claim for said prize unquestionably arose from an employer-
Provided, that the Regional Directors shall not indorse and employee relation and, therefore, falls within the coverage of
Labor Arbiters shall not entertain claims for moral or other par. 5 of P.D. 1691, which speaks of "all claims arising from
forms of damages. employer-employee relations, unless expressly excluded by
this Code." Indeed, Tumala would not have qualitfied for the
It will be noted that paragraphs 3 and 5 of Article 217 were content, much less won the prize, if he was not an employee
deleted from the text of the above decree and a new of the company at the time of the holding of the contest.
provision incorporated therein, to wit: "Provided that the Besides, the cause advanced by petitioners to justify their
Regional Directors shall not indorse and Labor Arbiters shall refusal to deliver the prizethe alleged fraudulent
not en certain claims for moral or other forms of damages." manipulations committed by Tumala in connection with his
This amendatory act thus divested the Labor Arbiters of their duties as salesman of the companyinvolves an inquiry into
competence to pass upon claims for damages by employees his actuations as an employee.
against their employers.
Besides, to hold that Tumala's claim for the prize should be
However, on May 1, 1980, Article 217, as amended by P.D. passed upon by the regular court of justice, independently
1367, was amended anew by P.D. 1691. This last decree, and separately from his claim for back salaries, retirement
which is a verbatim reproduction of the original test of Article benefits and damages, would be to sanction split juridiction
217 of the Labor Code, restored to the Labor Arbiters of the and multiplicity of suits which are prejudicial to the orderly
NLRC exclusive jurisdiction over claims, money or otherwise, administration of justice.
arising from employer-employee relations, except those
expressly excluded therefrom. One last point. Petitioners content that Tumala has no cause
of action to as for back salaries and damages because his
In sustaining its jurisdiction over the case at bar, the dimissal was authorized by the Regional Director of the
respondent court relied on Calderon vs. Court of Appeals 4 , MInistry of Labor. This question calls for the presentaiton of
where We ruled that an employee's action for unpaid evidence and the same may well be entilated before the
salaries, alowances and other reimbursable expenses and
labor Arbiter who has jurisdiction over the case. Besides, the
issue raised is not for Us to determine in this certiorari
proceeding. The extraordinary remedy of certiorari
proceeding. The extraordinary remedy of certiorari offers G.R. No. 80774 May 31, 1988
only a limited form of review and its principal function is to
keep an inferior tribunal within its jurisdiction. 5 SAN MIGUEL CORPORATION, petitioner,
vs.
WHEREFORE, the petition is granted, and respondent judge is NATIONAL LABOR RELATIONS COMMISSION and
hereby directed to dismiss Civil Case No. 13494, without RUSTICO VEGA, respondents.
prejudice to the right of respondent Tumala to refile the same
with the Labor Arbiter. No costs. Siguion Reyna, Montecillo & Ongsiako Law Offices for
petitioner.
SO ORDERED.
The Solicitor General for public respondent.

FELICIANO, J.:

In line with an Innovation Program sponsored by petitioner


San Miguel Corporation ("Corporation;" "SMC") and under
which management undertook to grant cash awards to "all
SMC employees ... except [ED-HO staff, Division Managers
and higher-ranked personnel" who submit to the Corporation
Ideas and suggestions found to be beneficial to the
Corporation, private respondent Rustico Vega submitted on
23 September 1980 an innovation proposal. Mr. Vega's
proposal was entitled "Modified Grande Pasteurization
Process," and was supposed to eliminate certain alleged
defects in the quality and taste of the product "San Miguel
Beer Grande:"

Title of Proposal

Modified Grande Pasteurization Process

Present Condition or Procedure


At the early stage of beer grande production, several cases of respondent had no cause of action. It denied ever having
beer grande full goods were received by MB as returned beer approved or adopted Mr. Vega's proposal as part of the
fulls (RBF). The RBF's were found to have sediments and their Corporation's brewing procedure in the production of San
contents were hazy. These effects are usually caused by Miguel Beer Grande. Among other things, petitioner stated
underpasteurization time and the pasteurzation units for beer that Mr. Vega's proposal was tumed down by the company
grande were almost similar to those of the steinie. "for lack of originality" and that the same, "even if
implemented [could not] achieve the desired result."
Proposed lnnovation (Attach necessary information) Petitioner further alleged that the Labor Arbiter had no
In order to minimize if not elienate underpasteurization of jurisdiction, Mr. Vega having improperly bypassed the
beer grande, reduce the speed of the beer grande grievance machinery procedure prescribed under a then
pasteurizer thereby, increasing the pasteurization time and existing collective bargaining agreement between
the pasteurization acts for grande beer. In this way, the self- management and employees, and available administrative
life (sic) of beer grande will also be increased. 1 remedies provided under the rules of the Innovation Program.
A counterclaim for moral and exemplary damages, attorney's
Mr. Vega at that time had been in the employ of petitioner fees, and litigation expenses closed out petitioner's pleading.
Corporation for thirteen (1 3) years and was then holding the
position of "mechanic in the Bottling Department of the SMC In an Order 4 dated 30 April 1986, the Labor Arbiter, noting
Plant Brewery situated in Tipolo, Mandaue City. that the money claim of complainant Vega in this case is "not
a necessary incident of his employment" and that said claim
Petitioner Corporation, however, did not find the aforequoted is not among those mentioned in Article 217 of the Labor
proposal acceptable and consequently refused Mr. Vega's Code, dismissed the complaint for lack of jurisdiction.
subsequent demands for a cash award under the Innovation However, in a gesture of "compassion and to show the
Program. On 22 February 1983., a Complaint 2 (docketed as government's concern for the workingman," the Labor Arbiter
Case No. RAB-VII-0170-83) was filed against petitioner also directed petitioner to pay Mr. Vega the sum of P2,000.00
Corporation with Regional Arbitration Branch No. VII (Cebu as "financial assistance."
City) of the then.", Ministry of Labor and Employment. Frivate
respondent Vega alleged there that his proposal "[had] been The Labor Arbiter's order was subsequently appealed by both
accepted by the methods analyst and implemented by the parties, private respondent Vega assailing the dismissal of his
Corporation [in] October 1980," and that the same complaint for lack of jurisdiction and petitioner Corporation
"ultimately and finally solved the problem of the Corporation questioning the propriety of the award of "financial
in the production of Beer Grande." Private respondent thus assistance" to Mr. Vega. Acting on the appeals, the public
claimed entitlement to a cash prize of P60,000.00 (the respondent National Labor Relations Commission, on 4
maximum award per proposal offered under the Innovation September 1987, rendered a Decision, 5 the dispositive
Program) and attorney's fees. portion of which reads:

In an Answer With Counterclaim and Position


3
Paper, petitioner Corporation alleged that private
WHEREFORE, the appealed Order is hereby set aside and 5. Cases arising from any violation of Article 265 of this;
another udgment entered, order the respondent to pay the Code, including questions involving the legality of strikes and
complainant the amount of P60,000.00 as explained above. lockouts.

SO ORDERED. (b) The Commission shall have exclusive appellate


jurisdiction over all cases decided by Labor Arbiters.
In the present Petition for certiorari filed on 4 December (Emphasis supplied)
1987, petitioner Corporation, invoking Article 217 of the
Labor Code, seeks to annul the Decision of public respondent While paragraph 3 above refers to "all money claims of
Commission in Case No. RAB-VII-01 70-83 upon the ground workers," it is not necessary to suppose that the entire
that the Labor Arbiter and the Commission have no universe of money claims that might be asserted by workers
jurisdiction over the subject matter of the case. against their employers has been absorbed into the original
and exclusive jurisdiction of Labor Arbiters. In the first place,
The jurisdiction of Labor Arbiters and the National Labor paragraph 3 should be read not in isolation from but rather
Relations Commission is outlined in Article 217 of the Labor within the context formed by paragraph 1 related to unfair
Code, as last amended by Batas Pambansa Blg. 227 which labor practices), paragraph 2 (relating to claims concerning
took effect on 1 June 1982: terms and conditions of employment), paragraph 4 (claims
ART. 217. Jurisdiction of Labor Arbiters and the commission. relating to household services, a particular species of
(a) The Labor Arbiters shall have theoriginal and exclusive employer-employee relations), and paragraph 5 (relating to
jurisdiction to hear and decide within thirty (30) working days certain activities prohibited to employees or to
after submission of the case by the parties for decision, the employers).<re||an1w> It is evident that there is a
following cases involving are workers, whether agricultural or unifying element which runs through paragraphs 1 to 5 and
non-agricultural: that is, that they all refer to cases or disputes arising out of
or in connection with an employer-employee relationship.
1. Unfair labor practice cases; This is, in other words, a situation where the rule of noscitur a
sociis may be usefully invoked in clarifying the scope of
2. Those that workers may file involving wages, hours of work paragraph 3, and any other paragraph of Article 217 of the
and other terms and conditions of employment; Labor Code, as amended. We reach the above conclusion
from an examination of the terms themselves of Article 217,
3. All money claims of workers, including those based on
as last amended by B.P. Blg. 227, and even though earlier
non-payment or underpayment of wages, overtime
versions of Article 217 of the Labor Code expressly brought
compensation, separation pay and other benefits provided
within the jurisdiction of the Labor Arbiters and the NLRC
by law or appropriate agreement, except claims for
"cases arising from employer employee relations," 6 which
employees' compensation, social security, medicare and
clause was not expressly carried over, in printer's ink, in
maternity benefits;
Article 217 as it exists today. For it cannot be presumed that
4. Cases involving household services; and 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 while private respondent was the sales Manager of petitioner.
the regular courts of justice, were intended by the legislative Petitioner had sued private respondent for non-payment of
authority to be taken away from the jurisdiction of the courts accounts which had arisen from private respondent's own
and lodged with Labor Arbiters on an exclusive basis. The purchases of vehicles and parts, repair jobs on cars
Court, therefore, believes and so holds that the money claims personally owned by him, and cash advances from the
of workers" referred to in paragraph 3 of Article 217 corporation. At the pre-trial in the lower court, private
embraces money claims which arise out of or in connection respondent raised the question of lack of jurisdiction of the
with the employer-employee relationship, or some aspect or court, stating that because petitioner's complaint arose out
incident of such relationship. Put a little differently, that of the employer-employee relationship, it fell outside the
money claims of workers which now fall within the original jurisdiction of the court and consequently should be
and exclusive jurisdiction of Labor Arbiters are those money dismissed. Respondent Judge did dismiss the case, holding
claims which have some reasonable causal connection with that the sum of money and damages sued for by the
the employer-employee relationship. employer arose from the employer-employee relationship
and, hence, fell within the jurisdiction of the Labor Arbiter
Applying the foregoing reading to the present case, we note and the NLRC. In reversing the order of dismissal and
that petitioner's Innovation Program is an employee incentive requiring respondent Judge to take cognizance of the case
scheme offered and open only to employees of petitioner below, this Court, speaking through Mme. Justice Melencio-
Corporation, more specifically to employees below the rank Herrera, said:
of manager. Without the existing employer-employee
relationship between the parties here, there would have been Before the enactment of BP Blg. 227 on June 1, 1982, Labor
no occasion to consider the petitioner's Innovation Program Arbiters, under paragraph 5 of Article 217 of the Labor Code
or the submission by Mr. Vega of his proposal concerning had jurisdiction over" all other cases arising from employer-
beer grande; without that relationship, private respondent employee relation, unless, expressly excluded by this
Vega's suit against petitioner Corporation would never have Code." Even then, the principle followed by this Court was
arisen. The money claim of private respondent Vega in this that, although a controversy is between an employer and an
case, therefore, arose out of or in connection with his employee, the Labor Arbiters have no jurisdiction if the Labor
employment relationship with petitioner. Code is not involved. In Medina vs. Castro-Bartolome, 11
SCRA 597, 604, in negating jurisdiction of the Labor Arbiter,
The next issue that must logically be confronted is whether although the parties were an employer and two employees,
the fact that the money claim of private respondent Vega Mr. Justice Abad Santos stated:
arose out of or in connection with his employment relation"
with petitioner Corporation, is enough to bring such money The pivotal question to Our mind is whether or not the Labor
claim within the original and exclusive jurisdiction of Labor Code has any relevance to the reliefs sought by the plaintiffs.
Arbiters. For if the Labor Code has no relevance, any discussion
concerning the statutes amending it and whether or not they
In Molave Motor Sales, Inc. v. Laron, 7 the petitioner was a have retroactive effect is unnecessary.
corporation engaged in the sale and repair of motor vehicles,
It is obvious from the complaint that the plaintiffs have not respondents, clearly if impliedly suggesting that the claim for
alleged any unfair labor practice. Theirs is a simple action for damages did not necessarily arise out of or in connection
damages for tortious acts allegedly committed by the with the employer-employee relationship.Singapore Airlines
defendants. Such being the case, the governing statute is Limited v. Pao, also cited in Molave, involved a claim for
the Civil Code and not the Labor Code. It results that the liquidated damages not by a worker but by the employer
orders under review are based on a wrong premise. company, unlike Medina. The important principle that runs
through these three (3) cases is that where the claim to the
And in Singapore Airlines Limited v. Pao, 122 SCRA 671, principal relief sought 9 is to be resolved not by reference to
677, the following was said: the Labor Code or other labor relations statute or a collective
Stated differently, petitioner seeks protection under the civil bargaining agreement but by the general civil law, the
laws and claims no benefits under the Labor Code. The jurisdiction over the dispute belongs to the regular courts of
primary relief sought is for liquidated damages for breach of justice and not to the Labor Arbiter and the NLRC. In such
a contractual obligation. The other items demanded are not situations, resolution of the dispute requires expertise, not in
labor benefits demanded by workers generally taken labor management relations nor in wage structures and other
cognizance of in labor disputes, such as payment of wages, terms and conditions of employment, but rather in the
overtime compensation or separation pay. The items claimed application of the general civil law. Clearly, such claims fall
are the natural consequences flowing from breach of an outside the area of competence or expertise ordinarily
obligation, intrinsically a civil dispute. ascribed to Labor Arbiters and the NLRC and the rationale for
granting jurisdiction over such claims to these agencies
In the case below, PLAINTIFF had sued for monies loaned to disappears.
DEFENDANT, the cost of repair jobs made on his personal
cars, and for the purchase price of vehicles and parts sold to Applying the foregoing to the instant case, the Court notes
him. Those accounts have no relevance to the Labor Code. that the SMC Innovation Program was essentially an
The cause of action was one under the civil laws, and it does invitation from petitioner Corporation to its employees to
not breach any provision of the Labor Code or the contract of submit innovation proposals, and that petitioner Corporation
employment of DEFENDANT. Hence the civil courts, not the undertook to grant cash awards to employees who accept
Labor Arbiters and the NLRC should have jurisdiction. 8 such invitation and whose innovation suggestions, in the
judgment of the Corporation's officials, satisfied the
It seems worth noting that Medina v. Castro-Bartolome, standards and requirements of the Innovation Program 10 and
referred to in the above excerpt, involved a claim for which, therefore, could be translated into some substantial
damages by two (2) employees against the employer benefit to the Corporation. Such undertaking, though
company and the General Manager thereof, arising from the unilateral in origin, could nonetheless ripen into an
use of slanderous language on the occasion when the enforceable contractual (facio ut des) 11 obligation on the
General Manager fired the two (2) employees (the Plant part of petitioner Corporation under certain circumstances.
General Manager and the Plant Comptroller). The Court Thus, whether or not an enforceable contract, albeit implied
treated the claim for damages as "a simple action for arid innominate, had arisen between petitioner Corporation
damages for tortious acts" allegedly committed by private and private respondent Vega in the circumstances of this
case, and if so, whether or not it had been breached, are On August 4,1977, petitioner Leonardo D. Suario filed a
preeminently legal questions, questions not to be resolved by complaint for separation pay, damages and attorney's fees
referring to labor legislation and having nothing to do with against the Bank of the Philippine Islands, Davao Branch/ or
wages or other terms and conditions of employment, but the Manager and Assistant Manager/Cashier alleging:
rather having recourse to our law on contracts.
xxx xxx xxx
WEREFORE, the Petition for certiorari is GRANTED. The
decision dated 4 September 1987 of public respondent 2. That complainant has been a loyal employee of the
National Labor Relations Commission is SET ASIDE and the respondent bank since March, 1969, first assigned as a
complaint in Case No. RAB-VII-0170-83 is hereby DISMISSED, saving clerk, then rose to become the head of the loan
without prejudice to the right of private respondent Vega to section in 1976 with an official designation as Credit
file a suit before the proper court, if he so desires. No Investigator Appraiser-Credit Analyst;
pronouncement as to costs. SO ORDERED. 3. That during the time of the complainant's employment
G.R. No. L-50459 August 25, 1989 with the respondent bank, he pursued his studies of law
without criticism or adverse comments from the respondent
LEONARDO D. SUARIO, petitioner, bank but instead praises were showered and incentives and
vs. considerations were bestowed in view of the complainant's
BANK OF THE PHILIPPINE ISLANDS, Davao Branch or determination for intellectual advancement;
The Manager/Cashier and NATIONAL LABOR
RELATIONS COMMISSION, respondents. 4. That sometime in March, 1976, the complainant verbally
requested the then Asst. Vice-President and Branch Manager,
Leonardo D. Suario for and in his own behalf. Mr. Armando N. Guilatco, for a 6-month leave of absence
without pay purposely to take the 1976 pre-bar review in
Canete Tolentino, Buyo, Caballero and Fuentes for Manila and that the said Mr. Guilatco informed the
respondent BPI. complainant that there would be no problem as regards the
requested leave of absence;

GUTIERREZ, JR., J.: 5. That sometime in May, 1976, the complainant received a
verbal notice from the new Branch Manager, Mr. Vicente
The petitioner, with himself as his own counsel, filed this Casino, that the respondent's Head Office approved only a
petition for review of the decision of the National Labor 30-day leave of absence without pay but that Mr. Guilatco,
Relations Commission (NLRC) which denied his claim for then assigned in Head Office as Vice President, advised him
damages arising from an alleged illegal dismissal. In addition (Casino) to inform the complainant to just avail of the 30-day
to the separation pay already awarded to him, the petitioner leave of absence first and then proceed to Manila for the
asks for P9,995.00 actual damages, P300,000.00 moral review since the request would be ultimately granted;
damages, P200,000.00 exemplary damages, and attorney's
fees to be determined by the Court.
6. That complainant never suspected that his application the Personnel Manager promised to take up the matter with
would be disapproved, much less any bad faith on the part of Mr. Alberto Villa Abrille;
the respondent bank to discriminate union member (sic),
since it has been the policy of the respondent bank to grant 10. That during the first week of August, 1976, the
request of this nature as shown in the case of four (4) former complainant received a letter from the Asst.
employees who were all granted leave of absence without Manager/Cashier, Mr. Douglas E. Aurelio, ordering the
pay. Copies of the affidavits of Judge Juan Montejo and Atty. complainant to report back for work since the complainant's
Bienvenido Banez and xerox copies of the payroll of Jose request was allegedly disapproved and that failure to report
Ledesma and Antonio Tan are hereto attached as ANNEXES back for work would be a conclusive proof that the
'A', 'B', 'C', and 'D' and made an integral part hereof; complainant is no longer interested to continue working and
therefore considered resigned. ...
7. That on May 10, 1976, the complainant wrote a formal
letter to the President of the respondent bank, Mr. Alberto 11. That upon receipt of the letter, complainant's review was
Villa Abrille, asking for a formal reconsideration and caused unduly interrupted since sleepless nights were spent in order
the same to be received by Mr. Vicente Casino but the latter to arrive at the proper decision and that the complainant has
advised instead the complainant to address to him (Casino) a decided not to report back because of the considerable
letter of mild tenor since any reconsideration should be expenses already incurred in Manila after he has been led to
coursed through the proper channel; and that Mr. Casino believe that the request would ultimately be granted;
advised the complainant to just file his 30-day leave of 12. That during the last week of August, 1976, the
absence without pay as approved and then proceed to Manila complainant received another letter from Douglas E. Aurelio,
since the request would ultimately be granted. A Xerox copy attaching a xerox copy of the application for a Clearance to
of the said letter is hereto attached as ANNEX 'E' to be made terminate on the ground of resignation/ or abandonment. ...
an integral part hereof;
13. That the complainant failed to file his opposition since as
8. That acting on the said advice of Vicente Casino, the above averred to, he was already in Manila taking up the
complainant, with utmost good faith, wrote a letter review and was then very busy since the bar examination
addressed to Mr. Casino aid at the same time, filed a 30-day was only two months shy;
leave of absence. Copies of the letter and Application for
Leave of Absence are hereto attached as ANNEXES 'F' and 'G' 14. That sometime during the first week of December, 1976,
to be made an integral part hereof, the complainant went to the respondent bank but was
verbally informed that he was already dismissed;
9. That on May 17, 1976, the complainant proceeded to
Manila for the pre-bar review and even went to the extent of 15. That on December 13, 1976, the complainant formally
going to the respondent's Head Office to seek an audience wrote a letter to the respondent bank requesting for a written
with the Personnel Manager with an alternative of working and formal advise as to his real status and that on December
with any of the Metro Manila Branches of the respondent 14, 1976, the respondent bank replied that the matter was
bank if and when the request would not be granted and that still referred to the Personnel Department at Head Office
leading again the complainant to believe that his case was The petitioner alleges that the public respondent committed
not yet hopeless. ... the following:

16. That on December 21, 1976, the complainant wrote I


another letter pressing for a categorical answer and on
December 23, 1976, the lawyers of the respondent bank THAT THE NATIONAL LABOR RELATIONS COMMISSION IN ITS
replied that as far as the bank is concerned the services of DECISION DATED OCTOBER 9, 1978 (ANNEX F OF THE
the complainant was considered terminated effective July 19, PETITION) ERRED IN NOT GRANTING THE CLAIM OF DAMAGES
1976 contrary to the respondent bank's manifestation that PRAYED FOR BY PETITIONER DESPITE FINDINGS THAT THE
his case was still pending before the Personnel DISMISSAL WAS CLEARLY ILLEGAL; and
Department. ... II
17. That the dismissal of the complainant was clearly illegal THAT THE NATIONAL LABOR RELATIONS COMMISSION ERRED
and without just cause, being discriminatory in character he IN DISMISSING PETITIONER'S MOTION FOR
being an active union member and in fact the Vice President RECONSIDERATION BASED MAINLY ON PD NOS. 1367 AND
of the ALU-BPI Chapter until his dismissal in view of the 1391 IN ITS DECISION DATED FEBRUARY 9, 1979. (Rollo, p.
uneven application of the respondent's policy; ... (Rollo, pp. 139).
15-19)
The main issue in this case is whether or not the NLRC
The case was set for conciliation but since the parties could committed grave abuse of discretion in denying the
not agree on any settlement, the case was certified to the petitioner's claim for actual, moral and exemplary damages
Labor Arbiter. Thereafter, the Executive Labor Arbiter plus attorney's fees in addition to his separation pay.
required the parties to submit their position papers. Based on
the position papers submitted, a decision was rendered on On the matter of NLRC jurisdiction over claims for damages,
December 7, 1977. The dispositive portion reads as follows: it clearly appears that the complaint was filed on August 4,
1977 and decided by the Labor Arbiter on December 7, 1977;
WHEREFORE, premises considered, respondent is hereby hence, the applicable law is Article 217 of the Labor Code
ordered to pay complainant's claim for separation pay in the which took effect on October 1, 1974, and which provides:
amount of P11,813.36. His claim for moral, actual, and
exemplary damages and attorney's fees are hereby xxx xxx xxx
dismissed for lack of merit. (Rollo, p. 46)
ART. 217. Jurisdiction of Labor Arbiters and the Commission.
The decision of the Executive Labor Arbiter was affirmed on (a) The Labor Arbiters shall have exclusive jurisdiction to
appeal to the National Labor Relations Commission on hear and decide the following cases involving all workers,
October 9, 1978. A motion for reconsideration was likewise whether agricultural or non-agricultural:
denied. Hence, this petition.
(1) Unfair labor practice cases;
(2) Unresolved issues in collective bargaining including those and possible conflicting findings and conclusions by two
which involve wages, hours of work, and other terms and tribunals on one and the same claim.
conditions of employment duly indorsed by the Bureau in
accordance with the provisions of this Code; So, on May 1, 1980, Presidential Decree No. 1691 (which
substantially reenacted Article 217 in its original form)
(3) All money claims of workers involving non-payment or nullified Presidential Decree No. 1367 and restored to the
underpayment of wages, overtime or premium Labor Arbiters and the NLRC their jurisdiction to award all
compensation, maternity or service incentive leave, kinds of damages in cases arising from employer-employee
separation pay and other money claims arising from relations (Pepsi-Cola Bottling Company of the Philippines v.
employer-employee relation, except claims for employee's Martinez, G.R. No. 58877).
compensation, social security and medicare benefits and as
otherwise provided in Article 128 of this Code; It is now well settled that money claims of workers provided
by law over which the labor arbiter has original and exclusive
(4) Cases involving household services; and jurisdiction are comprehensive enough to include claims for
moral damages of a dismissed employee against his
(5) All other cases arising from employer-employee employer. (Vargas v. Akai Phil. Inc., 156 SCRA 531 [1987]).
relationship unless expressly excluded by this Code.
On the issue whether or not the petitioner is entitled to his
(b) The Commission shall have exclusive appellate claim for moral damages, we are constrained to decide in the
jurisdiction over all cases decided by Labor Arbiters, negative. The case of Primero v. Intermediate Appellate
compulsory arbitrators, and voluntary arbitrators in Court, (156 SCRA 435 [1987]) expounded on this matter, to
appropriate casino provided in Article 263 of this Code. ... wit:
The contention of private respondent that the NLRC is not xxx xxx xxx
clothed with authority to entertain claims for moral and other
forms of damages is based on PD 1367 which took effect on The legislative intent appears clear to allow recovery in
May 1, 1979 and which amended Article 217 by specifically proceedings before Labor Arbiters of moral and other forms
providing that "Regional Directors shall not indorse and Labor of damages, in all cases or matters arising from employer-
Arbiters shall not entertain claims for moral or other forms of employee relations. This would no doubt include, particularly,
damages." instances where an employee has been unlawfully dismissed.
In such a case the Labor Arbiter has jurisdiction to award to
This limitation on jurisdiction did not last long. This Court in the dismissed employee not only the reliefs specifically
the case of Ebon v. De Guzman, (113 SCRA 52 [1982]) provided by labor laws, but also moral and the forms of
explained: damages governed by the Civil Code. Moral damages would
Evidently, the lawmaking authority had second thoughts be recoverable, for example, where the dismissal of the
about depriving the Labor Arbiters and the NLRC of the employee was not only effected without authorized cause
jurisdiction to award damages in labor cases because that set and/or due process for which relief is granted by the Labor
up would mean duplicity of suits, splitting the cause of action Code but was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a the Labor Arbiter applies the Labor Code; in addressing the
manner contrary to morals, good customs or public policy-for second, the Civil Code. And this appears to be the plain and
which the obtainable relief is determined by 'the Civil patent intendment of the law. For apart from the reliefs
Code (not the Labor Code).lwph1.t Stated otherwise, if expressly set out in the Labor Code flowing from illegal
the evidence adduced by the employee before the Labor dismiss from employment, no other damages may be
Arbiter should establish that the employer did indeed awarded to an illegally dismiss employee other than those
terminate the employee's services without just cause or specified by the Civil Code. Hence, the fact that the issue of
without according him due process, the Labor Arbiter's whether or not moral or other damages were suffered by an
judgment shall be for the employer to reinstate the employee and in the affirmative, the amount that should
employee and pay him his back wages, or exceptionally, for properly be awarded to him in the circumstances is
the employee simply to receive separation pay. These are determined under the provisions of the Civil Code and not the
reliefs explicitly prescribed by the Labor Code. But any award Labor Code. ... (P. 445)
of moral damages by the Labor Arbiter obviously cannot be
based on the Labor Code but should be grounded on the Civil In the case of Guita v. Court of Appeals (139 SCRA 576
Code. Such an award cannot be justified solely upon the [1985]), we stated that:
premise (otherwise sufficient for redress under the Labor Moral damages may be awarded to compensate one for
Code) that the employer fired his employee without just diverse injuries such as mental anguish, besmirched
cause or due process. Additional facts must be pleaded and reputation, wounded feelings and social humiliation. It is
proven to warrant the grant of moral damages under the however not enough that such injuries have arisen; it is
Civil Code, these being, to repeat, that the act of dismissal essential that they have sprung from a wrongful act or
was attended by bad faith or fraud, or was oppressive to omission of the defendant which was the proximate cause
labor, or done in a manner contrary to morals, good customs, thereof.
or public policy; and, of course, that social humiliation,
wounded feelings, grave anxiety, etc., resulted Moral damages include physical suffering, mental anguish,
therefrom. (pp. 443-444, emphasis supplied) fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury.
The case of Primero v. IAC states the distinction between the Though incapable of pecuniary computation, moral damages
two seemingly disparate causes of action, to wit: may be recovered if they are the proximate result of the
It is clear that the question of the legality of the act of defendant's wrongful act or omission. (Civil Code, Article
dismissal is intimately related to the issue of the legality of 2217).
the manner by which that act of dismissal was performed. In a long line of cases, we have consistently ruled that in the
But while the Labor Code treats of the nature of, and the absence of a wrongful act or omission or of fraud or bad
remedy available as regards the first the employee's faith, moral damages cannot be awarded. . . (R & B Surety
separation from employment it does not at all deal with the and Insurance Co., Inc. v. IAC, 129 SCRA 736, 743.) (p. 580)
second the manner of that separation which is governed
exclusively by the Civil Code. In addressing the first issue,
We do not find any bad faith or fraud on the part of the bank however, did not oppose such application nor did he do
officials who denied the petitioner's request for a six months' anything to preserve his right.
leave of absence without pay. If the petitioner was made to
believe that his request would be granted, we can not fault More pertinent is the fact that the petitioner knew as early as
the branch manager or his subsequent replacement for May 6, 1976 that he was granted only a one month study
giving their assurances. They were merely personal leave (rollo, p. 98). He may have asked for a reconsideration
assurances which could be reconsidered on the basis of later but notwithstanding its denial, the petitioner proceeded with
developments or upon consultation with higher authorities his review. Whether or not his request for six months' leave
and which are not binding. Certainly, the bank officials who without pay would be granted, the petitioner was set on
gave their verbal assurances had only the petitioner's continuing with his review.
paramount welfare in their minds. There is no evidence to Neither can we consider the private respondents' response to
show that they meant to deceive the petitioner. They the petitioner's query regarding his status as having given
themselves thought that such a request would be granted. him false hopes. The referral to the personnel department
Unfortunately, company policy had to be followed. The fact was merely a part of the formal procedure undertaken by the
that the petitioner's request for six months' leave of absence bank. Such referral does not show that the bank acted in a
was denied does not ipso facto entitle him to damages. wanton or willful manner.
As held in the case of Rubio v. Court of Appeals (141 SCRA In the light of the foregoing, we sustain the Labor Arbiter's
488 [1986]): finding that the petitioner's claim for damages must be
xxx xxx xxx dismissed for lack of sufficient basis.

In a long line of cases, we have consistently ruled that in the WHEREFORE, the petition is hereby DISMISSED for lack of
absence of a wrongful act or omission or of fraud or bad faith, merit.
moral damages cannot be awarded and that the adverse SO ORDERED.
result of an action does not per se make the action wrongful
and subject the actor to have payment of damages, for the
law could not have meant to impose a penalty on the right to
litigate. ... (p. 516) G.R. No. 157010 June 21, 2005

It is incumbent upon the petitioner to prove that there was PHILIPPINE NATIONAL BANK, petitioner,
malice or bad faith on the part of the private respondents in vs.
terminating him On the contrary, the records of this petition FLORENCE O. CABANSAG, respondent.
show that the private respondent acted in accordance with
DECISION
law before effecting the dismissal. The records also show that
there was a prior application with the Ministry of Labor to PANGANIBAN, J.:
terminate the petitioner's employment. A copy of said
application was furnished to the petitioner. The petitioner,
The Court reiterates the basic policy that all Filipino workers, employment as Branch Credit Officer, at a total monthly
whether employed locally or overseas, enjoy the protective package of $SG4,500.00, effective upon assumption of duties
mantle of Philippine labor and social legislations. Our labor after approval. Ruben C. Tobias found her eminently qualified
statutes may not be rendered ineffective by laws or and wrote on October 26, 1998, a letter to the President of
judgments promulgated, or stipulations agreed upon, in a the Bank in Manila, recommending the appointment of
foreign country. Florence O. Cabansag, for the position.

The Case xxxxxxxxx

Before us is a Petition for Review on Certiorari1 under Rule 45 "The President of the Bank was impressed with the
of the Rules of Court, seeking to reverse and set aside the credentials of Florence O. Cabansag that he approved the
July 16, 2002 Decision2 and the January 29, 2003 recommendation of Ruben C. Tobias. She then filed an
Resolution3 of the Court of Appeals (CA) in CA-GR SP No. Application, with the Ministry of Manpower of the
68403. The assailed Decision dismissed the CA Petition (filed Government of Singapore, for the issuance of an
by herein petitioner), which had sought to reverse the Employment Pass as an employee of the Singapore PNB
National Labor Relations Commission (NLRC)s June 29, 2001 Branch. Her application was approved for a period of two (2)
Resolution,4 affirming Labor Arbiter Joel S. Lustrias January years.
18, 2000 Decision.5
"On December 7, 1998, Ruben C. Tobias wrote a letter to
The assailed CA Resolution denied herein petitioners Motion Florence O. Cabansag offering her a temporary appointment,
for Reconsideration. as Credit Officer, at a basic salary of Singapore Dollars
4,500.00, a month and, upon her successful completion of
The Facts her probation to be determined solely, by the Bank, she may
The facts are narrated by the Court of Appeals as follows: be extended at the discretion of the Bank, a permanent
appointment and that her temporary appointment was
"In late 1998, [herein Respondent Florence Cabansag] arrived subject to the following terms and conditions:
in Singapore as a tourist. She applied for employment, with
the Singapore Branch of the Philippine National Bank, a 1. You will be on probation for a period of three (3)
private banking corporation organized and existing under the consecutive months from the date of your assumption of
laws of the Philippines, with principal offices at the PNB duty.
Financial Center, Roxas Boulevard, Manila. At the time, the 2. You will observe the Banks rules and regulations and
Singapore PNB Branch was under the helm of Ruben C. those that may be adopted from time to time.
Tobias, a lawyer, as General Manager, with the rank of Vice-
President of the Bank. At the time, too, the Branch Office had 3. You will keep in strictest confidence all matters related to
two (2) types of employees: (a) expatriates or the regular transactions between the Bank and its clients.
employees, hired in Manila and assigned abroad including
Singapore, and (b) locally (direct) hired. She applied for 4. You will devote your full time during business hours in
promoting the business and interest of the Bank.
5. You will not, without prior written consent of the Bank, be Ruben C. Tobias, likewise, told Florence O. Cabansag that the
employed in anyway for any purpose whatsoever outside PNB Singapore Branch will be sold or transformed into a
business hours by any person, firm or company. remittance office and that, in either way, Florence O.
Cabansag had to resign from her employment. The more
6. Termination of your employment with the Bank may be Florence O. Cabansag was perplexed. She then asked Ruben
made by either party after notice of one (1) day in writing C. Tobias that she be furnished with a Formal Advice from
during probation, one month notice upon confirmation or the the PNB Head Office in Manila. However, Ruben C. Tobias
equivalent of one (1) days or months salary in lieu of flatly refused. Florence O. Cabansag did not submit any letter
notice. of resignation.
"Florence O. Cabansag accepted the position and assumed "On April 16, 1999, Ruben C. Tobias again summoned
office. In the meantime, the Philippine Embassy in Singapore Florence O. Cabansag to his office and demanded that she
processed the employment contract of Florence O. Cabansag submit her letter of resignation, with the pretext that he
and, on March 8, 1999, she was issued by the Philippine needed a Chinese-speaking Credit Officer to penetrate the
Overseas Employment Administration, an Overseas local market, with the information that a Chinese-speaking
Employment Certificate, certifying that she was a bona fide Credit Officer had already been hired and will be reporting for
contract worker for Singapore. work soon. She was warned that, unless she submitted her
xxxxxxxxx letter of resignation, her employment record will be
blemished with the notation DISMISSED spread thereon.
"Barely three (3) months in office, Florence O. Cabansag Without giving any definitive answer, Florence O. Cabansag
submitted to Ruben C. Tobias, on March 9, 1999, her initial asked Ruben C. Tobias that she be given sufficient time to
Performance Report. Ruben C. Tobias was so impressed with look for another job. Ruben C. Tobias told her that she should
the Report that he made a notation and, on said Report: be out of her employment by May 15, 1999.
GOOD WORK. However, in the evening of April 14, 1999,
while Florence O. Cabansag was in the flat, which she and "However, on April 19, 1999, Ruben C. Tobias again
Cecilia Aquino, the Assistant Vice-President and Deputy summoned Florence O. Cabansag and adamantly ordered her
General Manager of the Branch and Rosanna Sarmiento, the to submit her letter of resignation. She refused. On April 20,
Chief Dealer of the said Branch, rented, she was told by the 1999, she received a letter from Ruben C. Tobias terminating
two (2) that Ruben C. Tobias has asked them to tell Florence her employment with the Bank.
O. Cabansag to resign from her job. Florence O. Cabansag xxxxxxxxx
was perplexed at the sudden turn of events and the runabout
way Ruben C. Tobias procured her resignation from the Bank. "On January 18, 2000, the Labor Arbiter rendered judgment
The next day, Florence O. Cabansag talked to Ruben C. Tobias in favor of the Complainant and against the Respondents, the
and inquired if what Cecilia Aquino and Rosanna Sarmiento decretal portion of which reads as follows:
had told her was true. Ruben C. Tobias confirmed the veracity
of the information, with the explanation that her resignation
was imperative as a cost-cutting measure of the Bank.
WHEREFORE, considering the foregoing premises, judgment Currency at the time of payment, and moral damages in the
is hereby rendered finding respondents guilty of Illegal amount of PhP 200,000.00, exemplary damages in the
dismissal and devoid of due process, and are hereby ordered: amount of PhP 100,000.00;

1. To reinstate complainant to her former or substantially 4. To pay complainant the amount of SGD 5,039.81 or its
equivalent position without loss of seniority rights, benefits equivalent in Philippine Currency at the time of payment,
and privileges; representing attorneys fees.
6
2. Solidarily liable to pay complainant as follows: SO ORDERED." [Emphasis in the original.]

a) To pay complainant her backwages from 16 April 1999 up PNB appealed the labor arbiters Decision to the NLRC. In a
to her actual reinstatement. Her backwages as of the date of Resolution dated June 29, 2001, the Commission affirmed
the promulgation of this decision amounted to SGD that Decision, but reduced the moral damages to P100,000
40,500.00 or its equivalent in Philippine Currency at the time and the exemplary damages to P50,000. In a subsequent
of payment; Resolution, the NLRC denied PNBs Motion for
Reconsideration.
b) Mid-year bonus in the amount of SGD 2,250.00 or its
equivalent in Philippine Currency at the time of payment; Ruling of the Court of Appeals

c) Allowance for Sunday banking in the amount of SGD In disposing of the Petition for Certiorari, the CA noted that
120.00 or its equivalent in Philippine Currency at the time of petitioner bank had failed to adduce in evidence the
payment; Singaporean law supposedly governing the latters
employment Contract with respondent. The appellate court
d) Monetary equivalent of leave credits earned on Sunday found that the Contract had actually been processed by the
banking in the amount of SGD 1,557.67 or its equivalent in Philippine Embassy in Singapore and approved by the
Philippine Currency at the time of payment; Philippine Overseas Employment Administration (POEA),
e) Monetary equivalent of unused sick leave benefits in the which then used that Contract as a basis for issuing an
amount of SGD 1,150.60 or its equivalent in Philippine Overseas Employment Certificate in favor of respondent.
Currency at the time of payment. According to the CA, even though respondent secured an
f) Monetary equivalent of unused vacation leave benefits in employment pass from the Singapore Ministry of
the amount of SGD 319.85 or its equivalent in Philippine Employment, she did not thereby waive Philippine labor laws,
Currency at the time of payment. or the jurisdiction of the labor arbiter or the NLRC over her
Complaint for illegal dismissal. In so doing, neither did she
g) 13th month pay in the amount of SGD 4,500.00 or its submit herself solely to the Ministry of Manpower of
equivalent in Philippine Currency at the time of payment; Singapores jurisdiction over disputes arising from her
employment. The appellate court further noted that a cursory
3. Solidarily to pay complainant actual damages in the
amount of SGD 1,978.00 or its equivalent in Philippine
reading of the Ministrys letter will readily show that no such for certiorari. Thus, in observance of the doctrine on the
waiver or submission is stated or implied. hierarchy of courts, these petitions should be initially filed
with the CA.11
Finally, the CA held that petitioner had failed to establish a
just cause for the dismissal of respondent. The bank had also Rightly, the bank elevated the NLRC Resolution to the CA by
failed to give her sufficient notice and an opportunity to be way of a Petition for Certiorari. In seeking a review by this
heard and to defend herself. The CA ruled that she was Court of the CA Decision -- on questions of jurisdiction, venue
consequently entitled to reinstatement and back wages, and validity of employment termination -- petitioner is
computed from the time of her dismissal up to the time of likewise correct in invoking Rule 45.12
her reinstatement.
It is true, however, that in a petition for review on certiorari,
7
Hence, this Petition. the scope of the Supreme Courts judicial review of decisions
of the Court of Appeals is generally confined only to errors of
Issues law. It does not extend to questions of fact. This doctrine
Petitioner submits the following issues for our consideration: applies with greater force in labor cases. Factual questions
are for the labor tribunals to resolve. 13In the present case,
"1. Whether or not the arbitration branch of the NLRC in the the labor arbiter and the NLRC have already determined the
National Capital Region has jurisdiction over the instant factual issues. Their findings, which are supported by
controversy; substantial evidence, were affirmed by the CA. Thus, they are
entitled to great respect and are rendered conclusive upon
"2. Whether or not the arbitration of the NLRC in the National this Court, absent a clear showing of palpable error or
Capital Region is the most convenient venue or forum to hear arbitrary disregard of evidence.14
and decide the instant controversy; and
The Courts Ruling
"3. Whether or not the respondent was illegally dismissed,
and therefore, entitled to recover moral and exemplary The Petition has no merit.
damages and attorneys fees."8
First Issue:
9
In addition, respondent assails, in her Comment, the
propriety of Rule 45 as the procedural mode for seeking a Jurisdiction
review of the CA Decision affirming the NLRC Resolution. The jurisdiction of labor arbiters and the NLRC is specified in
Such issue deserves scant consideration. Respondent Article 217 of the Labor Code as follows:
miscomprehends the Courts discourse in St. Martin Funeral
Home v. NLRC,10 which has indeed affirmed that the proper "ART. 217. Jurisdiction of Labor Arbiters and the Commission.
mode of review of NLRC decisions, resolutions or orders is by (a) Except as otherwise provided under this Code the Labor
a special civil action for certiorari under Rule 65 of the Rules Arbiters shall have original and exclusive jurisdiction to hear
of Court. The Supreme Court and the Court of Appeals and decide, within thirty (30) calendar days after the
have concurrent original jurisdiction over such petitions submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the virtue of any law or contract involving Filipino workers for
following cases involving all workers, whether agricultural or overseas deployment including claims for actual, moral,
non-agricultural: exemplary and other forms of damages.

1. Unfair labor practice cases; x x x x x x x x x"

2. Termination disputes; Based on the foregoing provisions, labor arbiters clearly


have original and exclusive jurisdiction over claims arising
3. If accompanied with a claim for reinstatement, those cases from employer-employee relations, including termination
that workers may file involving wage, rates of pay, hours of disputes involving all workers, among whom are overseas
work and other terms and conditions of employment Filipino workers (OFW).15
4. Claims for actual, moral, exemplary and other forms of We are not unmindful of the fact that respondent was directly
damages arising from the employer-employee relations; hired, while on a tourist status in Singapore, by the PNB
5. Cases arising from any violation of Article 264 of this Code, branch in that city state. Prior to employing respondent,
including questions involving the legality of strikes and petitioner had to obtain an employment pass for her from the
lockouts; and Singapore Ministry of Manpower. Securing the pass was a
regulatory requirement pursuant to the immigration
6. Except claims for Employees Compensation, Social regulations of that country.16
Security, Medicare and maternity benefits, all other claims,
arising from employer-employee relations, including those of Similarly, the Philippine government requires non-Filipinos
persons in domestic or household service, involving an working in the country to first obtain a local work permit in
amount of exceeding five thousand pesos (P5,000.00) order to be legally employed here. That permit, however,
regardless of whether accompanied with a claim for does not automatically mean that the non-citizen is thereby
reinstatement. bound by local laws only, as averred by petitioner. It does not
at all imply a waiver of ones national laws on labor. Absent
(b) The commission shall have exclusive appellate jurisdiction any clear and convincing evidence to the contrary, such
over all cases decided by Labor Arbiters. permit simply means that its holder has a legal status as a
worker in the issuing country.1avvphil.zw+
x x x x x x x x x."
Noteworthy is the fact that respondent likewise applied for
More specifically, Section 10 of RA 8042 reads in part: and secured an Overseas Employment Certificate from the
POEA through the Philippine Embassy in Singapore. The
"SECTION 10. Money Claims. Notwithstanding any
Certificate, issued on March 8, 1999, declared her a bona fide
provision of law to the contrary, the Labor Arbiters of the
contract worker for Singapore. Under Philippine law, this
National Labor Relations Commission (NLRC) shall have the
document authorized her working status in a foreign country
original and exclusive jurisdiction to hear and decide, within
and entitled her to all benefits and processes under our
ninety (90) calendar days after the filing of the complaint, the
statutes. Thus, even assuming arguendothat she was
claims arising out of an employer-employee relationship or by
considered at the start of her employment as a "direct hire" Philippines; See also Section 18, Article II and Section 3,
governed by and subject to the laws, common practices and Article XIII, 1987 Constitution]. This ruling is likewise
customs prevailing in Singapore 17 she subsequently became rendered imperative by Article 17 of the Civil Code which
a contract worker or an OFW who was covered by Philippine states that laws which have for their object public order,
labor laws and policies upon certification by the POEA. At the public policy and good customs shall not be rendered
time her employment was illegally terminated, she already ineffective by laws or judgments promulgated, or by
possessed the POEA employment Certificate. determination or conventions agreed upon in a foreign
country."
Moreover, petitioner admits that it is a Philippine corporation
doing business through a branch office in Second Issue:
18
Singapore. Significantly, respondents employment by the
Singapore branch office had to be approved by Benjamin P. Proper Venue
Palma Gil,19 the president of the bank whose principal offices Section 1(a) of Rule IV of the NLRC Rules of Procedure reads:
were in Manila. This circumstance militates against
petitioners contention that respondent was "locally hired"; "Section 1. Venue (a) All cases which Labor Arbiters have
and totally "governed by and subject to the laws, common authority to hear and decide may be filed in the Regional
practices and customs" of Singapore, not of the Philippines. Arbitration Branch having jurisdiction over the workplace of
Instead, with more reason does this fact reinforce the the complainant/petitioner; Provided, however that cases of
presumption that respondent falls under the legal definition Overseas Filipino Worker (OFW) shall be filed before the
of migrant worker, in this case one deployed in Singapore. Regional Arbitration Branch where the complainant resides or
Hence, petitioner cannot escape the application of Philippine where the principal office of the respondent/employer is
laws or the jurisdiction of the NLRC and the labor arbiter. situated, at the option of the complainant.

In any event, we recall the following policy pronouncement of "For purposes of venue, workplace shall be understood as the
the Court in Royal Crown Internationale v. NLRC:20 place or locality where the employee is regularly assigned
when the cause of action arose. It shall include the place
"x x x. Whether employed locally or overseas, all Filipino where the employee is supposed to report back after a
workers enjoy the protective mantle of Philippine labor and temporary detail, assignment or travel. In the case of field
social legislation, contract stipulations to the contrary employees, as well as ambulant or itinerant workers, their
notwithstanding. This pronouncement is in keeping with the workplace is where they are regularly assigned, or where
basic public policy of the State to afford protection to labor, they are supposed to regularly receive their salaries/wages or
promote full employment, ensure equal work opportunities work instructions from, and report the results of their
regardless of sex, race or creed, and regulate the relations assignment to their employers."
between workers and employers.1awphi1.net For the State
assures the basic rights of all workers to self-organization, Under the "Migrant Workers and Overseas Filipinos Act of
collective bargaining, security of tenure, and just and 1995" (RA 8042), a migrant worker "refers to a person who is
humane conditions of work [Article 3 of the Labor Code of the to be engaged, is engaged or has been engaged in a
remunerated activity in a state of which he or she is not a without due process of law. The twin requirements of notice
legal resident; to be used interchangeably with overseas and hearing constitute the essential elements of procedural
Filipino worker."21 Undeniably, respondent was employed by due process, and neither of these elements can be
petitioner in its branch office in Singapore. Admittedly, she is eliminated without running afoul of the constitutional
a Filipino and not a legal resident of that state. She thus falls guarantee.22
within the category of "migrant worker" or "overseas Filipino
worker." In dismissing employees, the employer must furnish them
two written notices: 1) one to apprise them of the particular
As such, it is her option to choose the venue of her Complaint acts or omissions for which their dismissal is sought; and 2)
against petitioner for illegal dismissal. The law gives her two the other to inform them of the decision to dismiss them. As
choices: (1) at the Regional Arbitration Branch (RAB) where to the requirement of a hearing, its essence lies simply in the
she resides or (2) at the RAB where the principal office of her opportunity to be heard.23
employer is situated. Since her dismissal by petitioner,
respondent has returned to the Philippines -- specifically to The evidence in this case is crystal-clear. Respondent was not
her residence at Filinvest II, Quezon City. Thus, in filing her notified of the specific act or omission for which her dismissal
Complaint before the RAB office in Quezon City, she has was being sought. Neither was she given any chance to be
made a valid choice of proper venue. heard, as required by law. At any rate, even if she were given
the opportunity to be heard, she could not have defended
Third Issue: herself effectively, for she knew no cause to answer to.

Illegal Dismissal All that petitioner tendered to respondent was a notice of her
employment termination effective the very same day,
The appellate court was correct in holding that respondent together with the equivalent of a one-month pay. This Court
was already a regular employee at the time of her dismissal, has already held that nothing in the law gives an employer
because her three-month probationary period of employment the option to substitute the required prior notice and
had already ended. This ruling is in accordance with Article opportunity to be heard with the mere payment of 30 days
281 of the Labor Code: "An employee who is allowed to work salary.24
after a probationary period shall be considered a regular
employee." Indeed, petitioner recognized respondent as such Well-settled is the rule that the employer shall be sanctioned
at the time it dismissed her, by giving her one months salary for noncompliance with the requirements of, or for failure to
in lieu of a one-month notice, consistent with provision No. 6 observe, due process that must be observed in dismissing an
of her employment Contract. employee.25

Notice and Hearing Not Complied With No Valid Cause for Dismissal

As a regular employee, respondent was entitled to all rights, Moreover, Articles 282,26 28327 and 28428 of the Labor Code
benefits and privileges provided under our labor laws. One of provide the valid grounds or causes for an employees
her fundamental rights is that she may not be dismissed dismissal. The employer has the burden of proving that it was
done for any of those just or authorized causes. The failure to Awards for Damages Justified
discharge this burden means that the dismissal was not
justified, and that the employee is entitled to reinstatement Finally, moral damages are recoverable when the dismissal of
and back wages.29 an employee is attended by bad faith or constitutes an act
oppressive to labor or is done in a manner contrary to
Notably, petitioner has not asserted any of the grounds morals, good customs or public policy. 34 Awards for moral and
provided by law as a valid reason for terminating the exemplary damages would be proper if the employee was
employment of respondent. It merely insists that her harassed and arbitrarily dismissed by the employer. 35
dismissal was validly effected pursuant to the provisions of
her employment Contract, which she had voluntarily agreed In affirming the awards of moral and exemplary damages, we
to be bound to. quote with approval the following ratiocination of the labor
arbiter:
Truly, the contracting parties may establish such stipulations,
clauses, terms and conditions as they want, and their "The records also show that [respondents] dismissal was
agreement would have the force of law between them. effected by [petitioners] capricious and high-handed
However, petitioner overlooks the qualification that those manner, anti-social and oppressive, fraudulent and in bad
terms and conditions agreed upon must not be contrary to faith, and contrary to morals, good customs and public policy.
law, morals, customs, public policy or public order. 30 As Bad faith and fraud are shown in the acts committed by
explained earlier, the employment Contract between [petitioners] before, during and after [respondents] dismissal
petitioner and respondent is governed by Philippine labor in addition to the manner by which she was dismissed. First,
laws. Hence, the stipulations, clauses, and terms and [respondent] was pressured to resign for two different and
conditions of the Contract must not contravene our labor law contradictory reasons, namely, cost-cutting and the need for
provisions. a Chinese[-]speaking credit officer, for which no written
advice was given despite complainants request. Such
Moreover, a contract of employment is imbued with public wavering stance or vacillating position indicates bad faith
interest. The Court has time and time again reminded parties and a dishonest purpose. Second, she was employed on
that they "are not at liberty to insulate themselves and their account of her qualifications, experience and readiness for
relationships from the impact of labor laws and regulations the position of credit officer and pressured to resign a month
by simply contracting with each other." 31 Also, while a after she was commended for her good work. Third, the
contract is the law between the parties, the provisions of demand for [respondents] instant resignation on 19 April
positive law that regulate such contracts are deemed 1999 to give way to her replacement who was allegedly
included and shall limit and govern the relations between the reporting soonest, is whimsical, fraudulent and in bad faith,
parties.32 because on 16 April 1999 she was given a period of [sic] until
15 May 1999 within which to leave. Fourth, the pressures
Basic in our jurisprudence is the principle that when there is made on her to resign were highly oppressive, anti-social and
no showing of any clear, valid, and legal cause for the caused her absolute torture, as [petitioners] disregarded her
termination of employment, the law considers the matter a situation as an overseas worker away from home and family,
case of illegal dismissal.33
with no prospect for another job. She was not even provided SO ORDERED.
with a return trip fare. Fifth, the notice of termination is an
utter manifestation of bad faith and whim as it totally
disregards [respondents] right to security of tenure and due
process. Such notice together with the demands for
[respondents] resignation contravenes the fundamental
guarantee and public policy of the Philippine government on
security of tenure.

"[Respondent] likewise established that as a proximate result


of her dismissal and prior demands for resignation, she
suffered and continues to suffer mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings,
moral shock and social humiliation. Her standing in the social
and business community as well as prospects for
employment with other entities have been adversely affected
by her dismissal. [Petitioners] are thus liable for moral
damages under Article 2217 of the Civil Code.

xxxxxxxxx

"[Petitioners] likewise acted in a wanton, oppressive or


malevolent manner in terminating [respondents]
employment and are therefore liable for exemplary damages.
This should served [sic] as protection to other employees of
[petitioner] company, and by way of example or correction
for the public good so that persons similarly minded as
[petitioners] would be deterred from committing the same
acts."36

The Court also affirms the award of attorneys fees. It is


settled that when an action is instituted for the recovery of
G.R. Nos. L-53364-65 March 16, 1987
wages, or when employees are forced to litigate and
consequently incur expenses to protect their rights and DOMICIANO SOCO, petitioner,
interests, the grant of attorneys fees is legally justifiable. 37 vs.
MERCANTILE CORPORATION OF DAVAO AND THE
WHEREFORE, the Petition is DENIED and the assailed
Decision and Resolution AFFIRMED. Costs against petitioner.
HONORABLE AMADO G. INCIONG, DEPUTY MINISTER, and went to Kiosk No. 4 on San Pedro Street to talk to
MINISTRY OF LABOR, respondents. Bartolome Calago, a co-employee, but who was then off-duty.
The personnel officer of MERCO advised petitioner to report
Antonio Ladlao for petitioner. to his office to explain his unauthorized deviation in
Rodolfo A. Ta-asan for private respondent. connection with said incident but petitioner did not comply.
On January 30, 1979, MERCO wrote the FFW to which MELU
was affiliated and wherein petitioner Domiciano Soco was the
President asking for a grievance conference to be scheduled
ALAMPAY, J.: not later than February 13, 1979. When petitioner manifested
his unwillingness to attend the grievance conference in his
Petition for certiorari to annul the order dated October 25,
belief that such is not necessary, FFW relayed this
1979 of the former Deputy Minister of Labor in Case No.
information to MERCO. Due to the refusal of petitioner to
ROXI-C-209-79 and Case No. LR-30-79, which affirmed the
submit himself to a formal conference, MERCO, in a
order dated May 31, 1979 of the Regional Director, granting
memorandum dated February 13, 1979 suspended petitioner
the application of private respondent Mercantile Corporation
for five (5) days, effective February 15, 1979, for violation of
of Davao (MERCO), for clearance to terminate petitioner
Company Rule No. 19(a). Then a report of this action taken
Domiciano Soco and dismissing the latter's complaint for
was filed with the Ministry of Labor.
unfair labor practice.
On February 13, 1979, at 10:30 A.M., petitioner was
Private respondent is engaged in the sale and distribution of
instructed to deliver ice cream to the New City Commercial
ice cream in Davao City. Petitioner who was employed as
Corporation at R. Magsaysay Avenue and Gempesaw Store at
driver of MERCO's delivery van, was the President of the
Gempesaw Street, Davao City. After making these deliveries,
MERCO Employees Labor Union (MELU), an affiliate of the
petitioner then proceeded to the Office of SPFL Union at the
Federation of Free Workers (FFW). In the last week of January,
Puericulture Center building located on Alvarez Street. John
1979, the personnel officer of private respondent conducted
Ferrazzini, Manager of MERCO saw the company vehicle
an investigation due to reports that petitioner was carrying
parked along the street, After verifying that petitioner was
on his union MELU activities during his working hours for the
the driver of the MERCO Ford Fiera van, he then called for
purpose of transferring his Union's affiliation from the FFW to
Rogelio Galagar, Secretary of the MELU and another
the Southern Philippines Federation of Labor (SPFL) and for
employee and in their presence, the MERCO manager took
this purpose he was even utilizing the company vehicle of
out the rotor of the van. Later that morning, when petitioner
MERCO, in violation of the Company's Rule No. 19(a) which
came out of the building he was unable to start the engine of
prescribes a penalty of suspension of 15 days for the first
the vehicle and he called for company assistance. An officer
offense and dismissal for succeeding offenses.
of MERCO advised petitioner to report to his office because of
It appears that on January 25, 1979, petitioner was ordered the said incident in order to explain his unauthorized
to deliver ice cream to the Imperial Hotel and Maguindanao deviation but petitioner did not do so. On February 14, 1979,
Hotel at CM Recto Avenue and to Your Goody Mart at Anda respondent MERCO wrote the FFW to which MELU was
Street, all in Davao City, but he deviated from the usual route affiliated and the petitioner herein was the President, for a
grievance conference on February 15, 1979, but this was amounting to lack of or in excess of jurisdiction. Petitioner
reset to February 21, 1979 to afford FFW sufficient time to contends that Policy Instruction No. 6 of the Ministry of Labor
notify petitioner Domiciano Soco. On February 20, 1979, FFW and Employment (MOLE) indicates that the Regional Director
informed MERCO that the requested grievance conference has no jurisdiction to hear and decide unfair labor practice
would not be held because petitioner Domiciano Soco finds it cases because the exclusive original jurisdiction over such
unnecessary to do so. labor cases belongs to the Conciliation Section of the
Regional Office of the MOLE. Petitioner avers, that such
On his part, petitioner filed on February 14, 1979 a complaint cases, therefore, should be first resolved by the Labor Arbiter
for unfair labor practice against MERCO, docketed by the and not the Regional Director.
Regional Office of the Ministry of Labor, Davao City, as LRD
Case No. LR-30-79. Petitioner alleged therein that the five (5) This contention is undeserving of the Court's favor.
days suspension imposed on him by respondent Company,
was on account of his union activities. The fact appears that at the initial hearing conducted on
March 7, 1979 by the Regional Director, it was agreed upon
On February 21, 1979, petitioner was placed on preventive by the parties to consolidate the two cases being litigated
suspension pending the approval of MERCO's application for considering that both cases concern the same parties and
clearance to terminate the services of the former. This the issues involved are interrelated (Decision of the Regional
application was filed with the Ministry of Labor on February Director, p. 20, Rollo). Petitioner obviously accepted the
22, 1979 and docketed therein as LRD Case No. ROXI-C-209- jurisdiction of the Regional Director by presenting his
79. MERCO's application for clearance to terminate was evidence. By having asked for affirmative relief, without
opposed by petitioner even as MERCO filed its Answer to the challenging the Regional Director's power to hear and try his
complaint against it for unfair labor practice, on March 7, complaint for unfair labor practice, he cannot rightfully now
1979. challenge the resolution made in said cases by the same
Director, based on the latter's alleged lack of jurisdiction.
The two cases were consolidated and tried jointly as agreed
to by the contending parties. In an order dated May 21, 1979, In the case of Tijam vs. Sibonghanoy, 23 SCRA 29, it has
the Regional Director granted private respondent's been stated that "after voluntarily submitting a cause and
application to terminate the employment of petitioner. He encountering an adverse decision on the merits, it is too late
upheld the preventive suspension imposed by MERCO on for the loser to question the jurisdiction or power of the
herein petitioner and dismissed the latter's complaint for court." Therein, We stated that the Court "frowns upon the
unfair labor practice. Said order was then appealed by herein undesirable practice of a party submitting his case for
petitioner but the Deputy Minister of Labor, on October 25, decision and then accepting the judgment, only if favorable,
1979, affirmed the appealed order. The dismissal of and attacking it for lack of jurisdiction when adverse."
petitioner's appeal led to the filing of the instant petition for
certiorari. In Ching vs. Ramolete, 51 SCRA 14, this view was reiterated,
and We quote:
Petitioner assails the action taken by the respondent Deputy
Minister of Labor as done with grave abuse of discretion xxx xxx xxx
Having invoked the jurisdiction of the trial court to secure an However, what should not be overlooked is the prerogative of
affirmative relief against his opponents, petitioner may not an employer company to prescribe reasonable rules and
now be allowed to repudiate or question the same jurisdiction regulations necessary or proper for the conduct of its
after failing to obtain such relief. While jurisdiction of a business and to provide certain disciplinary measures in
tribunal may be challenged at any time, sound public policy order to implement said rules and to assure that the same
bars petitioner from doing so after having procured that would be complied with. A rule prohibiting employees from
jurisdiction himself, speculating on the fortunes of litigation. using company vehicles for private purpose without authority
from management is, from our viewpoint, a reasonable one.
Petitioner avers that respondent Minister of Labor erred in This regulation cannot be faulted by petitioner because this
affirming the findings of the Regional Director that he is proper and necessary even if only for an orderly conduct of
violated Company Rules No. 19(a) twice and his dismissal MERCO's business. From the evidence presented, petitioner
was, therefore, unwarranted. This issue raised by petitioner twice used the company vehicle in pursuing his own personal
relates to questions of fact. It has been held, however, in interests, on company time and deviating from his authorized
numerous cases, that as a general rule, the findings of fact of route, all without permission. To cap off his infractions,
the trial court or quasi-judicial bodies are binding on this petitioners stubbornly declined even to satisfy MERCO's
Court. This principle should be applied in the instant cases, request for an explanation or to attend a grievance
considering that the findings of respondent Deputy Minister conference to discuss violations. Certainly, to condone
of Labor are supported by the evidence he appreciated. As a petitioner's own conduct will erode the discipline that an
matter of fact, the petitioner was caught for the second time employer should uniformly apply so that it can expect
by no less than the Manager of respondent's company, in compliance to the same rules and regulations by its other
actual violation of the rule prohibiting the use of the employees. Otherwise, the rules necessary and proper for the
company vehicle for private purposes. operation of its business, would be gradually rendered
Lastly, petitioner asserts that in affirming his dismissal, the ineffectual, ignored, and eventually become meaningless.
Deputy Minister of Labor violated the constitutional provision The Court agrees fully with the comment made by the
of the security of tenure of employees and that assuming respondent Deputy Minister of Labor, represented by the
that he indeed violated the company rule, the fact remains office of the Solicitor General, that-
that the damage caused by him, if any, to the company, is
only very minimal which should not warrant the imposition of xxx xxx xxx
a penalty of dismissal. Petitioner submits that he has been
employed in the company for eighteen (18) years. Petitioner The filing by petitioner of the complaint for Unfair Labor
avers that the damage inflicted on MERCO by his activities Practice case on February 14, 1979 was brought about by the
due to his misuse of the company vehicle during working fact that he was caught for the second time on February 13,
hours did not hamper the smooth business operations of 1979 violating Company Rule 19(a). It was more of an
MERCO. anticipatory move on the part of petitioner. (Rollo, pp. 82-83).

The Court is not unmindful of the fact that petitioner has, as


he says, been employed with petitioner Company for
eighteen (18) years. On this singular consideration, the Court For consideration are the incidents that flow from the familiar
deems it proper to afford some equitable relief to petitioner doctrine of non-suability of the state.
due to the past services rendered by him to MERCO. Thus, it
is but appropriate that petitioner should be given by In this petition for certiorari, the Department of Agriculture
respondent MERCO, separation pay, equivalent to one month seeks to nullify the Resolution, 1 dated 27 November 1991, of
salary for every year of his service to said Company. the National Labor Relations Commission (NLRC), Fifth
Division, Cagayan de Oro City, denying the petition for
WHEREFORE, the petition is hereby DISMISSED but injunction, prohibition and mandamus that prays to enjoin
respondent Mercantile Corporation of Davao (MERCO) is, permanently the NLRC's Regional Arbitration Branch X and
nevertheless, ordered to grant the petitioner herein Cagayan de Oro City Sheriff from enforcing the decision 2 of
separation pay, equivalent to one (1) month salary for every 31 May 1991 of the Executive Labor Arbiter and from
year of his service. attaching and executing on petitioner's property.

No pronouncement as to costs. The Department of Agriculture (herein petitioner) and Sultan


Security Agency entered into a contract 3 on 01 April 1989 for
SO ORDERED. security services to be provided by the latter to the said
governmental entity. Save for the increase in the monthly
rate of the guards, the same terms and conditions were also
made to apply to another contract, dated 01 May 1990,
between the same parties. Pursuant to their arrangements,
guards were deployed by Sultan Agency in the various
premises of the petitioner.

On 13 September 1990, several guards of the Sultan Security


Agency filed a complaint for underpayment of wages, non-
G.R. No. 104269 November 11, 1993 payment of 13th month pay, uniform allowances, night shift
differential pay, holiday pay and overtime pay, as well as for
DEPARTMENT OF AGRICULTURE, petitioner, damages, 4 before the Regional Arbitration Branch X of
vs. Cagayan de Oro City, docketed as NLRC Case No. 10-09-
THE NATIONAL LABOR RELATIONS COMMISSION, et 00455-90 (or 10-10-00519-90, its original docket number),
al., respondents. against the Department of Agriculture and Sultan Security
Agency.
Roy Lago Salcedo for private respondents.
The Executive Labor Arbiter rendered a decision on 31 May
finding herein petitioner and jointly and severallyliable with
VITUG, J.: Sultan Security Agency for the payment of money claims,
aggregating P266,483.91, of the complainant security
guards. The petitioner and Sultan Security Agency did not
appeal the decision of the Labor Arbiter. Thus, the decision petitioner to source and raise funds to satisfy the judgment
became final and executory. awards against it;

On 18 July 1991, the Labor Arbiter issued a writ of 2. Meantime, petitioner is ordered and directed to source for
execution. 5 commanding the City Sheriff to enforce and funds within the period above-stated and to deposit the sums
execute the judgment against the property of the two of money equivalent to the aggregate amount. it has been
respondents. Forthwith, or on 19 July 1991, the City Sheriff adjudged to pay jointly and severally with respondent Sultan
levied on execution the motor vehicles of the petitioner, i.e. Security Agency with the Regional Arbitration Branch X,
one (1) unit Toyota Hi-Ace, one (1) unit Toyota Mini Cruiser, Cagayan de Oro City within the same period for proper
and one (1) unit Toyota Crown. 6 These units were put under dispositions;
the custody of Zacharias Roa, the property custodian of the
petitioner, pending their sale at public auction or the final 3. In order to ensure compliance with this order, petitioner is
settlement of the case, whichever would come first. likewise directed to put up and post
sufficient surety and supersedeas bond equivalent to at least
A petition for injunction, prohibition and mandamus, with to fifty (50%) percent of the total monetary award issued by
prayer for preliminary writ of injunction was filed by the a reputable bonding company duly accredited by the
petitioner with the National Labor Relations Commission Supreme Court or by the Regional Trial Court of Misamis
(NLRC), Cagayan de Oro, alleging, inter alia, that the writ Oriental to answer for the satisfaction of the money claims in
issued was effected without the Labor Arbiter having duly case of failure or default on the part of petitioner to satisfy
acquired jurisdiction over the petitioner, and that, therefore, the money claims;
the decision of the Labor Arbiter was null and void and all
actions pursuant thereto should be deemed equally invalid 4. The City Sheriff is ordered to immediately release the
and of no legal, effect. The petitioner also pointed out that properties of petitioner levied on execution within ten (10)
the attachment or seizure of its property would hamper and days from notice of the posting of sufficient surety or
jeopardize petitioner's governmental functions to the supersedeas bond as specified above. In the meanwhile,
prejudice of the public good. petitioner is assessed to pay the costs and/or expenses
incurred by the City Sheriff, if any, in connection with the
On 27 November 1991, the NLRC promulgated its assailed execution of the judgments in the above-stated cases upon
resolution; viz: presentation of the appropriate claims or vouchers and
receipts by the city Sheriff, subject to the conditions specified
WHEREFORE, premises considered, the following orders are in the NLRC Sheriff, subject to the conditions specified in the
issued: NLRC Manual of Instructions for Sheriffs;
1. The enforcement and execution of the judgments against 5. The right of any of the judgment debtors to claim
petitioner in NLRC RABX Cases Nos. 10-10-00455-90; 10-10- reimbursement against each other for any payments made in
0481-90 and 10-10-00519-90 are temporarily suspended for connection with the satisfaction of the judgments herein is
a period of two (2) months, more or less, but not extending hereby recognized pursuant to the ruling in the Eagle
beyond the last quarter of calendar year 1991 to enable Security case, (supra). In case of dispute between the
judgment debtors, the Executive Labor Arbiter of the Branch not because of any formal conception or obsolete theory, but
of origin may upon proper petition by any of the parties on the logical and practical ground that there can be no legal
conduct arbitration proceedings for the purpose and thereby right as against the authority that makes the law on which
render his decision after due notice and hearings; the right depends. 9 True, the doctrine, not too infrequently,
is derisively called "the royal prerogative of dishonesty"
7. Finally, the petition for injunction is Dismissed for lack of because it grants the state the prerogative to defeat any
basis. The writ of preliminary injunction previously issued legitimate claim against it by simply invoking its non-
is Lifted and Set Aside and in lieu thereof, a Temporary Stay suability. 10 We have had occasion, to explain in its defense,
of Execution is issued for a period of two (2) months but not however, that a continued adherence to the doctrine of non-
extending beyond the last quarter of calendar year 1991, suability cannot be deplored, for the loss of governmental
conditioned upon the posting of a surety or supersedeas efficiency and the obstacle to the performance of its
bond by petitioner within ten (10) days from notice pursuant multifarious functions would be far greater in severity than
to paragraph 3 of this disposition. The motion to admit the the inconvenience that may be caused private parties, if such
complaint in intervention isDenied for lack of merit while the fundamental principle is to be abandoned and the availability
motion to dismiss the petition filed by Duty Sheriff is Noted of judicial remedy is not to be accordingly restricted. 11
SO ORDERED. The rule, in any case, is not really absolute for it does not say
In this petition for certiorari, the petitioner charges the NLRC that the state may not be sued under any circumstances. On
with grave abuse of discretion for refusing to quash the writ the contrary, as correctly phrased, the doctrine only conveys,
of execution. The petitioner faults the NLRC for assuming "the state may not be sued without its consent;" its clear
jurisdiction over a money claim against the Department, import then is that the State may at times be sued. 12 The
which, it claims, falls under the exclusive jurisdiction of the States' consent may be given expressly or impliedly. Express
Commission on Audit. More importantly, the petitioner consent may be made through a general law 13 or a special
asserts, the NLRC has disregarded the cardinal rule on the law. 14 In this jurisdiction, the general law waiving the
non-suability of the State. immunity of the state from suit is found in Act No. 3083,
where the Philippine government "consents and submits to
The private respondents, on the other hand, argue that the be sued upon any money claims involving liability arising
petitioner has impliedly waived its immunity from suit by from contract, express or implied, which could serve as a
concluding a service contract with Sultan Security Agency. basis of civil action between private parties." 15 Implied
consent, on the other hand, is conceded when the State itself
The basic postulate enshrined in the constitution that "(t)he commences litigation, thus opening itself to a
State may not be sued without its consent," 7 reflects nothing 16
counterclaim or when it enters into a contract. 17
In this
less than a recognition of the sovereign character of the situation, the government is deemed to have descended to
State and an express affirmation of the unwritten rule the level of the other contracting party and to have divested
effectively insulating it from the jurisdiction of courts. 8 It is itself of its sovereign immunity. This rule, relied upon by the
based on the very essence of sovereignty. As has been aptly NLRC and the private respondents, is not, however, without
observed, by Justice Holmes, a sovereign is exempt from suit, qualification. Not all contracts entered into by the
government operate as a waiver of its non-suability; In the instant case, the Department of Agriculture has not
distinction must still be made between one which is executed pretended to have assumed a capacity apart from its being a
in the exercise of its sovereign function and another which is governmental entity when it entered into the questioned
done in its proprietary capacity. 18 contract; nor that it could have, in fact, performed any act
proprietary in character.
In the Unites States of America vs. Ruiz, 19 where the
questioned transaction dealt with improvements on the But, be that as it may, the claims of private respondents, i.e.
wharves in the naval installation at Subic Bay, we held: for underpayment of wages, holiday pay, overtime pay and
similar other items, arising from the Contract for Service,
The traditional rule of immunity exempts a State from being clearly constitute money claims. Act No. 3083, aforecited,
sued in the courts of another State without its consent or gives the consent of the State to be "sued upon any
waiver. This rule is a necessary consequence of the principles moneyed claim involving liability arising from contract,
of independence and equality of States. However, the rules express or implied, . . . Pursuant, however, to Commonwealth
of International Law are not petrified; they are constantly Act ("C.A.") No. 327, as amended by Presidential Decree
developing and evolving. And because the activities of states ("P.D.") No. 1145, the money claim first be brought to the
have multiplied, it has been necessary to distinguish them Commission on Audit. Thus, inCarabao, Inc., vs. Agricultural
between sovereign and governmental acts ( jure imperii) and Productivity Commission, 20 we ruled:
private, commercial and proprietary act ( jure gestionisis).
The result is that State immunity now extends only to (C)laimants have to prosecute their money claims against the
acts jure imperii. The restrictive application of State Government under Commonwealth Act 327, stating that Act
immunity is now the rule in the United States, the United 3083 stands now merely as the general law waiving the
Kingdom and other states in Western Europe. State's immunity from suit, subject to the general limitation
expressed in Section 7 thereof that "no execution shall issue
xxx xxx xxx upon any judgment rendered by any Court against the
The restrictive application of State immunity is proper only Government of the (Philippines), and that the conditions
when the proceedings arise out of commercial transactions of provided in Commonwealth Act 327 for filing money claims
the foreign sovereign, its commercial activities or economic against the Government must be strictly observed."
affairs. Stated differently, a state may be said to have We fail to see any substantial conflict or inconsistency
descended to the level of an individual and can this be between the provisions of C.A. No. 327 and the Labor Code
deemed to have actually given its consent to be sued only with respect to money claims against the State. The Labor
when it enters into business contracts. It does not apply code, in relation to Act No. 3083, provides the legal basis for
where the contracts relates to the exercise of its sovereign the State liability but the prosecution, enforcement or
functions. In this case the projects are an integral part of the satisfaction thereof must still be pursued in accordance with
naval base which is devoted to the defense of both the the rules and procedures laid down in C.A. No. 327, as
United States and the Philippines, indisputably a function of amended by P.D. 1445.
the government of the highest order; they are not utilized for
not dedicated to commercial or business purposes.
When the state gives its consent to be sued, it does thereby
necessarily consent to unrestrained execution against it.
tersely put, when the State waives its immunity, all it does, in
effect, is to give the other party an opportunity to prove, if it
can, that the State has a liability. 21 In Republic vs.
Villasor 22 this Court, in nullifying the issuance of an alias writ
of execution directed against the funds of the Armed Forces
of the Philippines to satisfy a final and executory judgment,
has explained, thus

The universal rule that where the State gives its consent to
be sued by private parties either by general or special law, it
may limit the claimant's action "only up to the completion of
proceedings anterior to the stage of execution" and that the
power of the Courts ends when the judgment is rendered,
since government funds and properties may not be seized
under writs or execution or garnishment to satisfy such
judgments, is based on obvious considerations of public
policy. Disbursements of public funds must be covered by the
correspondent appropriation as required by law. The
functions and public services rendered by the State cannot
be allowed to be paralyzed or disrupted by the diversion of
public funds from their legitimate and specific objects, as
appropriated by law. 23

WHEREFORE, the petition is GRANTED. The resolution, dated


27 November 1991, is hereby REVERSED and SET ASIDE. The G.R. No. 116347 October 3, 1996
writ of execution directed against the property of the
NATIVIDAD PONDOC, petitioner,
Department of Agriculture is nullified, and the public
vs.
respondents are hereby enjoined permanently from doing,
NATIONAL LABOR RELATIONS COMMISSION (Fifth
issuing and implementing any and all writs of execution
Division, Cagayan de Oro City) and EMILIO
issued pursuant to the decision rendered by the Labor Arbiter
PONDOC,respondents.
against said petitioner.

SO ORDERED.
DAVIDE, JR., J.:p
The novel issue that confronts us in this case is whether the Records disclose that Andres Pondoc was employed by
Fifth Division of the National Labor Relations Commission Eulalio Pondoc as a laborer from October 1990 up to
(NLRC) can validly defeat a final judgment of the Labor December 1991, receiving a wage rate of P20.00 per day. He
Arbiter in favor of the complainant in a labor case by: (a) was required to work twelve (12) hours a day from 7:00 AM
entertaining a petition for injunction and damages, and an to 8:00 PM, Monday to Sunday. Despite working on his rest
appeal from the Labor Arbiter's denial of a claim for set-off days and holidays, he was not paid his premium pay as
based on an alleged indebtedness of the laborer and order of required by law (Ibid).
execution of the final judgment; and, (b) thereafter, by
receiving evidence and adjudging recovery on such Consequently, on May 14, 1992, Natividad Pondoc, on behalf
indebtedness and authorizing it to offset the Labor Arbiter's of her husband, filed a complaint for salary differential,
final award. overtime pay, 13th month pay, holiday pay and other money
claims before the Sub-Regional Arbitration Branch No. 9 of
The petitioner takes the negative view. In its Manifestation the NLRC, docketed as Sub-RAB Case No. 09-05-10102-92
and Motion in Lieu of Comment, 1 the Office of the Solicitor (Records, p.1).
General joins her in her plea, hence we required the NLRC to
file its own comment. In his position paper, private respondent questioned, among
others, the existence of [an] employer-employee relationship
We resolved to give due course to the petition after the filing between them. He further averred that Melleonor General
by the NLRC and the private respondent of their separate Merchandise and Hardware Supply is a fictitious
comments. establishment (Records, pp. 64-68).

Petitioner Natividad Pondoc was the legitimate wife of Andres On June 17, 1993, Labor Arbiter Esteban Abecia rendered a
Pondoc. Atter her death on 5 December 1994, she was Decision finding the existence of [an] employer-employee
substituted by Hipolito Pondoc, her only legitimate son. 2 relationship between the parties. The dispositive portion of
the Decision reads:
The Office of the Solicitor General summarized the factual
antecedents of this case in its Manifestation and Motion in WHEREFORE, judgment is hereby rendered: (a) ordering
Lieu of Comment: respondent Eulalio Pondoc to pay complainant the following
claims:
Private respondent Eulalio Pondoc is the owner-proprietor of
Melleonor General Merchandise and Hardware Supply located (1) Salary differential for
at Poblacion, Sindangan, Zamboanga del Norte. Respondent reason of underpayment P35,776.00;
is engaged, among others, in the business of buying and
selling copra, rice, corn, "binangkol," junk iron and empty
bottles. He has in his employ more than twenty (20) regular (2) Regular holiday and
workers (Records, pp. 9-11) premium pay for holiday services 902.00;

(3) Premium pay for rest day Accordingly, respondent Eulalio Pondoc is hereby directed to
services 3,840.00; pay complainant Natividad Pondoc the amount of P3,066.65.

The Temporary restraining order issued herein is hereby


(4) 13th month pay 3,600.00 made permanent.

3
SO ORDERED (Annex "D" of Petition).
or the total amount of FORTY-FOUR [sic] THOUSAND AND
ONE HUNDRED EIGHTEEN PESOS (P44,118.00). Her motion for reconsideration of the judgment having been
denied by the NLRC, the petitioner instituted this special civil
Other claims are denied for lack of merit. action for certiorari under Rule 65 of the Rules of Court
wherein she prays this Court annul the challenged decision of
SO ORDERED (Records, pp. 323-324). the NLRC, Fifth Division (Cagayan de Oro City), in NLRC Case
On his last day to perfect an appeal, private respondent filed No. IC No. M-000065, and direct the enforcement of the writ
a Manifestation before the Labor Arbiter praying that his of execution in NLRC Case No. SRAB-09-05-10102-92, on the
liabilities be set-off against petitioner's alleged indebtedness ground that the NLRC, Fifth Division, acted without or in
to him (Records, pp. 325-327). The Labor Arbiter denied, excess of jurisdiction or with grave abuse of discretion when
however, the compensation, and, instead, issued a writ of it proceeded to determine the alleged indebtedness of the
execution as prayed for by petitioner (Records, p. 328). petitioner and set-off the same against the liabilities of the
private respondent. The petitioner asserts that the decision
Before the execution order could be implemented, however, of the Labor Arbiter in NLRC Case No. SRAB-09-05-10102-92
private respondent was able to obtain a restraining order was already final and executory when the private respondent
from the NLRC, where he filed a Petition for "Injunction and tried to defeat the judgment by asserting an alleged
Damages," docketed as NLRC Case No. ICM-000065. indebtedness of Andres Pondoc as a set-off, a claim not
pleaded before the Labor Arbiter at any time before
On February 28, 1994, public respondent NLRC allowed judgment, hence deemed waived. Moreover the
compensation between petitioner's monetary award and her indebtedness "did not evolve out [sic] employer-employee
alleged indebtedness to private respondent. It disposed: relationship, hence, purely civil in aspect."
WHEREFORE, the appealed order is hereby vacated and set The Office of the Solicitor General agreed with the petitioner
aside. A new one is entered declaring the setting-off of and stressed further that the asserted indebtedness was
complainant's indebtedness which allegedly amounted to never proven to have arisen out of or in connection with the
P41,051.35 against the complainant's monetary award in the employer-employee relationship between the private
amount of P44,118.00. The additional amount of P5,000.00 respondent and the late Andres Pondoc, or to have any
which complainant allegedly got from respondent on 10 July causal connection thereto. Accordingly, both the Labor
1993 could not be credited in view of appellant's failure to Arbiter and the NLRC did not have jurisdiction over the
submit evidence to prove that complainant was really paid private respondent's claim.
P5,000.00.
As expected, the private respondent and the NLRC prayed for pendency of the case, but excluding labor disputes involving
the dismissal of this case. strike or lockout. (emphasis supplied).

We rule for the petitioner. Hence, a petition or motion for preliminary injunction should
have been filed in the appeal interposed by the private
The proceedings before the NLRC were fatally flawed. respondent, i.e., in NLRC Case No. SRAB-09-05-10102-92.
In the first place, the NLRC should not have entertained the This matter, however, became academic when the NLRC
private respondent's separate or independent petition for consolidated the two cases as shown by the captions in its
"Injunction and Damages" (NLRC IC No. M-000065). It was challenged decision of 28 February 1994 and resolution of 6
obvious that the petition was a scheme to defeat or obstruct May 1994.
the enforcement of the judgment in NLRC Case No. SRAB-09- Secondly, the appeal of the private respondent in NLRC Case
05-10102-92 where, in fact, a writ of execution had been No. SRAB-09-05-10102-92 was not from the decision therein,
issued. Article 218(e) of the Labor Code does not provide but from the order of the Labor Arbiter denying the set-off
blanket authority to the NLRC or any of its divisions to issue insisted upon by the private respondent and directing the
writs of injunction, while Rule XI of the New Rules of execution of the judgment. Therefore, the private respondent
Procedure of the NLRC makes injunction only an ancillary admitted the final and executory character of the judgment.
remedy in ordinary labor disputes such as the one brought by
the petitioner in NLRC Case No. SRAB-09-05-10102-92. This is The Labor Arbiter, in denying the set-off, reasoned "[i]t could
clear from Section 1 of the said Rule which pertinently have been considered if it was presented before the decision
provides as follows: of this case." 4 While this is correct, there are stronger
reasons why the set-off should, indeed, be denied. As
Sec. 1. Injunction in Ordinary Labor Disputed. A correctly contended by the Office of the Solicitor General,
preliminary injunction or a restraining order may be granted there is a complete want of evidence that the indebtedness
by the Commission through its divisions pursuant to the asserted by the private respondent against Andres Pondoc
provisions of paragraph (e) of Article 218 of the Labor Code, arose out of or was incurred in connection with the employer-
as amended, when it is established on the bases of the sworn employee relationship between them. The Labor Arbiter did
allegations in the petition that the acts complained not then have jurisdiction over the claim as under paragraph
of, involving or arising from any labor dispute before the (a) of Article 217 of the Labor Code, Labor Arbiters have
Commission, which, if not restrained or performed forthwith, exclusive and original jurisdiction only in the following cases:
may cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such party. 1. Unfair labor practice cases;
2. Termination disputes;
xxx xxx xxx 3. If accompanied with a claim for reinstatement, those cases
The foregoing ancillary power may be exercised by the Labor that workers may file involving wages, rates of pay, hours of
Arbiters only as an incident to the cases pending before them work and other terms and conditions of employment;
in order to preserve the rights of the parties during the 4. Claim 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, waived 5 and counterclaims not set up in the answer are
including questions involving the legality of strikes and barred. 6 Set-off or compensation is one of the modes of
lockouts; and extinguishing obligations 7 and extinguishment is an
8
6. Except claims for Employees Compensation, Social affirmative defense and a ground for a motion to dismiss.
Security, Medicare and maternity benefits, all other claims,
arising from employer-employee relations, including those We do not then hesitate to rule that the NLRC acted without
of persons in domestic or household service, involving an jurisdiction or with grave abuse of discretion in entertaining
amount exceeding five thousand pesos (P5,000.00) an independent action for injunction and damages (NLRC IC
regardless of whether accompanies with a claim for No. M-000065), in receiving evidence and rendering
reinstatement. judgment on the alleged indebtedness of Andres Pondoc, and
in ordering such judgment to offset the final award of the
On the other hand, under paragraph (b) thereof, the NLRC Labor Arbiter in NLRC Case No. SRAB-09-05-10102-92.
has exclusive appellate jurisdiction over all cases decided by
the Labor Arbiters. This simply means that the NLRC does not WHEREFORE, the instant petition is GRANTED and the
have original jurisdiction over the cases enumerated in challenged decision of 28 February 1994 and resolution of 6
paragraph (a) and that if a claim does not fall within the May 1994 of the National Labor Relations Commission in
exclusive original jurisdiction of the Labor Arbiter, the NLRC NLRC Case No. IC No. M-000065 and NLRC Case No. SRAB-09-
cannot have appellate jurisdiction thereon. 05-10102-92 are ANNULLED and SET ASIDE. The judgment of
the Labor Arbiter in NLRC Case No. SRAB-09-05-10102-92
The conclusion then is inevitable that the NLRC was without should forthwith be enforced without any further delay, the
jurisdiction, either original or appellate, to receive evidence award therein bearing interest at the rate of twelve per
on the alleged indebtedness, render judgment thereon, and centum (12%) per annum from the finality of such judgment
direct that its award be set-off against the final judgment of until it shall have been fully paid.
the Labor Arbiter.
Costs against the private respondent.
Finally, even assuming arguendo that the claim for the
alleged indebtedness fell within the exclusive original SO ORDERED.
jurisdiction of the Labor Arbiter, it was deemed waived for
not having been pleaded as an affirmative defense or barred
for not having been set up as a counterclaim before the
Labor Arbiter at any appropriate time prior to the rendition of
the decision in NLRC Case No. SRAB-09-05-10102-92. Under
the Rules of Court, which is applicable in a suppletory
character in labor cases before the Labor Arbiters or the
NLRC pursuant to Section 3, Rule I of the New Rules of
Procedure of the NLRC, defenses which are not raised either
in a motion to dismiss or in the answer are deemed
petitioner to reinstate the private respondents to their
previous positions?

This is the pivotal issue presented before us in this petition


for certiorari under Rule 65 of the Revised Rules of Court
which seeks the nullification of the injunctive writ dated April
3, 1995 issued by the NLRC and the Order denying
petitioner's motion for reconsideration on the ground that the
said Orders were issued in excess of jurisdiction.

Private respondents are flight stewards of the petitioner. Both


were dismissed from the service for their alleged
involvement in the April 3, 1993 currency smuggling in Hong
Kong.

Aggrieved by said dismissal, private respondents filed with


the NLRC a petition 1 for injunction praying that:

I. Upon filing of this Petition, a temporary restraining order be


issued, prohibiting respondents (petitioner herein) from
effecting or enforcing the Decision dated Feb. 22, 1995, or to
reinstate petitioners temporarily while a hearing on the
G.R. No. 120567 March 20, 1998
propriety of the issuance of a writ of preliminary injunction is
PHILIPPINE AIRLINES, INC., petitioner, being undertaken;
vs.
II. After hearing, a writ of preliminary mandatory injunction
NATIONAL LABOR RELATIONS COMMISSION,
be issued ordering respondent to reinstate petitioners to their
FERDINAND PINEDA and GOGFREDO
former positions pending the hearing of this case, or,
CABLING, respondents.
prohibiting respondent from enforcing its Decision dated
February 22, 1995 while this case is pending adjudication;

MARTINEZ, J.: III. After hearing, that the writ of preliminary injunction as to
the reliefs sought for be made permanent, that petitioners be
Can the National Labor Relations Commission (NLRC), even awarded full backwages, moral damages of PHP 500,000.00
without a complaint for illegal dismissal tiled before the labor each and exemplary damages of PHP 500,000.00 each,
arbiter, entertain an action for injunction and issue such writ attorney's fees equivalent to ten percent of whatever amount
enjoining petitioner Philippine Airlines, inc. from enforcing its is awarded, and the costs of suit.
Orders of dismissal against private respondents, and ordering
On April 3, 1995, the NLRC issued a temporary mandatory petitioners from any participation or from being the owners
injunction 2 enjoining petitioner to cease and desist from of the currencies, and at which hearing Mr. Joseph Abaca
enforcing its February 22, 1995 Memorandum of dismissal. In volunteered the information that the real owner of said
granting the writ, the NLRC considered the following facts, to money was one who frequented his headquarters in
wit: Hongkong to which information, the Disciplinary Board
Chairman, Mr. Ismael Khan," opined "for the need for another
. . . that almost two (2) years ago, i.e. on April 15, 1993, the hearing to go to the bottom of the incident"; that from said
petitioners were instructed to attend an investigation by statement, it appeared "that Mr. Joseph Abaca was the
respondent's "Security and Fraud Prevention Sub- courier, and had another mechanic in Manila who hid the
Department" regarding an April 3, 1993 incident in Hongkong currency at the plane's skybed for Abaca to retrieve in
at which Joseph Abaca, respondent's Avionics Mechanic in Hongkong, which findings of how the money was found was
Hongkong "was intercepted by the Hongkong Airport Police at previously confirmed by Mr. Joseph Abaca himself when he
Gate 05 . . . the ramp area of the Kai Tak International Airport was first investigated by the Hongkong authorities"; that just
while . . . about to exit said gate carrying a . . . bag said to as petitioners "thought that they were already fully cleared of
contain some 2.5 million pesos in Philippine Currencies. That the charges, as they no longer received any
at the Police Station. Mr. Abaca claimed that he just found summons/notices on the intended "additional hearings"
said plastic bag at the Skybed Section of the arrival flight mandated by the Disciplinary Board," they were surprised to
PR300/03 April 93," where petitioners served as flight receive "on February 23, 1995. . . a Memorandum dated
stewards of said flight PR300; . . the petitioners sought "a February 22, 1995" terminating their services for alleged
more detailed account of what this HKG incident is all about"; violation of respondent's Code of Discipline "effective
but instead, the petitioners were administratively charged, "a immediately"; that sometime . . . first week of March, 1995,
hearing" on which "did petitioner Pineda received another Memorandum from
not push through" until almost two (2) years after, i.e, "on respondent Mr. Juan Paraiso, advising him of his termination
January 20, 1995 . . . where a confrontation between Mr. effective February 3, 1995, likewise for violation of
Abaca and petitioners herein was compulsorily arranged by respondent's Code of Discipline; . . .
the respondent's disciplinary board" at which hearing, Abaca
was made to identify petitioners as co-conspirators; that In support of the issuance of the writ of temporary injunction,
despite the fact that the procedure of identification adopted the NLRC adapted the view that: (1) private respondents
by respondent's Disciplinary Board was anomalous "as there cannot be validly dismissed on the strength of petitioner's
was no one else in the line-up (which could not be called one) Code of Discipline which was declared illegal by this Court in
but petitioners . . . Joseph Abaca still had difficulty in the ease at PAL, Inc. vs. NLRC, (G.R. No. 85985), promulgated
identifying petitioner Pineda as his co-conspirator, and as to August 13, 1993, for the reason that it was formulated by the
petitioner Cabling, he was implicated and pointed by Abaca petitioner without the participation of its employees as
only after respondent's Atty. Cabatuando pressed the former required in R.A. 6715, amending Article 211 of the Labor
to identify petitioner Cabling as co-conspirator"; that with the Code; (2) the whimsical, baseless and premature dismissals
hearing reset to January 25, 1995, "Mr. Joseph Abaca finally of private respondents which "caused them grave and
gave exculpating statements to the board in that he cleared irreparable injury" is enjoinable as private respondents are
left "with no speedy and adequate remedy at law" except the 6. . . . in issuing the temporary injunction in the absence of
issuance of a temporary mandatory injunction; (3) the NLRC any irreparable or substantial injury to both private
is empowered under Article 218 (e) of the Labor Code not respondents.
only to restrain any actual or threatened commission of any
or all prohibited or unlawful acts but also to require the On May 31, 1995, the NLRC denied petitioner's motion for
performance of a particular act in any labor dispute, which, if reconsideration, ruling:
not restrained or performed forthwith, may cause grave or "The respondent (now petitioner), for one, cannot validly
irreparable damage to any party; and (4) the temporary claim that we cannot exercise our injunctive power under
power of the NLRC was recognized by this Court in the case Article 218 (e) of the Labor Code on the pretext that what we
of Chemo-Technische Mfg., Inc.Employees Union, DFA, have here is not a labor dispute as long as it concedes that
et. al. vs. Chemo-Technische Mfg., Inc. [G.R. No. 107031, as defined by law, a" (l) "Labor Dispute" includes any
January 25, 1993]. controversy or matter concerning terms or conditions of
On May 4, 1995, petitioner moved for employment." If security of tenure, which has been breached
reconsideration 3 arguing that the NLRC erred: by respondent and which, precisely, is sought to be protected
by our temporary mandatory injunction (the core of
1. . . . in granting a temporary injunction order when it has no controversy in this case) is not a "term or condition of
jurisdiction to issue an injunction or restraining order since employment", what then is?
this may be issued only under Article 218 of the Labor Code if
the case involves or arises from labor disputes; xxx xxx xxx

2. . . . in granting a temporary injunction order when the Anent respondent's second argument . . . . Article 218 (e) of
termination of private respondents have long been carried the Labor Code . . . empowered the Commission not only to
out; issue a prohibitory injunction, but a mandatory ("to require
the performance") one as well. Besides, as earlier discussed,
3. . . . in ordering the reinstatement of private respondents we already exercised (on August 23, 1991) this temporary
on the basis of their mere allegations, in violation of PAL's mandatory injunctive power in the case of "Chemo-
right to due process: Technische Mfg., Inc. Employees Union-DFA et. al. vs. Chemo-
Technische Mfg., Inc., et. al." (supra) and effectively enjoined
4. . . . in arrogating unto itself management prerogative to one (1) month old dismissals by Chemo-Technische and that
discipline its employees and divesting the labor arbiter of its our aforesaid mandatory exercise of injunctive power, when
original and exclusive jurisdiction over illegal dismissal cases; questioned through a petition for certiorari, was sustained by
5. . . . in suspending the effects of termination when such the Third Division of the Supreme court per its Resolution
action is exclusively within the jurisdiction of the Secretary of dated January 25, 1993.
Labor; xxx xxx xxx
Respondent's fourth argument that petitioner's remedy for But just the same, we have to stress that Article 279 does not
their dismissals is "to file an illegal dismissal case against PAL speak alone of backwages as an obtainable relief for illegal
which cases are within the original and exclusive jurisdiction dismissal; that reinstatement as well is the concern of said
of the Labor Arbiter' is ignorant. In requiring as a condition law, enforceable when necessary, through Article 218 (e) of
for the issuance of a "temporary or permanent injunction" the Labor Code (without need of an illegal dismissal suit
"(4) That complainant has no adequate remedy at law;" under Article 217 (a) of the Code) if such whimsical and
Article 218 (e) of the Labor Code clearly capricious act of illegal dismissal will "cause grave or
envisioned adequacy, and not plain availability of a remedy irreparable injury to a party". . . . . 4
at law as an alternative bar to the issuance of an injunction.
An illegal dismissal suit (which takes, on its expeditious side, Hence, the present recourse.
three (3) years before it can be disposed of) while available Generally, injunction is a preservative remedy for the
as a remedy under Article 217 (a) of the Labor Code, is protection of one's substantive rights or interest. It is not a
certainly not an "adequate; remedy at law, Ergo, it cannot as cause of action in itself but merely a provisional remedy, an
an alternative remedy, bar our exercise of that injunctive adjunct to a main suit. It is resorted to only when there is a
power given us by Article 218 (e) of the Code. pressing necessity to avoid injurious consequences which
xxx xxx xxx cannot be remedied under any standard of compensation.
The application of the injunctive writ rests upon the existence
Thus, Article 218 (e), as earlier discussed [which empowers of an emergency or of a special reason before the main case
this Commission "to require the performance of a particular be regularly heard. The essential conditions for granting such
act" (such as our requiring respondent "to cease and desist temporary injunctive relief are that the complaint alleges
from enforcing" its whimsical memoranda of dismissals and facts which appear to be sufficient to constitute a proper
"instead to reinstate petitioners to their respective position basis for injunction and that on the entire showing from the
held prior to their subject dismissals") in "any labor dispute contending parties, the injunction is reasonably necessary to
which, if not . . . performed forthwith, may cause grave and protect the legal rights of the plaintiff pending the
irreparable damage to any party"] stands as the sole litigation. 5 Injunction is also a special equitable relief granted
"adequate remedy at law" for petitioners here. only in cases where there is no plain, adequate and complete
remedy at law. 6
Finally, the respondent, in its sixth argument claims that
even if its acts of dismissing petitioners "may be great, still In labor cases, Article 218 of the Labor Code empowers the
the same is capable of compensation", and that NLRC
consequently, "injunction need not be issued where adequate
compensation at law could be obtained". Actually, (e) To enjoin or restrain any actual or threatened commission
what respondent PAL argues here is that we need not of any or all prohibited or unlawful acts or to require the
interfere in its whimsical dismissals of petitioners as, after all, performance of a particular act in any labor dispute which, if
it can pay the latter its backwages. . . . not restrained or performed forthwith, may cause grave or
irreparable damage to any party or render ineffectual any
decision in favor of such party; . . ." (Emphasis Ours)
Complementing the above-quoted provision, Sec. 1, Rule XI The term "controversy" is likewise defined as "a litigated
of the New Rules of Procedure of the NLRC, pertinently question; adversary proceeding in a court of law; a civil
provides as follows: action or suit, either at law or in equity; a justiciable
dispute." 9
Sec. 1. Injunction in Ordinary Labor Dispute. A preliminary
injunction or a restraining order may be granted by the A "justiciable controversy" is "one involving an active
Commission through its divisions pursuant to the provisions antagonistic assertion of a legal right on one side and a
of paragraph (e) of Article 218 of the Labor Code, as denial thereof on the other concerning a real, and not a mere
amended, when it is established on the bases of the sworn theoretical question or issue." 10
allegations in the petition that the acts complained
of, involving or arising from any labor dispute before the Taking into account the foregoing definitions, it is an essential
Commission, which, if not restrained or performed forthwith, requirement that there must first be a labor dispute between
may cause grave or irreparable damage to any party or the contending parties before the labor arbiter. In the present
render ineffectual any decision in favor of such party. case, there is no labor dispute between the petitioner and
private respondents as there has yet been no complaint for
xxx xxx xxx illegal dismissal filed with the labor arbiter by the private
respondents against the petitioner.
The foregoing ancillary power may be exercised by the Labor
Arbiters only as an incident to the cases pending before them The petition for injunction directly filed before the NLRC is in
in order to preserve the rights of the parties during the reality an action for illegal dismissal. This is clear from the
pendency of the case, but excluding labor disputes involving allegations in the petition which prays for; reinstatement of
strikes or lockout. 7 (Emphasis Ours) private respondents; award of full backwages, moral and
exemplary damages; and attorney's fees. As such, the
From the foregoing provisions of law, the power of the NLRC petition should have been filed with the labor arbiter who has
to issue an injunctive writ originates from "any labor dispute" the original and exclusive jurisdiction to hear and decide the
upon application by a party thereof, which application if not following cases involving all workers, whether agricultural or
granted "may cause grave or irreparable damage to any non-agricultural:
party or render ineffectual any decision in favor of such
party." (1) Unfair labor practice;

The term "labor dispute" is defined as "any controversy or (2) Termination disputes;
matter concerning terms and conditions of employment or
the association or representation of persons in negotiating, (3) If accompanied with a claim for reinstatement, those
fixing. maintaining, changing, or arranging the terms and cases that workers may file involving wages, rates of pay,
conditions of employment regardless of whether or not the hours of work and other terms and conditions of
disputants stand in the proximate relation of employers and employment;
employees." 8 (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 provision as well as with such orders as he may issue to
Code, including questions involving the legality of strikes and enforce the same.
lockouts; and
On the other hand, the NLRC shall have
(6) Except claims for employees compensation, social exclusive appellate jurisdiction over all cases decided by
security, medicare and maternity benefits, all other claims labor arbiters as provided in Article 217(b) of the Labor Code.
arising from employer- employee relations, including those of In short, the jurisdiction of the NLRC in illegal dismissal cases
persons in domestic or household service, involving an is appellate in nature and, therefore, it cannot entertain the
amount exceeding five thousand pesos (P5,000.00), whether private respondents' petition for injunction which challenges
or not accompanied with a claim for reinstatement. 11 the dismissal orders of petitioner. Article 218(e) of the Labor
Code does not provide blanket authority to the NLRC or any
The jurisdiction conferred by the foregoing legal provision to of its divisions to issue writs of injunction, considering that
the labor arbiter is both original and exclusive, meaning, no Section 1 of Rule XI of the New Rules of Procedure of the
other officer or tribunal can take cognizance of, hear and NLRC makes injunction only an ancillary remedy in ordinary
decide any of the cases therein enumerated. The only labor disputes." 12
exceptions are where the Secretary of Labor and
Employment or the NLRC exercises the power of compulsory Thus, the NLRC exceeded its jurisdiction when it issued the
arbitration, or the parties agree to submit the matter to assailed Order granting private respondents' petition for
voluntary arbitration pursuant to Article 263 (g) of the Labor injunction and ordering the petitioner to reinstate private
Code, the pertinent portions of which reads: respondents.

(g) When, in his opinion, there exists a labor dispute causing The argument of the NLRC in its assailed Order that to file an
or likely to cause a strike or lockout in an industry illegal dismissal suit with the labor arbiter is not an
indispensable to the national interest, the Secretary of Labor "adequate" remedy since it takes three (3) years before it
and Employment may assume jurisdiction over the dispute can be disposed of, is patently erroneous. An "adequate"
and decide it or certify the same to the Commission for remedy at law has been defined as one "that affords relief
compulsory arbitration. Such assumption or certification shall with reference to the matter in controversy, and which is
have the effect of automatically enjoining the intended or appropriate to the particular circumstances of the case." 13 It
impending strike or lockout as specified in the assumption or is a remedy which is equally, beneficial, speedy and sufficient
certification order. If one has already taken place at the time which will promptly relieve the petitioner from the injurious
of assumption or certification, all striking or locked out effects of the acts complained of.14
employees shall immediately resume operations and readmit
all workers under the same terms and conditions prevailing Under the Labor Code, the ordinary and proper recourse of
before the strike or lockout. The Secretary of Labor and an illegally dismissed employee is to file a complaint for
Employment or the Commission may seek the assistance of illegal dismissal with the labor arbiter. 15 In the case at bar,
law enforcement agencies to ensure compliance with this private respondents disregarded this rule and directly went to
the NLRC through a petition for injunction praying that
petitioner be enjoined from enforcing its dismissal orders.
In Lamb vs. Phipps, 16 we ruled that if the remedy is The ruling of the NLRC that the Supreme Court upheld its
specifically provided by law, it is presumed to be adequate. power to issue temporary mandatory injunction orders in the
Moreover, the preliminary mandatory injunction prayed for case of Chemo-Technische Mfg., Inc. Employees Union-DFA,
by the private respondents in their petition before the NLRC et. al. vs. Chemo-Technische Mfg., Inc. et. al., docketed as
can also be entertained by the labor arbiter who, as shown G.R. No. 107031, is misleading. As correctly argued by the
earlier, has the ancillary power to issue preliminary petitioner, no such pronouncement was made by this Court in
injunctions or restraining orders as an incident in the cases said case. On January 25, 1993, we issued a Minute
pending before him in order to preserve the rights of the Resolution in the subject case stating as follows:
parties during the pendency of the case. 17
Considering the allegations contained, the issues raised and
Furthermore, an examination of private respondents' petition the arguments adduced in the petition for certiorari, as well
for injunction reveals that it has no basis since there is no as the comments of both public and private respondents
showing of any urgency or irreparable injury which the thereon, and the reply of the petitioners to private
private respondents might suffer. An injury is considered respondent's motion to dismiss the petition, the Court
irreparable if it is of such constant and frequent recurrence Resolved to DENY the same for being premature.
that no fair and reasonable redress can be had therefor in a
court of law, 18 or where there is no standard by which their It is clear from the above resolution that we did not in
amount can be measured with reasonable accuracy, that is, it anyway sustain the action of the NLRC in issuing such
is not susceptible of mathematical computation. It is temporary mandatory injunction but rather we dismissed the
considered irreparable injury when it cannot be adequately petition as the NLRC had yet to rule upon the motion for
compensated in damages due to the nature of the injury reconsideration filed by petitioner. Thus, the minute
itself or the nature of the right or property injured or when resolution denying the petition for being prematurely filed.
there exists no certain pecuniary standard for the Finally, an injunction, as an extraordinary remedy, is not
measurement of damages. 19 favored in labor law considering that it generally has not
In the case at bar, the alleged injury which private proved to be an effective means of settling labor
respondents stand to suffer by reason of their alleged illegal disputes. 20 It has been the policy of the State to encourage
dismissal can be adequately compensated and therefore, the parties to use the non-judicial process of negotiation and
there exists no "irreparable injury," as defined above which compromise, mediation and arbitration. 21 Thus, injunctions
would necessitate the issuance of the injunction sought for. may be issued only in cases of extreme necessity based on
Article 279 of the Labor Code provides that an employee who legal grounds clearly established, after due consultations or
is unjustly dismissed from employment shall be entitled to hearing and when all efforts at conciliation are exhausted
reinstatement, without loss of seniority rights and other which factors, however, are clearly absent in the present
privileges, and to the payment of full backwages, inclusive of case.
allowances, and to other benefits or their monetary WHEREFORE, the petition is hereby GRANTED. The assailed
equivalent computed from the time his compensation was Orders dated April 3, 1995 and May 31, 1995, issued by the
withheld from him up to the time of his actual reinstatement.
National Labor Relations Commission (First Division), in NLRC determinada, termina o bien por voluntad de cualquiera de
NCR IC No. 000563-95, are hereby REVERSED and SET ASIDE. las partes o cada vez que ilega el plazo fijado para el pago de
los salarios segun costumbre en la localidad o cunado se
SO ORDERED. termine la obra;

2. Que los obreros de una empresa fabril, que han celebrado


contrato, ya individual ya colectivamente, con ell, sin tiempo
fijo, y que se han visto obligados a cesar en sus tarbajos por
haberse declarando paro forzoso en la fabrica en la cual
tarbajan, dejan de ser empleados u obreros de la misma;

3. Que un patrono o sociedad que ha celebrado un contrato


colectivo de trabajo con sus osbreros sin tiempo fijo de
duracion y sin ser para una obra determiminada y que se
G.R. No. L-46496 February 27, 1940
niega a readmitir a dichos obreros que cesaron como
ANG TIBAY, represented by TORIBIO TEODORO, consecuencia de un paro forzoso, no es culpable de practica
manager and propietor, and injusta in incurre en la sancion penal del articulo 5 de la Ley
NATIONAL WORKERS BROTHERHOOD, petitioners, No. 213 del Commonwealth, aunque su negativa a readmitir
vs. se deba a que dichos obreros pertenecen a un determinado
THE COURT OF INDUSTRIAL RELATIONS and NATIONAL organismo obrero, puesto que tales ya han dejado deser
LABOR UNION, INC., respondents. empleados suyos por terminacion del contrato en virtud del
paro.
Office of the Solicitor-General Ozaeta and Assistant Attorney
Barcelona for the Court of Industrial Relations. The respondent National Labor Union, Inc., on the other
Antonio D. Paguia for National Labor Unon. hand, prays for the vacation of the judgement rendered by
Claro M. Recto for petitioner "Ang Tibay". the majority of this Court and the remanding of the case to
Jose M. Casal for National Workers' Brotherhood. the Court of Industrial Relations for a new trial, and avers:

LAUREL, J.: 1. That Toribio Teodoro's claim that on September 26, 1938,
there was shortage of leather soles in ANG TIBAY making it
The Solicitor-General in behalf of the respondent Court of necessary for him to temporarily lay off the members of the
Industrial Relations in the above-entitled case has filed a National Labor Union Inc., is entirely false and unsupported
motion for reconsideration and moves that, for the reasons by the records of the Bureau of Customs and the Books of
stated in his motion, we reconsider the following legal Accounts of native dealers in leather.
conclusions of the majority opinion of this Court:
2. That the supposed lack of leather materials claimed by
1. Que un contrato de trabajo, asi individual como colectivo, Toribio Teodoro was but a scheme to systematically prevent
sin termino fijo de duracion o que no sea para una
the forfeiture of this bond despite the breach of his necessarily mean the modification and reversal of the
CONTRACT with the Philippine Army. judgment rendered herein.

3. That Toribio Teodoro's letter to the Philippine Army dated The petitioner, Ang Tibay, has filed an opposition both to the
September 29, 1938, (re supposed delay of leather soles motion for reconsideration of the respondent National Labor
from the States) was but a scheme to systematically prevent Union, Inc.
the forfeiture of this bond despite the breach of his
CONTRACT with the Philippine Army. In view of the conclusion reached by us and to be herein after
stead with reference to the motion for a new trial of the
4. That the National Worker's Brotherhood of ANG TIBAY is a respondent National Labor Union, Inc., we are of the opinion
company or employer union dominated by Toribio Teodoro, that it is not necessary to pass upon the motion for
the existence and functions of which are illegal. (281 U.S., reconsideration of the Solicitor-General. We shall proceed to
548, petitioner's printed memorandum, p. 25.) dispose of the motion for new trial of the respondent labor
union. Before doing this, however, we deem it necessary, in
5. That in the exercise by the laborers of their rights to the interest of orderly procedure in cases of this nature, in
collective bargaining, majority rule and elective interest of orderly procedure in cases of this nature, to make
representation are highly essential and indispensable. several observations regarding the nature of the powers of
(Sections 2 and 5, Commonwealth Act No. 213.) the Court of Industrial Relations and emphasize certain
6. That the century provisions of the Civil Code which had guiding principles which should be observed in the trial of
been (the) principal source of dissensions and continuous cases brought before it. We have re-examined the entire
civil war in Spain cannot and should not be made applicable record of the proceedings had before the Court of Industrial
in interpreting and applying the salutary provisions of a Relations in this case, and we have found no substantial
modern labor legislation of American origin where the evidence that the exclusion of the 89 laborers here was due
industrial peace has always been the rule. to their union affiliation or activity. The whole transcript taken
contains what transpired during the hearing and is more of a
7. That the employer Toribio Teodoro was guilty of unfair record of contradictory and conflicting statements of
labor practice for discriminating against the National Labor opposing counsel, with sporadic conclusion drawn to suit
Union, Inc., and unjustly favoring the National Workers' their own views. It is evident that these statements and
Brotherhood. expressions of views of counsel have no evidentiary value.

8. That the exhibits hereto attached are so inaccessible to The Court of Industrial Relations is a special court whose
the respondents that even with the exercise of due diligence functions are specifically stated in the law of its creation
they could not be expected to have obtained them and (Commonwealth Act No. 103). It is more an administrative
offered as evidence in the Court of Industrial Relations. than a part of the integrated judicial system of the nation. It
is not intended to be a mere receptive organ of the
9. That the attached documents and exhibits are of such far- Government. Unlike a court of justice which is essentially
reaching importance and effect that their admission would passive, acting only when its jurisdiction is invoked and
deciding only cases that are presented to it by the parties to be paid by the "inquilinos" or tenants or less to
litigant, the function of the Court of Industrial Relations, as landowners. (Section 5, ibid.) In fine, it may appeal to
will appear from perusal of its organic law, is more active, voluntary arbitration in the settlement of industrial disputes;
affirmative and dynamic. It not only exercises judicial or may employ mediation or conciliation for that purpose, or
quasi-judicial functions in the determination of disputes recur to the more effective system of official investigation
between employers and employees but its functions in the and compulsory arbitration in order to determine specific
determination of disputes between employers and employees controversies between labor and capital industry and in
but its functions are far more comprehensive and expensive. agriculture. There is in reality here a mingling of executive
It has jurisdiction over the entire Philippines, to consider, and judicial functions, which is a departure from the rigid
investigate, decide, and settle any question, matter doctrine of the separation of governmental powers.
controversy or dispute arising between, and/or affecting
employers and employees or laborers, and regulate the In the case of Goseco vs. Court of Industrial Relations et al.,
relations between them, subject to, and in accordance with, G.R. No. 46673, promulgated September 13, 1939, we had
the provisions of Commonwealth Act No. 103 (section 1). It occasion to joint out that the Court of Industrial Relations et
shall take cognizance or purposes of prevention, arbitration, al., G. R. No. 46673, promulgated September 13, 1939, we
decision and settlement, of any industrial or agricultural had occasion to point out that the Court of Industrial
dispute causing or likely to cause a strike or lockout, arising Relations is not narrowly constrained by technical rules of
from differences as regards wages, shares or compensation, procedure, and the Act requires it to "act according to justice
hours of labor or conditions of tenancy or employment, and equity and substantial merits of the case, without regard
between landlords and tenants or farm-laborers, provided to technicalities or legal forms and shall not be bound by any
that the number of employees, laborers or tenants of farm- technicalities or legal forms and shall not be bound by any
laborers involved exceeds thirty, and such industrial or technical rules of legal evidence but may inform its mind in
agricultural dispute is submitted to the Court by the such manner as it may deem just and equitable." (Section
Secretary of Labor or by any or both of the parties to the 20, Commonwealth Act No. 103.) It shall not be restricted to
controversy and certified by the Secretary of labor as existing the specific relief claimed or demands made by the parties to
and proper to be by the Secretary of Labor as existing and the industrial or agricultural dispute, but may include in the
proper to be dealth with by the Court for the sake of public award, order or decision any matter or determination which
interest. (Section 4, ibid.) It shall, before hearing the dispute may be deemed necessary or expedient for the purpose of
and in the course of such hearing, endeavor to reconcile the settling the dispute or of preventing further industrial or
parties and induce them to settle the dispute by amicable agricultural disputes. (section 13, ibid.) And in the light of
agreement. (Paragraph 2, section 4, ibid.) When directed by this legislative policy, appeals to this Court have been
the President of the Philippines, it shall investigate and study especially regulated by the rules recently promulgated by the
all industries established in a designated locality, with a view rules recently promulgated by this Court to carry into the
to determinating the necessity and fairness of fixing and effect the avowed legislative purpose. The fact, however,
adopting for such industry or locality a minimum wage or that the Court of Industrial Relations may be said to be free
share of laborers or tenants, or a maximum "canon" or rental from the rigidity of certain procedural requirements does not
mean that it can, in justifiable cases before it, entirely ignore
or disregard the fundamental and essential requirements of and Maryland Coach Co. v. national labor Relations Board,
due process in trials and investigations of an administrative 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81 Law. ed. 965.) It
character. There are primary rights which must be respected means such relevant evidence as a reasonable mind accept
even in proceedings of this character: as adequate to support a conclusion." (Appalachian Electric
Power v. National Labor Relations Board, 4 Cir., 93 F. 2d 985,
(1) The first of these rights is the right to a hearing, which 989; National Labor Relations Board v. Thompson Products, 6
includes the right of the party interested or affected to Cir., 97 F. 2d 13, 15; Ballston-Stillwater Knitting Co. v.
present his own case and submit evidence in support thereof. National Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . .
In the language of Chief Hughes, in Morgan v. U.S., 304 U.S. The statute provides that "the rules of evidence prevailing in
1, 58 S. Ct. 773, 999, 82 Law. ed. 1129, "the liberty and courts of law and equity shall not be controlling.' The obvious
property of the citizen shall be protected by the rudimentary purpose of this and similar provisions is to free administrative
requirements of fair play. boards from the compulsion of technical rules so that the
(2) Not only must the party be given an opportunity to mere admission of matter which would be deemed
present his case and to adduce evidence tending to establish incompetent inn judicial proceedings would not invalidate the
the rights which he asserts but the tribunal must consider the administrative order. (Interstate Commerce Commission v.
evidence presented. (Chief Justice Hughes in Morgan v. U.S. Baird, 194 U.S. 25, 44, 24 S. Ct. 563, 568, 48 Law. ed. 860;
298 U.S. 468, 56 S. Ct. 906, 80 law. ed. 1288.) In the Interstate Commerce Commission v. Louisville and Nashville
language of this court inEdwards vs. McCoy, 22 Phil., 598, R. Co., 227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431;
"the right to adduce evidence, without the corresponding United States v. Abilene and Southern Ry. Co. S. Ct. 220, 225,
duty on the part of the board to consider it, is vain. Such 74 Law. ed. 624.) But this assurance of a desirable flexibility
right is conspicuously futile if the person or persons to whom in administrative procedure does not go far as to justify
the evidence is presented can thrust it aside without notice orders without a basis in evidence having rational probative
or consideration." force. Mere uncorroborated hearsay or rumor does not
constitute substantial evidence. (Consolidated Edison Co. v.
(3) "While the duty to deliberate does not impose the National Labor Relations Board, 59 S. Ct. 206, 83 Law. ed. No.
obligation to decide right, it does imply a necessity which 4, Adv. Op., p. 131.)"
cannot be disregarded, namely, that of having something to
support it is a nullity, a place when directly attached." (5) The decision must be rendered on the evidence presented
(Edwards vs. McCoy, supra.) This principle emanates from the at the hearing, or at least contained in the record and
more fundamental is contrary to the vesting of unlimited disclosed to the parties affected. (Interstate Commence
power anywhere. Law is both a grant and a limitation upon Commission vs. L. & N. R. Co., 227 U.S. 88, 33 S. Ct. 185, 57
power. Law. ed. 431.) Only by confining the administrative tribunal
to the evidence disclosed to the parties, can the latter be
(4) Not only must there be some evidence to support a protected in their right to know and meet the case against
finding or conclusion (City of Manila vs. Agustin, G.R. No. them. It should not, however, detract from their duty actively
45844, promulgated November 29, 1937, XXXVI O. G. 1335), to see that the law is enforced, and for that purpose, to use
but the evidence must be "substantial." (Washington, Virginia the authorized legal methods of securing evidence and
informing itself of facts material and relevant to the Brotherhood (appendix A), the record is barren and does not
controversy. Boards of inquiry may be appointed for the satisfy the thirst for a factual basis upon which to predicate,
purpose of investigating and determining the facts in any in a national way, a conclusion of law.
given case, but their report and decision are only advisory.
(Section 9, Commonwealth Act No. 103.) The Court of This result, however, does not now preclude the concession
Industrial Relations may refer any industrial or agricultural of a new trial prayed for the by respondent National Labor
dispute or any matter under its consideration or advisement Union, Inc., it is alleged that "the supposed lack of material
to a local board of inquiry, a provincial fiscal. a justice of the claimed by Toribio Teodoro was but a scheme adopted to
peace or any public official in any part of the Philippines for systematically discharged all the members of the National
investigation, report and recommendation, and may delegate Labor Union Inc., from work" and this avernment is desired to
to such board or public official such powers and functions as be proved by the petitioner with the "records of the Bureau of
the said Court of Industrial Relations may deem necessary, Customs and the Books of Accounts of native dealers in
but such delegation shall not affect the exercise of the Court leather"; that "the National Workers Brotherhood Union of
itself of any of its powers. (Section 10, ibid.) Ang Tibay is a company or employer union dominated by
Toribio Teodoro, the existence and functions of which are
(6) The Court of Industrial Relations or any of its judges, illegal." Petitioner further alleges under oath that the exhibits
therefore, must act on its or his own independent attached to the petition to prove his substantial avernments"
consideration of the law and facts of the controversy, and not are so inaccessible to the respondents that even within the
simply accept the views of a subordinate in arriving at a exercise of due diligence they could not be expected to have
decision. It may be that the volume of work is such that it is obtained them and offered as evidence in the Court of
literally Relations personally to decide all controversies Industrial Relations", and that the documents attached to the
coming before them. In the United States the difficulty is petition "are of such far reaching importance and effect that
solved with the enactment of statutory authority authorizing their admission would necessarily mean the modification and
examiners or other subordinates to render final decision, with reversal of the judgment rendered herein." We have
the right to appeal to board or commission, but in our case considered the reply of Ang Tibay and its arguments against
there is no such statutory authority. the petition. By and large, after considerable discussions, we
have come to the conclusion that the interest of justice would
(7) The Court of Industrial Relations should, in all be better served if the movant is given opportunity to
controversial questions, render its decision in such a manner present at the hearing the documents referred to in his
that the parties to the proceeding can know the various motion and such other evidence as may be relevant to the
issues involved, and the reasons for the decision rendered. main issue involved. The legislation which created the Court
The performance of this duty is inseparable from the of Industrial Relations and under which it acts is new. The
authority conferred upon it. failure to grasp the fundamental issue involved is not entirely
In the right of the foregoing fundamental principles, it is attributable to the parties adversely affected by the result.
sufficient to observe here that, except as to the alleged Accordingly, the motion for a new trial should be and the
agreement between the Ang Tibay and the National Worker's same is hereby granted, and the entire record of this case
shall be remanded to the Court of Industrial Relations, with
instruction that it reopen the case, receive all such evidence
as may be relevant and otherwise proceed in accordance
with the requirements set forth hereinabove. So ordered.

G.R. No. 157634 May 16, 2005

MAYON HOTEL & RESTAURANT, PACITA O. PO and/or


JOSEFA PO LAM, petitioners,
vs.
ROLANDO ADANA, CHONA BUMALAY, ROGER BURCE,
EDUARDO ALAMARES, AMADO ALAMARES, EDGARDO
TORREFRANCA, LOURDES CAMIGLA, TEODORO
LAURENARIA, WENEFREDO LOVERES, LUIS GUADES,
AMADO MACANDOG, PATERNO LLARENA, GREGORIO
NICERIO, JOSE ATRACTIVO, MIGUEL TORREFRANCA,
and SANTOS BROOLA, respondents.

DECISION

PUNO, J.:
This is a petition for certiorari to reverse and set aside the
Decision issued by the Court of Appeals (CA) 1 in CA-G.R. SP
No. 68642, entitled "Rolando Adana, Wenefredo Loveres, et. 9. Lourdes Camigla Cashier
al. vs. National Labor Relations Commission (NLRC), Mayon 10. Chona Bumalay Cashier
Hotel & Restaurant/Pacita O. Po, et al.," and the
Resolution2 denying petitioners' motion for reconsideration. 11. Jose Atractivo Technician
The assailed CA decision reversed the NLRC Decision which
had dismissed all of respondents' complaints, 3 and reinstated 12. Amado Alamares Dishwasher and Kitchen
the Joint Decision of the Labor Arbiter 4 which ruled that Helper
respondents were illegally dismissed and entitled to their 13. Roger Burce Cook
money claims.
14. Rolando Adana Waiter
The facts, culled from the records, are as follows: 5
15. Miguel Torrefranca Cook
Petitioner Mayon Hotel & Restaurant is a single proprietor
business registered in the name of petitioner Pacita O. 16. Edgardo Torrefranca Cook
Po,6 whose mother, petitioner Josefa Po Lam, manages the
Due to the expiration and non-renewal of the lease contract
establishment.7 The hotel and restaurant employed about
for the rented space occupied by the said hotel and
sixteen (16) employees.
restaurant at Rizal Street, the hotel operations of the
Records show that on various dates starting in 1981, business were suspended on March 31, 1997. 9 The operation
petitioner hotel and restaurant hired the following people, all of the restaurant was continued in its new location at
respondents in this case, with the following jobs: 8 Elizondo Street, Legazpi City, while waiting for the
construction of a new Mayon Hotel & Restaurant at
1. Wenefredo Loveres Accountant and Officer-in- Pearanda Street, Legazpi City. 10 Only nine (9) of the sixteen
charge (16) employees continued working in the Mayon Restaurant
at its new site.11
2. Paterno Llarena Front Desk Clerk
On various dates of April and May 1997, the 16 employees
3. Gregorio Nicerio Supervisory Waiter
filed complaints for underpayment of wages and other
4. Amado Macandog Roomboy money claims against petitioners, as follows:12

5. Luis Guades Utility/Maintenance Worker Wenefredo Loveres, Luis Guades, Amado Macandog and Jose
Atractivo for illegal dismissal, underpayment of wages,
6. Santos Broola Roomboy nonpayment of holiday and rest day pay; service incentive
leave pay (SILP) and claims for separation pay plus damages;
7. Teodoro Laurenaria Waiter

8. Eduardo Alamares Roomboy/Waiter


Paterno Llarena and Gregorio Nicerio for illegal dismissal with Respondents filed a motion for reconsideration with the NLRC
claims for underpayment of wages; nonpayment of cost of and when this was denied, they filed a petition
living allowance (COLA) and overtime pay; premium pay for forcertiorari with the CA which rendered the now assailed
holiday and rest day; SILP; nightshift differential pay and decision.
separation pay plus damages;
After their motion for reconsideration was denied, petitioners
Miguel Torrefranca, Chona Bumalay and Lourdes Camigla for now come to this Court, seeking the reversal of the CA
underpayment of wages; nonpayment of holiday and rest day decision on the following grounds:
pay and SILP;
I. The Honorable Court of Appeals erred in reversing the
Rolando Adana, Roger Burce and Amado Alamares for decision of the National Labor Relations Commission (Second
underpayment of wages; nonpayment of COLA, overtime, Division) by holding that the findings of fact of the NLRC were
holiday, rest day, SILP and nightshift differential pay; not supported by substantial evidence despite ample and
sufficient evidence showing that the NLRC decision is indeed
Eduardo Alamares for underpayment of wages, nonpayment supported by substantial evidence;
of holiday, rest day and SILP and night shift differential pay;
II. The Honorable Court of Appeals erred in upholding the
Santos Broola for illegal dismissal, underpayment of wages, joint decision of the labor arbiter which ruled that private
overtime pay, rest day pay, holiday pay, SILP, and respondents were illegally dismissed from their employment,
damages;13 and despite the fact that the reason why private respondents
Teodoro Laurenaria for underpayment of wages; nonpayment were out of work was not due to the fault of petitioners but to
of COLA and overtime pay; premium pay for holiday and rest causes beyond the control of petitioners.
day, and SILP. III. The Honorable Court of Appeals erred in upholding the
On July 14, 2000, Executive Labor Arbiter Gelacio L. Rivera, Jr. award of monetary benefits by the labor arbiter in his joint
rendered a Joint Decision in favor of the employees. The decision in favor of the private respondentS, including the
Labor Arbiter awarded substantially all of respondents' award of damages to six (6) of the private respondents,
money claims, and held that respondents Loveres, Macandog despite the fact that the private respondents have not proven
and Llarena were entitled to separation pay, while by substantial evidence their entitlement thereto and
respondents Guades, Nicerio and Alamares were entitled to especially the fact that they were not illegally dismissed by
their retirement pay. The Labor Arbiter also held that based the petitioners.
on the evidence presented, Josefa Po Lam is the IV. The Honorable Court of Appeals erred in holding that
owner/proprietor of Mayon Hotel & Restaurant and the proper Pacita Ong Po is the owner of the business establishment,
respondent in these cases. petitioner Mayon Hotel and Restaurant, thus disregarding the
On appeal to the NLRC, the decision of the Labor Arbiter was certificate of registration of the business establishment
reversed, and all the complaints were dismissed. ISSUED by the local government, which is a public document,
and the unqualified admissions of complainants-private there is, necessarily, a re-examination of the factual findings
respondents.14 to ascertain which opinion should be sustained.18 As ruled
in Asuncion v. NLRC,19
In essence, the petition calls for a review of the following
issues: Although, it is a legal tenet that factual findings of
administrative bodies are entitled to great weight and
1. Was it correct for petitioner Josefa Po Lam to be held liable respect, we are constrained to take a second look at the facts
as the owner of petitioner Mayon Hotel & Restaurant, and the before us because of the diversity in the opinions of the
proper respondent in this case? Labor Arbiter and the NLRC. A disharmony between the
2. Were respondents Loveres, Guades, Macandog, Atractivo, factual findings of the Labor Arbiter and those of the NLRC
Llarena and Nicerio illegally dismissed? opens the door to a review thereof by this Court. 20

3. Are respondents entitled to their money claims due to The CA, therefore, did not err in reviewing the records to
underpayment of wages, and nonpayment of holiday pay, determine which opinion was supported by substantial
rest day premium, SILP, COLA, overtime pay, and night shift evidence.
differential pay? Moreover, it is explicit in Castillo v. NLRC21 that factual
It is petitioners' contention that the above issues have findings of administrative bodies like the NLRC are
already been threshed out sufficiently and definitively by the affirmed only if they are supported by substantial
NLRC. They therefore assail the CA's reversal of the NLRC evidence that is manifest in the decision and on the
decision, claiming that based on the ruling in Castillo v. records. As stated in Castillo:
NLRC,15 it is non sequitur that the CA should re-examine the [A]buse of discretion does not necessarily follow from a
factual findings of both the NLRC and the Labor Arbiter, reversal by the NLRC of a decision of a Labor Arbiter. Mere
especially as in this case the NLRC's findings are allegedly variance in evidentiary assessment between the NLRC and
supported by substantial evidence. the Labor Arbiter does not automatically call for a full review
We do not agree. of the facts by this Court. The NLRC's decision, so long as it is
not bereft of substantial support from the records, deserves
There is no denying that it is within the NLRC's competence, respect from this Court. As a rule, the original and exclusive
as an appellate agency reviewing decisions of Labor Arbiters, jurisdiction to review a decision or resolution of respondent
to disagree with and set aside the latter's findings. 16 But it NLRC in a petition for certiorari under Rule 65 of the Rules of
stands to reason that the NLRC should state an acceptable Court does not include a correction of its evaluation of the
cause therefore, otherwise it would be a whimsical, evidence but is confined to issues of jurisdiction or grave
capricious, oppressive, illogical, unreasonable exercise of abuse of discretion. Thus, the NLRC's factual findings, if
quasi-judicial prerogative, subject to invalidation by the supported by substantial evidence, are entitled to great
extraordinary writ of certiorari.17 And when the factual respect and even finality, unless petitioner is able to show
findings of the Labor Arbiter and the NLRC are diametrically that it simply and arbitrarily disregarded the evidence before
opposed and this disparity of findings is called into question, it or had misappreciated the evidence to such an extent as to
compel a contrary conclusion if such evidence had been that the evidence[,] if produced, would operate to his
properly appreciated. (citations omitted)22 prejudice, and support the case of his adversary.

After careful review, we find that the reversal of the NLRC's Furthermore, in ruling that Josefa Po Lam is the real owner of
decision was in order precisely because it was not supported the hotel and restaurant, the labor arbiter relied also on the
by substantial evidence. testimonies of the witnesses, during the hearing of the
instant case. When the conclusions of the labor arbiter are
1. Ownership by Josefa Po Lam sufficiently corroborated by evidence on record, the same
The Labor Arbiter ruled that as regards the claims of the should be respected by appellate tribunals, since he is in a
employees, petitioner Josefa Po Lam is, in fact, the owner of better position to assess and evaluate the credibility of the
Mayon Hotel & Restaurant. Although the NLRC reversed this contending parties.23 (citations omitted)
decision, the CA, on review, agreed with the Labor Arbiter Petitioners insist that it was error for the Labor Arbiter and
that notwithstanding the certificate of registration in the the CA to have ruled that petitioner Josefa Po Lam is the
name of Pacita Po, it is Josefa Po Lam who is the owner of Mayon Hotel & Restaurant. They allege that the
owner/proprietor of Mayon Hotel & Restaurant, and the documents they submitted to the Labor Arbiter sufficiently
proper respondent in the complaints filed by the employees. and clearly establish the fact of ownership by petitioner
The CA decision states in part: Pacita Po, and not her mother, petitioner Josefa Po Lam. They
[Despite] the existence of the Certificate of Registration in contend that petitioner Josefa Po Lam's participation was
the name of Pacita Po, we cannot fault the labor arbiter in limited to merely (a) being the overseer; (b) receiving the
ruling that Josefa Po Lam is the owner of the subject hotel month-to-month and/or year-to-year financial reports
and restaurant. There were conflicting documents submitted prepared and submitted by respondent Loveres; and (c)
by Josefa herself. She was ordered to submit additional visitation of the premises.24 They also put emphasis on the
documents to clearly establish ownership of the hotel and admission of the respondents in their position paper
restaurant, considering the testimonies given by the submitted to the Labor Arbiter, identifying petitioner Josefa
[respondents] and the non-appearance and failure to submit Po Lam as the manager, and Pacita Po as the owner. 25 This,
her own position paper by Pacita Po. But Josefa did not they claim, is a judicial admission and is binding on
comply with the directive of the Labor Arbiter. The ruling of respondents. They protest the reliance the Labor Arbiter and
the Supreme Court in Metropolitan Bank and Trust Company the CA placed on their failure to submit additional documents
v. Court of Appeals applies to Josefa Po Lam which is stated in to clearly establish ownership of the hotel and restaurant,
this wise: claiming that there was no need for petitioner Josefa Po Lam
to submit additional documents considering that the
When the evidence tends to prove a material fact which Certificate of Registration is the best and primary evidence of
imposes a liability on a party, and he has it in his power to ownership.
produce evidence which from its very nature must overthrow
the case made against him if it is not founded on fact, and he
refuses to produce such evidence, the presumption arises
We disagree with petitioners. We have scrutinized the records and interest in the business as merely to help and assist her
and find the claim that petitioner Josefa Po Lam is merely the daughter as the hotel and restaurant was near the former's
overseer is not borne out by the evidence. store, the testimonies of [respondents] and Josefa as well as
her demeanor during the trial in these cases proves (sic) that
First. It is significant that only Josefa Po Lam appeared in the Josefa Po Lam owns Mayon Hotel and Restaurant.
proceedings with the Labor Arbiter. Despite receipt of the [Respondents] testified that it was Josefa who exercises all
Labor Arbiter's notice and summons, other notices and the acts and manifestation of ownership of the hotel and
Orders, petitioner Pacita Po failed to appear in any of the restaurant like transferring employees from the Greatwall
proceedings with the Labor Arbiter in these cases, nor file her Palace Restaurant which she and her husband Roy Po Lam
position paper.26 It was only on appeal with the NLRC that previously owned; it is Josefa to whom the employees
Pacita Po signed the pleadings.27 The apathy shown by submits (sic) reports, draws money for payment of payables
petitioner Pacita Po is contrary to human experience as one and for marketing, attending (sic) to Labor Inspectors during
would think that the owner of an establishment would ocular inspections. Except for documents whereby Pacita Po
naturally be concerned when all her employees file appears as the owner of Mayon Hotel and Restaurant,
complaints against her. nothing in the record shows any circumstance or
Second. The records of the case belie petitioner Josefa Po manifestation that Pacita Po is the owner of Mayon Hotel and
Lam's claim that she is merely an overseer. The findings of Restaurant. The least that can be said is that it is absurd for a
the Labor Arbiter on this question were based on credible, person to purchase a hotel and restaurant in the very heart
competent and substantial evidence. We again quote the of the City of Legazpi verbally. Assuming this to be true,
Joint Decision on this matter: when [petitioners], particularly Josefa, was directed to submit
evidence as to the ownership of Pacita of the hotel and
Mayon Hotel and Restaurant is a [business name] of an restaurant, considering the testimonies of [respondents], the
enterprise. While [petitioner] Josefa Po Lam claims that it is former should [have] submitted the lease contract between
her daughter, Pacita Po, who owns the hotel and restaurant the owner of the building where Mayon Hotel and Restaurant
when the latter purchased the same from one Palanos in was located at Rizal St., Legazpi City and Pacita Po to clearly
1981, Josefa failed to submit the document of sale from said establish ownership by the latter of said enterprise. Josefa
Palanos to Pacita as allegedly the sale was only verbal failed. We are not surprised why some employers employ
although the license to operate said hotel and restaurant is in schemes to mislead Us in order to evade liabilities. We
the name of Pacita which, despite our Order to Josefa to therefore consider and hold Josefa Po Lam as the
present the same, she failed to comply (p. 38, tsn. August 13, owner/proprietor of Mayon Hotel and Restaurant and the
1998). While several documentary evidences were submitted proper respondent in these cases. 28
by Josefa wherein Pacita was named therein as owner of the
hotel and restaurant (pp. 64, 65, 67 to 69; vol. I, rollo)[,] Petitioners' reliance on the rules of evidence, i.e., the
there were documentary evidences also that were submitted certificate of registration being the best proof of ownership,
by Josefa showing her ownership of said enterprise (pp. 468 is misplaced. Notwithstanding the certificate of registration,
to 469; vol. II, rollo). While Josefa explained her participation doubts were cast as to the true nature of petitioner Josefa Po
Lam's involvement in the enterprise, and the Labor Arbiter
had the authority to resolve this issue. It was therefore within opportunity to be heard. 35 Obviously, the choice not to
his jurisdiction to require the additional documents to present evidence was made by petitioners themselves. 36
ascertain who was the real owner of petitioner Mayon Hotel &
Restaurant. But more significantly, we sustain the Labor Arbiter and the
CA because even when the case was on appeal with the
Article 221 of the Labor Code is clear: technical rules are not NLRC, nothing was submitted to negate the Labor Arbiter's
binding, and the application of technical rules of procedure finding that Pacita Po is not the real owner of the subject
may be relaxed in labor cases to serve the demand of hotel and restaurant. Indeed, no such evidence was
substantial justice.29 The rule of evidence prevailing in court submitted in the proceedings with the CA nor with this Court.
of law or equity shall not be controlling in labor cases and it Considering that petitioners vehemently deny ownership by
is the spirit and intention of the Labor Code that the Labor petitioner Josefa Po Lam, it is most telling that they continue
Arbiter shall use every and all reasonable means to ascertain to withhold evidence which would shed more light on this
the facts in each case speedily and objectively and without issue. We therefore agree with the CA that the failure to
regard to technicalities of law or procedure, all in the interest submit could only mean that if produced, it would have been
of due process.30 Labor laws mandate the speedy adverse to petitioners' case.37
administration of justice, with least attention to technicalities
but without sacrificing the fundamental requisites of due Thus, we find that there is substantial evidence to rule that
process.31 petitioner Josefa Po Lam is the owner of petitioner Mayon
Hotel & Restaurant.
Similarly, the fact that the respondents' complaints contained
no allegation that petitioner Josefa Po Lam is the owner is of 2. Illegal Dismissal: claim for separation pay
no moment. To apply the concept of judicial admissions to Of the sixteen employees, only the following filed a case for
respondents who are but lowly employees - would be to illegal dismissal: respondents Loveres, Llarena, Nicerio,
exact compliance with technicalities of law that is contrary to Macandog, Guades, Atractivo and Broola. 38
the demands of substantial justice. Moreover, the issue of
ownership was an issue that arose only during the course of The Labor Arbiter found that there was illegal dismissal, and
the proceedings with the Labor Arbiter, as an incident of granted separation pay to respondents Loveres, Macandog
determining respondents' claims, and was well within his and Llarena. As respondents Guades, Nicerio and Alamares
jurisdiction.32 were already 79, 66 and 65 years old respectively at the time
of the dismissal, the Labor Arbiter granted retirement
Petitioners were also not denied due process, as they were benefits pursuant to Article 287 of the Labor Code as
given sufficient opportunity to be heard on the issue of amended.39 The Labor Arbiter ruled that respondent Atractivo
ownership.33 The essence of due process in administrative was not entitled to separation pay because he had been
proceedings is simply an opportunity to explain one's side or transferred to work in the restaurant operations in Elizondo
an opportunity to seek reconsideration of the action or ruling Street, but awarded him damages. Respondents Loveres,
complained of.34 And there is nothing in the records which Llarena, Nicerio, Macandog and Guades were also awarded
would suggest that petitioners had absolute lack of damages.40
The NLRC reversed the Labor Arbiter, finding that "no clear [F]rom the records, more than six months had lapsed without
act of termination is attendant in the case at bar" and that [petitioner] having resumed operation of the hotel. After
respondents "did not submit any evidence to that effect, but more than one year from the temporary closure of Mayon
the finding and conclusion of the Labor Arbiter [are] merely Hotel and the temporary transfer to another site of Mayon
based on his own surmises and conjectures." 41 In turn, the Restaurant, the building which [petitioner] Josefa allege[d]
NLRC was reversed by the CA. w[h]ere the hotel and restaurant will be transferred has been
finally constructed and the same is operated as a hotel with
It is petitioners contention that the CA should have sustained bar and restaurant nevertheless, none of [respondents]
the NLRC finding that none of the above-named respondents herein who were employed at Mayon Hotel and Restaurant
were illegally dismissed, or entitled to separation or which was also closed on April 30, 1998 was/were recalled by
retirement pay. According to petitioners, even the Labor [petitioner] to continue their services...
Arbiter and the CA admit that when the illegal dismissal case
was filed by respondents on April 1997, they had as yet no Parenthetically, the Labor Arbiter did not grant separation
cause of action. Petitioners therefore conclude that the filing pay to the other respondents as they had not filed an
by respondents of the illegal dismissal case was premature amended complaint to question the cessation of their
and should have been dismissed outright by the Labor employment after the closure of Mayon Hotel & Restaurant
Arbiter.42 Petitioners also claim that since the validity of on March 31, 1997.45
respondents' dismissal is a factual question, it is not for the
reviewing court to weigh the conflicting evidence. 43 The above factual finding of the Labor Arbiter was never
refuted by petitioners in their appeal with the NLRC. It
We do not agree. Whether respondents are still working for confounds us, therefore, how the NLRC could have so
petitioners is a factual question. And the records are cavalierly treated this uncontroverted factual finding by
unequivocal that since April 1997, when petitioner Mayon ruling that respondents have not introduced any evidence to
Hotel & Restaurant suspended its hotel operations and show that they were illegally dismissed, and that the Labor
transferred its restaurant operations in Elizondo Street, Arbiter's finding was based on conjecture. 46 It was a serious
respondents Loveres, Macandog, Llarena, Guades and Nicerio error that the NLRC did not inquire as to thelegality of the
have not been permitted to work for petitioners. Respondent cessation of employment. Article 286 of the Labor Code is
Alamares, on the other hand, was also laid-off when the clear there is termination of employment when an
Elizondo Street operations closed, as were all the other otherwise bona fide suspension of work exceeds six (6)
respondents. Since then, respondents have not been months.47 The cessation of employment for more than six
permitted to work nor recalled, even after the construction of months was patent and the employer has the burden of
the new premises at Pearanda Street and the reopening of proving that the termination was for a just or authorized
the hotel operations with the restaurant in this new site. As cause.48
stated by the Joint Decision of the Labor Arbiter on July 2000,
or more than three (3) years after the complaint was filed: 44 Moreover, we are not impressed by any of petitioners'
attempts to exculpate themselves from the charges. First, in
the proceedings with the Labor Arbiter, they claimed that it
could not be illegal dismissal because the lay-off was merely It is confounding how petitioners have fashioned their
temporary (and due to the expiration of the lease contract arguments. After having admitted, in effect, that respondents
over the old premises of the hotel). Theyspecifically invoked have been laid-off since April 1997, they would have this
Article 286 of the Labor Code to argue that the claim for Court excuse their refusal to reinstate respondents or grant
separation pay was premature and without legal and factual them separation pay because these same respondents
basis.49 Then, because the Labor Arbiter had ruled that there purportedly have not proven the illegality of their dismissal.
was already illegal dismissal when the lay-off had exceeded
the six-month period provided for in Article 286, petitioners Petitioners' arguments reflect their lack of candor and the
raise this novel argument, to wit: blatant attempt to use technicalities to muddle the issues
and defeat the lawful claims of their employees. First,
It is the firm but respectful submission of petitioners that petitioners admit that since April 1997, when hotel
reliance on Article 286 of the Labor Code is misplaced, operations were suspended due to the termination of the
considering that the reason why private respondents were lease of the old premises, respondents Loveres, Macandog,
out of work was not due to the fault of petitioners. The failure Llarena, Nicerio and Guades have not been permitted to
of petitioners to reinstate the private respondents to their work. Second, even after six monthsof what should have
former positions should not likewise be attributable to said been just a temporary lay-off, the same respondents
petitioners as the private respondents did not submit any were still not recalled to work. As a matter of fact, the
evidence to prove their alleged illegal dismissal. The Labor Arbiter even found that as of the time when he
petitioners cannot discern why they should be made liable to rendered his Joint Decision on July 2000 or more than three
the private respondents for their failure to be reinstated (3) years after the supposed "temporary lay-off," the
considering that the fact that they were out of work was not employment of all of the respondents with petitioners
due to the fault of petitioners but due to circumstances had ceased, notwithstanding that the new premises had
beyond the control of petitioners, which are the termination been completed and the same operated as a hotel with bar
and non-renewal of the lease contract over the subject and restaurant. This is clearly dismissal or the permanent
premises. Private respondents, however, argue in their severance or complete separation of the worker from the
Comment that petitioners themselves sought the application service on the initiative of the employer regardless of the
of Article 286 of the Labor Code in their case in their Position reasons therefor.51
Paper filed before the Labor Arbiter. In refutation, petitioners
humbly submit that even if they invoke Article 286 of the On this point, we note that the Labor Arbiter and the CA are
Labor Code, still the fact remains, and this bears stress and in accord that at the time of the filing of the complaint,
emphasis, that the temporary suspension of the operations of respondents had no cause of action to file the case for illegal
the establishment arising from the non-renewal of the lease dismissal. According to the CA and the Labor Arbiter, the lay-
contract did not result in the termination of employment of off of the respondents was merely temporary, pending
private respondents and, therefore, the petitioners cannot be construction of the new building at Pearanda Street. 52
faulted if said private respondents were out of work, and While the closure of the hotel operations in April of 1997
consequently, they are not entitled to their money claims may have been temporary, we hold that the evidence on
against the petitioners.50
record belie any claim of petitioners that the lay-of of confidence.55 Even the petition filed in this court made
respondents on that same date was merely temporary. On reference to the separation of the respondents due to
the contrary, we find substantial evidence that petitioners "severe financial losses and reverses," again imputing it to
intended the termination to be permanent. First, respondents' mismanagement.56 The vehemence of
respondents Loveres, Macandog, Llarena, Guades, Nicerio petitioners' accusation of mismanagement against
and Alamares filed the complaint for illegal respondents, especially against Loveres, is inconsistent with
dismissalimmediately after the closure of the hotel the desire to recall them to work. Fourth, petitioners'
operations in Rizal Street, notwithstanding the alleged memorandum on appeal also averred that the case was filed
temporary nature of the closure of the hotel operations, and "not because of the business being operated by them or that
petitioners' allegations that the employees assigned to the they were supposedly not receiving benefits from the Labor
hotel operations knew about this beforehand. Second, in Code which is true, but because of the fact that the source
their position paper submitted to the Labor Arbiter, of their livelihood, whether legal or immoral, was
petitioners invoked Article 286 of the Labor Code to assert stopped on March 31, 1997, when the owner of the
that the employer-employee relationship was merely building terminated the Lease Contract." 57Fifth, petitioners
suspended, and therefore the claim for separation pay was had inconsistencies in their pleadings (with the NLRC, CA and
premature and without legal or factual basis.53 But they with this Court) in referring to the closure, 58 i.e., in the
made no mention of any intent to recall these petition filed with this court, they assert that there is no
respondents to work upon completion of the new illegal dismissal because there was "only a temporary
premises. Third,the various pleadings on record show that cessation or suspension of operations of the hotel and
petitioners held respondents, particularly Loveres, as restaurant due to circumstances beyond the control of
responsible for mismanagement of the establishment and for petitioners, and that is, the non-renewal of the lease
abuse of trust and confidence. Petitioner Josefa Po Lam's contract..."59 And yet, in the same petition, they also assert
affidavit on July 21, 1998, for example, squarely blamed that: (a) the separation of respondents was due to severe
respondents, specifically Loveres, Bumalay and Camigla, for financial losses and reverses leading to the closure of the
abusing her leniency and causing petitioner Mayon Hotel & business; and (b) petitioner Pacita Po had to close
Restaurant to sustain "continuous losses until it is closed." shop and was bankrupt and has no liquidity to put up her
She then asserts that respondents "are not entitled to own building to house Mayon Hotel & Restaurant. 60 Sixth,
separation pay for they were not terminated and if ever the and finally, the uncontroverted finding of the Labor Arbiter
business ceased to operate it was because of that petitioners terminated all the other respondents, by not
54
losses." Again, petitioners make the same allegation in their employing them when the Hotel and Restaurant transferred
memorandum on appeal with the NLRC, where they alleged to its new site on Pearanda Street. 61 Indeed, in this same
that three (3) years prior to the expiration of the lease in memorandum, petitioners referred to all respondents as
1997, the operation of the Hotel had been sustaining "former employees of Mayon Hotel & Restaurant." 62
consistent losses, and these were solely attributed to
respondents, but most especially due to Loveres's These factors may be inconclusive individually, but when
mismanagement and abuse of petitioners' trust and taken together, they lead us to conclude that petitioners
really intended to dismiss all respondents and merely used
the termination of the lease (on Rizal Street premises) as a While we recognize the right of the employer to terminate
means by which they could terminate their employees. the services of an employee for a just or authorized cause,
the dismissal of employees must be made within the
Moreover, even assuming arguendo that the cessation of parameters of law and pursuant to the tenets of fair
employment on April 1997 was merely temporary, play.66 And in termination disputes, the burden of proof is
itbecame dismissal by operation of law when petitioners always on the employer to prove that the dismissal was for a
failed to reinstate respondents after the lapse of six (6) just or authorized cause. 67 Where there is no showing of a
months, pursuant to Article 286 of the Labor Code. clear, valid and legal cause for termination of employment,
We are not impressed by petitioners' claim that severe the law considers the case a matter of illegal dismissal. 68
business losses justified their failure to reinstate Under these circumstances, the award of damages was
respondents. The evidence to prove this fact is inconclusive. proper. As a rule, moral damages are recoverable where the
But more important, serious business losses do not excuse dismissal of the employee was attended by bad faith or fraud
the employer from complying with the clearance or report or constituted an act oppressive to labor, or was done in a
required under Article 283 of the Labor Code and its manner contrary to morals, good customs or public
implementing rules before terminating the employment of its policy.69 We believe that the dismissal of the respondents was
workers.63 In the absence of justifying circumstances, the attended with bad faith and meant to evade the lawful
failure of petitioners to observe the procedural requirements obligations imposed upon an employer.
set out under Article 284, taints their actuations with bad
faith, especially since they claimed that they have been To rule otherwise would lead to the anomaly of respondents
experiencing losses in the three years before 1997. To say being terminated from employment in 1997 as a matter of
the least, if it were true that the lay-off was temporary but fact, but without legal redress. This runs counter to notions of
then serious business losses prevented the reinstatement of fair play, substantial justice and the constitutional mandate
respondents, then petitioners should have complied with the that labor rights should be respected. If doubts exist between
requirements of written notice. The requirement of law the evidence presented by the employer and the employee,
mandating the giving of notices was intended not only to the scales of justice must be tilted in favor of the latter the
enable the employees to look for another employment and employer must affirmatively show rationally adequate
therefore ease the impact of the loss of their jobs and the evidence that the dismissal was for a justifiable cause. 70 It is
corresponding income, but more importantly, to give the a time-honored rule that in controversies between a laborer
Department of Labor and Employment (DOLE) the and his master, doubts reasonably arising from the evidence,
opportunity to ascertain the verity of the alleged authorized or in the interpretation of agreements and writing should be
cause of termination.64 resolved in the former's favor. 71 The policy is to extend the
doctrine to a greater number of employees who can avail of
And even assuming that the closure was due to a reason the benefits under the law, which is in consonance with the
beyond the control of the employer, it still has to accord its avowed policy of the State to give maximum aid and
employees some relief in the form of severance pay. 65 protection of labor.72
We therefore reinstate the Labor Arbiter's decision with the claims. One who pleads payment has the burden of proving
following modifications: it, and even where the employees must allege nonpayment,
the general rule is that the burden rests on the defendant to
(a) Separation pay for the illegal dismissal of respondents prove nonpayment, rather than on the plaintiff to prove non
Loveres, Macandog and Llarena; (Santos Broola cannot be payment.75 This petitioners failed to do.
granted separation pay as he made no such claim);
We also agree with the Labor Arbiter and the CA that the
(b) Retirement pay for respondents Guades, Nicerio, and documents petitioners submitted, i.e., affidavits executed by
Alamares, who at the time of dismissal were entitled to their some of respondents during an ocular inspection conducted
retirement benefits pursuant to Article 287 of the Labor Code by an inspector of the DOLE; notices of inspection result and
as amended;73 and Facility Evaluation Orders issued by DOLE, are not sufficient
(c) Damages for respondents Loveres, Macandog, Llarena, to prove payment.76 Despite repeated orders from the Labor
Guades, Nicerio, Atractivo, and Broola. Arbiter,77 petitioners failed to submit the pertinent employee
files, payrolls, records, remittances and other similar
3. Money claims documents which would show that respondents rendered
work entitling them to payment for overtime work, night shift
The CA held that contrary to the NLRC's ruling, petitioners differential, premium pay for work on holidays and rest day,
had not discharged the burden of proving that the monetary and payment of these as well as the COLA and the SILP
claims of the respondents have been paid. 74 The CA thus documents which are not in respondents' possession but in
reinstated the Labor Arbiter's grant of respondents' monetary the custody and absolute control of petitioners. 78 By choosing
claims, including damages. not to fully and completely disclose information and present
the necessary documents to prove payment of labor standard
Petitioners assail this ruling by repeating their long and
benefits due to respondents, petitioners failed to discharge
convoluted argument that as there was no illegal dismissal,
the burden of proof. 79 Indeed, petitioners' failure to submit
then respondents are not entitled to their monetary claims or
the necessary documents which as employers are in their
separation pay and damages. Petitioners' arguments are not
possession, inspite of orders to do so, gives rise to the
only tiring, repetitive and unconvincing, but confusing and
presumption that their presentation is prejudicial to its
confused entitlement to labor standard benefits is a
cause.80 As aptly quoted by the CA:
separate and distinct concept from payment of separation
pay arising from illegal dismissal, and are governed by [W]hen the evidence tends to prove a material fact which
different provisions of the Labor Code. imposes a liability on a party, and he has it in his power to
produce evidence which from its very nature must overthrow
We agree with the CA and the Labor Arbiter. Respondents
the case made against him if it is not founded on fact, and he
have set out with particularity in their complaint, position
refuses to produce such evidence, the presumption arises
paper, affidavits and other documents the labor standard
that the evidence, if produced, would operate to his
benefits they are entitled to, and which they alleged that
prejudice, and support the case of his adversary. 81
petitioners have failed to pay them. It was therefore
petitioners' burden to prove that they have paid these money
Petitioners next claim that the cost of the food and snacks were not what were provided for in the Orders and that it was
provided to respondents as facilities should have been only when they filed these cases that they came to know
included in reckoning the payment of respondents' wages. about said Facility Evaluation Orders (pp. 100; 379[,] vol.
They state that although on the surface respondents II, rollo; p. 40, tsn[,] June 19, 1998). [Petitioner] Josefa
appeared to receive minimal wages, petitioners had granted herself, who applied for evaluation of the facility (food) given
respondents other benefits which are considered part and to [respondents], testified that she did not inform
parcel of their wages and are allowed under existing [respondents] concerning said Facility Evaluation Orders (p.
laws.82 They claim that these benefits make up for whatever 34, tsn[,] August 13, 1998).
inadequacies there may be in compensation. 83 Specifically,
they invoked Sections 5 and 6, Rule VII-A, which allow the Even granting that meals and snacks were provided and
deduction of facilities provided by the employer through an indeed constituted facilities, such facilities could not be
appropriate Facility Evaluation Order issued by the Regional deducted without compliance with certain legal
87
Director of the DOLE.84 Petitioners also aver that they give requirements. As stated in Mabeza v. NLRC, the employer
five (5) percent of the gross income each month as simply cannot deduct the value from the employee's wages
incentives. As proof of compliance of payment of minimum without satisfying the following: (a) proof that such facilities
wages, petitioners submitted the Notice of Inspection Results are customarily furnished by the trade; (b) the provision of
issued in 1995 and 1997 by the DOLE Regional Office. 85 deductible facilities is voluntarily accepted in writing by the
employee; and (c) the facilities are charged at fair and
The cost of meals and snacks purportedly provided to reasonable value. The records are clear that petitioners failed
respondents cannot be deducted as part of respondents' to comply with these requirements. There was no proof of
minimum wage. As stated in the Labor Arbiter's decision: 86 respondents' written authorization. Indeed, the Labor Arbiter
found that while the respondents admitted that they were
While [petitioners] submitted Facility Evaluation Orders (pp. given meals and merienda, the quality of food served to
468, 469; vol. II, rollo) issued by the DOLE Regional Office them was not what was provided for in the Facility Evaluation
whereby the cost of meals given by [petitioners] to Orders and it was only when they filed the cases that they
[respondents] were specified for purposes of considering the came to know of this supposed Facility Evaluation
same as part of their wages, We cannot consider the cost of Orders.88 Petitioner Josefa Po Lam herself admitted that she
meals in the Orders as applicable to [respondents]. did not inform the respondents of the facilities she had
[Respondents] were not interviewed by the DOLE as to the applied for.89
quality and quantity of food appearing in the applications of
[petitioners] for facility evaluation prior to its approval to Considering the failure to comply with the above-mentioned
determine whether or not [respondents] were indeed given legal requirements, the Labor Arbiter therefore erred when he
such kind and quantity of food. Also, there was no evidence ruled that the cost of the meals actually provided to
that the quality and quantity of food in the Orders were respondents should be deducted as part of their salaries, on
voluntarily accepted by [respondents]. On the contrary; while the ground that respondents have availed themselves of the
some [of the respondents] admitted that they were given food given by petitioners.90 The law is clear that mere
meals and merienda, the quality of food serve[d] to them
availment is not sufficient to allow deductions from prior to their employment. Further, how can the amounts
employees' wages. receive[d] by [respondents] be considered as profit share
when the same [are] based on the gross receipt of the
More important, we note the uncontroverted testimony of hotel[?] No profit can as yet be determined out of the gross
respondents on record that they were required to eat in the receipt of an enterprise. Profits are realized after expenses
hotel and restaurant so that they will not go home and there are deducted from the gross income.
is no interruption in the services of Mayon Hotel &
Restaurant. As ruled in Mabeza, food or snacks or other On the issue of the proper minimum wage applicable to
convenience provided by the employers are deemed as respondents, we sustain the Labor Arbiter. We note that
supplements if they are granted for the convenience of the petitioners themselves have admitted that the establishment
employer. The criterion in making a distinction between a employs "more or less sixteen (16) employees,"93therefore
supplement and a facility does not so much lie in the kind they are estopped from claiming that the applicable
(food, lodging) but the purpose. 91 Considering, therefore, that minimum wage should be for service establishments
hotel workers are required to work different shifts and are employing 15 employees or less.
expected to be available at various odd hours, their ready
availability is a necessary matter in the operations of a small As for petitioners repeated invocation of serious business
hotel, such as petitioners' business. 92 The deduction of the losses, suffice to say that this is not a defense to payment of
cost of meals from respondents' wages, therefore, should be labor standard benefits. The employer cannot exempt himself
removed. from liability to pay minimum wages because of poor
financial condition of the company. The payment of minimum
We also do not agree with petitioners that the five (5) percent wages is not dependent on the employer's ability to pay. 94
of the gross income of the establishment can be considered
as part of the respondents' wages. We quote with approval Thus, we reinstate the award of monetary claims granted by
the Labor Arbiter on this matter, to wit: the Labor Arbiter.

While complainants, who were employed in the hotel, 4. Conclusion


receive[d] various amounts as profit share, the same cannot There is no denying that the actuations of petitioners in this
be considered as part of their wages in determining their case have been reprehensible. They have terminated the
claims for violation of labor standard benefits. Although respondents' employment in an underhanded manner, and
called profit share[,] such is in the nature of share from have used and abused the quasi-judicial and judicial
service charges charged by the hotel. This is more explained processes to resist payment of their employees' rightful
by [respondents] when they testified that what they received claims, thereby protracting this case and causing the
are not fixed amounts and the same are paid not on a unnecessary clogging of dockets of the Court. They have also
monthly basis (pp. 55, 93, 94, 103, 104; vol. II, rollo). Also, forced respondents to unnecessary hardship and financial
[petitioners] failed to submit evidence that the amounts expense. Indeed, the circumstances of this case would have
received by [respondents] as profit share are to be called for exemplary damages, as the dismissal was effected
considered part of their wages and had been agreed by them in a wanton, oppressive or malevolent manner, 95 and public
policy requires that these acts must be suppressed and (2) Granting retirement pay for respondents Guades, Nicerio,
discouraged.96 and Alamares;

Nevertheless, we cannot agree with the Labor Arbiter in (3) Removing the deductions for food facility from the
granting exemplary damages of P10,000.00 each to all amounts due to all respondents;
respondents. While it is true that other forms of damages
under the Civil Code may be awarded to illegally dismissed (4) Awarding moral damages of P20,000.00 each for
employees,97 any award of moral damages by the Labor respondents Loveres, Macandog, Llarena, Guades, Nicerio,
Arbiter cannot be based on the Labor Code but should be Atractivo, and Broola;
grounded on the Civil Code.98 And the law is clear that (5) Deleting the award of exemplary damages of P10,000.00
exemplary damages can only be awarded if plaintiff shows from all respondents except Loveres, Macandog, Llarena,
proof that he is entitled to moral, temperate or compensatory Guades, Nicerio, Atractivo, and Broola; and
damages.99
(6) Granting attorney's fees of P10,000.00 each to all
As only respondents Loveres, Guades, Macandog, Llarena, respondents.
Nicerio, Atractivo and Broola specifically claimed damages
from petitioners, then only they are entitled to exemplary The case is REMANDED to the Labor Arbiter for the
damages.sjgs1 RECOMPUTATION of the total monetary benefits awarded and
due to the employees concerned in accordance with the
Finally, we rule that attorney's fees in the amount decision. The Labor Arbiter is ORDERED to submit his
to P10,000.00 should be granted to each respondent. It is compliance thereon within thirty (30) days from notice of this
settled that in actions for recovery of wages or where an decision, with copies furnished to the parties.
employee was forced to litigate and incur expenses to
protect his rights and interest, he is entitled to an award of SO ORDERED.
attorney's fees.100 This case undoubtedly falls within this rule.

IN VIEW WHEREOF, the petition is hereby DENIED. The


Decision of January 17, 2003 of the Court of Appeals in CA-
G.R. SP No. 68642 upholding the Joint Decision of July 14,
2000 of the Labor Arbiter in RAB V Case Nos. 04-00079-97
and 04-00080-97 is AFFIRMED, with the following
MODIFICATIONS:

(1) Granting separation pay of one-half (1/2) month for every


year of service to respondents Loveres, Macandog and
Llarena;
G.R. No. 76988 January 31, 1989

GENERAL RUBBER AND FOOTWEAR


CORPORATION, petitioner,
vs.
THE HON. FRANKLIN DRILON IN HIS CAPACITY AS THE
MINISTER OF LABOR & EMPLOYMENT and THE
GENERAL RUBBER WORKERS' UNION-
NATU, respondents.

Paez & Pascual Law Office for petitioners.

The Solicitor General for public respondent.

Marcelino Lontok, Jr. for private respondent.

RESOLUTION

FELICIANO, J.:

The present petition involves the question of whether or not


union members who did not ratify a waiver of accrued wage
differentials are bound by the ratification made by a majority 1985 arising out of the non-compliance of said wage order
of the union members. during the said period. 3 (Emphasis supplied)

On 26 December 1984, Wage Order No. 6 was issued, This agreement was subsequently ratified on 30 July 1985 in
increasing the statutory minimum wage rate (by P2.00) and a document entitled "Sama-samang Kapasyahan sa
the mandatory cost of living allowance (by P3.00 for non- Pagpapatibay ng Return-to-Work Agreement" 4 by some two
agricultural workers) in the private sector, to take effect on 1 hundred and sixty-eight (268) members of respondent union,
November 1984, Petitioner General Rubber and Footwear each member signing individually the instrument of
Corporation applied to the National Wages Council ("Council") ratification.
for exemption from the provisions of Wage Order No. 6. The
Council, in an Order dated 4 March 1985, denied petitioner's Before the ratification of the Agreement, petitioner filed, on 5
application, stating in part that: June 1985, a Motion with the Council withdrawing its pending
Motion for Reconsideration of the Council's Order of 4 March
[Y]ou are hereby ordered to pay your covered employees the 1985. By a letter dated 13 June 1985, the Council allowed the
daily increase in statutory minimum wage rate of P 2.00 and withdrawal of petitioner's Motion for Reconsideration, which
living allowance of P3.00 effective November 1, 1984. ... letter in part stated:
1
This decision is final. (Emphasis supplied) In view of your compliance with Wage Order No. 6 effective
May 30, 1985 pursuant to the Return to Work Agreement ... ,
Petitioner filed a Motion for Reconsideration of this Order on this Council interposes no objection to your Motion to
27 May 1985. Withdraw ... 5 (Emphasis supplied)
On 25 May 1985, some members of respondent General Meanwhile, there were some one hundred (100) members of
Rubber Workers' Union-NATU, led by one Leopoldo Sto. the union who were unhappy over the Agreement, who took
Domingo, declared a strike against petitioner. 2 Three (3) the view that the Council's Order of 4 March 1985 bad
days later, on 28 May 1985, petitioner and Sto. Domingo, the become final and executory upon the withdrawal of
latter purporting to represent the striking workers, entered petitioner's Motion for Reconsideration and who would not
into a Return-to-Work Agreement ("Agreement"), Article 4 of sign the instrument ratifying the Agreement. On 10 July
which provided: 1985, these minority union members with respondent union
4. The COMPANY agrees to implement in full Wage Order No. acting on their behalf, applied for a writ of execution of the
6 effective May 30, 1985, and agrees to withdraw the Motion Council's Order. 6
for Reconsideration which it filed with the National Wages Petitioner opposed the Motion for a writ of execution,
Council in connection with the Application for Exemption. In contending that the Council's approval of its deferred
consideration, the UNION, its officers and members, agrees compliance with the implementation of the Wage
not to demand or ask from the COMPANY the corresponding Order, 7 together with the majority ratification of the
differential pay from November 1, 1984 to May 29 Agreement by the individual workers, 8 bound the non-
ratifying union members represented by respondent union.
Respondent union countered that the Agreement despite Accordingly, the benefits under Wage Order No. 6 due them
the majority ratification was not binding on the union by virtue of the final and executory Order of the National
members who had not consented thereto, upon the ground Wages Council dated March 4, 1985 subsists in their favor
that ratification or non-ratification of the Agreement, and can be subject for execution.
involving as it did money claims, was a personal right under
the doctrine of "Kaisahan ng Manggagawa sa La Campana v. xxx xxx xxx
Honorable Judge Ulpiano Sarmiento and La Campana." 9 The writ of execution dated September 20, 1985 ... was
Finding for the Union members represented by respondent clearly based on the final Order of the National Wages
union, the then Ministry (now Department) of Labor and Council sought to be enforced in a Motion for Execution filed
Employment, in an order dated 20 September 1985 issued by by the union. While the Return-to-Work Agreement was
National Capital Region Director Severo M. Pucan, directed mentioned in the writ, the respondent allegedly failing 'to
the issuance of a writ of execution and required petitioner to comply with the above-stated Agreement which had become
pay the minority members of respondent union their claims final and executory,' we find the Agreement indeed not the
for differential pay under Wage Order No. 6, which totalled basis for the issuance of the writ.
P90,090.00. 10 WHEREFORE, the Order of the Director dated January 15,
Petitioner then moved to quash the writ of execution upon 1986 is hereby set aside. Let a writ of execution be issued
the ground that the Council's order could not be the subject immediately to enforce the payment of the differential pay
of a writ of execution, having been superseded by the under Wage Order No. 6 from November 1, 1984 to May 29,
Agreement. 11 In another Order dated 15 January 1986. 1985 of the 100 workers who did not sign any waiver, in
Director Pucan, reversed his previous order and sustained compliance with the final Order of the National Wages
petitioner's contention that the minority union members Council. The entire record is hereby remanded to the
represented by respondent union were bound by the majority Regional Director, National Capital Region for this purpose.
ratification, holding that the Council's 20 September 1985 SO ORDERED . 13
(Emphasis supplied)
Order sought to be enforced by writ of execution should not
have been issued. 12 Not pleased with the adverse decision of the Minister,
petitioner filed the instant Petition for Certiorari.
Respondent union filed a Motion for Reconsideration, which
was treated as an appeal to the Minister of Labor. In a Petitioner argues once again that the National Wages
decision dated 19 December 1986, the Minister of Labor set Council's Order of 4 March 1985 did not become final and
aside the appealed Order of Director Pucan. The Minister's executory because it had been superseded by the Return-to-
decision held that: Work Agreement signed by petitioner corporation and the
union. At the same time, petitioner also argues that the
It is undisputed that the 100 numbers did not sign and ratify Return-to-Work Agreement could not be enforced by a writ of
the Return-to-Work Agreement and therefore they cannot be execution, because it was a contractual document and not
bound by the waiver of benefits therein. This, in essence, is the final and executory award of a public official or agency.
the ruling of the High Tribunal in the La Campana case.
Petitioner's contention is more clever than substantial. The authority to compromise cannot lightly be presumed and
core issue is whether or not Article 4 of the Return-to-Work should be duly established by evidence. (Esso Philippine, Inc.
Agreement quoted above, could be deemed as binding upon v. MME, 75 SCRA 91).
all members of the union, without regard to whether such
members had or had not in fact individually signed and As aptly held by the Secretary of Labor, the records are
ratified such Agreement. Article 4 of that Agreement bereft of showing that the individual members consented to
provided for, apparently, a quid pro quo arrangement: the said agreement. Now were the members informed of the
petitioner agreed to implement in full Wage Order No. filing of the civil case before the Court of First Instance. If the
6 starting 30 May 1985 (and not 1 November 1984, as parties to said agreement acted in good faith, why did they
provided by the terms of Wage Order No. 6) and to withdraw not furnish the Office of the president with a copy of the
its previously filed Motion for Reconsideration with the agreement when they knew all the while that the labor case
National Wages Council; in turn, the union and its members was then pending appeal therein? Undoubtedly, the
would refrain from requiring the company to pay the compromise agreement was executed to the prejudice of the
differential pay (increase in pay) due under Wage Order No. 6 complainants who never consented thereto, hence, it is null
corresponding to the preceding seven-month period from 1 and void. The judgment based on such agreement does not
November 1984 to 29 May 1985. bind the individual members or complainants who are not
parties thereto nor signatories therein.
Thus, Kaisahan ng Mangagawa sa La Campana v. Sarmiento,
(supra) is practically on all fours with the instant case. In La Money claims due to laborers cannot be the object of
Campana, what was at stake was the validity of a settlement or compromise effected by a union or counsel
compromise agreement entered into between the union and without the specific individual consent of each laborer
the company. In that compromise agreement, the union concerned. The beneficiaries are the individual complainants
undertook to dismiss and withdraw the case it had filed with themselves. The union to which they belong can only assist
the then Court of Industrial Relations, and waived its right to them but cannot decide for them.Awards in favor of laborers
execute any final judgment rendered in that case. The CIR after long years of litigation must be attended to with mutual
had in that case, rendered a judgment directing openness and in the best of faith. (Danao Development Corp.
reinstatement of dismissed workers and payment of ten (10) v. NLRC, 81 SCRA 487-505). Only thus can we really give
years backwages. The Secretary of Labor held that that meaning to the constitutional mandate of giving laborers
compromise agreement was void for lack of ratification by maximum protection and security. It is about time that the
the individual members of the union. The Supreme Court judgment in Case No. 584-V(7) be fully implemented
upheld the decision of the Secretary of Labor, stating among considering the unreasonable delay in the satisfaction
other things that: thereof. This unfortunate incident may only weaken the
workingmen's faith in the judiciary's capacity to give them
Generally, a judgment on a compromise agreement puts an justice when due. 14
end to a litigation and is immediately executory. However,
the Rules [of Court] require a special authority before an xxx xxx xxx
attorney can compromise the litigation of [his] clients. The (Emphasis supplied)
In the instant case, there is no dispute that private requiring petitioner to comply with Wage Order No. 6 from 1
respondents had not ratified the Return-to-Work Agreement. November 1984 onward must be regarded as having become
It follows, and we so hold, that private respondents cannot be final and executory insofar as the non-consenting union
held bound by the Return-to-Work Agreement. The waiver of members were concerned. Enforcement by writ of execution
money claims, which in this case were accrued money of that Order was, therefore, proper. It follows further that the
claims, by workers and employees must be regarded as a decision of 19 December 1986 of the respondent Minister of
personal right, that is, a right that must be personally Labor, far from constituting a grave abuse of discretion or an
exercised. For a waiver thereof to be legally effective, the act without or in excess of jurisdiction, was fully in
individual consent or ratification of the workers or employees accordance with law as laid down in La Campana and here
involved must be shown. Neither the officers nor the majority reiterated.
of the union had any authority to waive the accrued rights
pertaining to the dissenting minority members, even under a WHEREFORE, the Court Resolved to DISMISS the Petition
collective bargaining agreement which provided for a "union for certiorari for lack of merit. Costs against petitioner.
shop." The same considerations of public policy which
impelled the Court to reach the conclusion it did in La
Campana, are equally compelling in the present case. The
members of the union need the protective shield of this
doctrine not only vis-a-vis their employer but also, at
times, vis-a-vis the management of their own union, and at
other times even against their own imprudence or
impecuniousness.

It should perhaps be made clear that the Court is not here


saying that accrued money claims can never be effectively
waived by workers and employees. What the Court is saying
is that, in the present case, the private respondents never
purported to waive their claims to accrued differential pay.
Assuming that private respondents had actually and
individually purported to waive such claims, a second
question would then have arisen: whether such waiver could
be given legal effect or whether, on the contrary, it was
violative of public policy. 15 Fortunately, we do not have to
address this second question here.

Since Article 4 of the Return-to-Work Agreement was not


enforceable against the non-consenting union members, the
Order of the National Wages Council dated 4 March 1985
Aquilino Magsalin, Pedro Manibo, Ricardo Borja, Benjamin
Camitan, Alicia M. San Pedro, and Felomena Tolin were
employed as dispatcher, warehouseman, issue monitor,
foreman, jacks cementer and outer sole attacher,
respectively.

On August 26, 1994, Rubberworld filed with the Department


of Labor and Employment a notice of temporary shutdown of
operations to take effect on September 26, 1994. Before the
effectivity date, however, Rubberworld was forced to
prematurely shutdown its operations.

On November 11, 1994, private respondents filed with the


National Labor Relations Commission a complaint 2against
G.R. No. 128003 July 26, 2000 petitioner for illegal dismissal and non-payment of separation
pay.
RUBBERWORLD [PHILS.], INC., and JULIE YAO
ONG, petitioner, On November 22, 1994, Rubberworld filed with the Securities
vs. and Exchange Commission (SEC) a petition for declaration of
NATIONAL LABOR RELATIONS COMMISSION, AQUINO suspension of payments with a proposed rehabilitation plan. 3
MAGSALIN, PEDRO MAIBO, RICARDO BORJA, ALICIA
On December 28, 1994, SEC issued the following order:
M. SAN PEDRO AND FELOMENA B. TOLIN, respondents.
"Accordingly, with the creation of the Management
DECISION
Committee, all actions for claims against Rubberworld
PARDO, J.: Philippines, Inc. pending before any court, tribunal, office,
board, body, Commission or sheriff are hereby deemed
What is before the Court for resolution is a petition to annul SUSPENDED.
the resolution of the National Labor Relations Commission
(NLRC),1 affirming the labor-arbiter's award but deleting the "Consequently, all pending incidents for preliminary
moral and exemplary damages. injunctions, writ or attachments, foreclosures and the like are
hereby rendered moot and academic.
The facts are as follows:
"SO ORDERED."4
Petitioner Rubberworld (Phils.), Inc. [hereinafter
Rubberworld], a corporation established in 1965, was On January 24, 1995, petitioners submitted to the labor
engaged in manufacturing footwear, bags and garments. arbiter a motion to suspend the proceedings invoking the
SEC order dated December 28, 1994. The labor arbiter did
not act on the motion and ordered the parties to submit their The issue is whether or not the Department of Labor and
respective position papers. Employment, the Labor Arbiter and the National Labor
Relations Commission may legally act on the claims of
On December 10, 1995, the labor arbiter rendered a decision, respondents despite the order of the Securities and Exchange
which provides: Commission suspending all actions against a company under
"In the light of the foregoing, respondents are hereby rehabilitation by a management committee created by the
declared guilty of ILLEGAL SHUTDOWN and that respondents Securities and Exchange Commission.
are ordered to pay complainants their separation pay Presidential Decree No. 902-A is clear that "all actions for
equivalent to one (1) month pay for every year of service. claims against corporations, partnerships or associations
Considering the malicious act of closing the business under management or receivership pending before any court,
precipitately without due regard to the rights of tribunal, board or body shall be suspended accordingly." The
complainants, moral damages and exemplary damage in the law did not make any exception in favor of labor claims. 8
sum of P 50,000.00 and P 30,000.00 respectively is hereby "The justification for the automatic stay of all pending actions
awarded for each of the complainants. for claims is to enable the management committee or the
Finally 10 % of all sums owing to complainants is hereby rehabilitation receiver to effectively exercise its/his powers
adjudged as attorney's fees. free from any judicial or extra judicial interference that might
unduly hinder or prevent the 'rescue' of the debtor company.
SO ORDERED."5 To allow such other actions to continue would only add to the
burden of the management committee or rehabilitation
On February 5, 1996, petitioners appealed to the National receiver, whose time, effort and resources would be wasted
Labor Relations Commission (NLRC) alleging abuse of in defending claims against the corporation instead of being
discretion and serious errors in the findings of facts of the directed toward its restructuring and rehabilitation." 9
labor arbiter.
Thus, the labor case would defeat the purpose of an
On August 30, 1996, NLRC issued a resolution, the dispositive automatic stay.1wphi1 To rule otherwise would open the
portion of which reads: floodgates to numerous claims and would defeat the rescue
efforts of the management committee.
"PREMISES CONSIDERED, the decision appealed from is
hereby, AFFIRMED with MODIFICATION in that the award of Besides, even if an award is given to private respondents, the
moral and exemplary damages is hereby, DELETED. ruling could not be enforced as long as petitioner is under
management committee.10
SO ORDERED."6
This finds ratiocination in that the power to hear and decide
On November 20, 1996, NLRC denied petitioners' motion for
labor disputes is deemed suspended when the Securities and
reconsideration.
Exchange Commission puts the corporation under
Hence, this petition.7 rehabilitation.
Thus, when NLRC proceeded to decide the case despite the ALVAREZ, CRESENCIO FLORES, ALFREDO PERMACIO,
SEC suspension order, the NLRC acted without or in excess of CRESENCIO ALVIAR, HERNANI SURILLA, DIOSDADO
its jurisdiction to hear and decide cases. As a consequence, SOLON, CENON ALBURO, ZACARIAS ORTIZ, EUSEBIO
any resolution, decision or order that it rendered or issued BUSTILLO, GREGORIO BAGO, JERRY VARGAS, EDUARDO
without jurisdiction is a nullity. BUENO, PASCUAL HUDAYA, ROGELIO NIETES, and
REYNALDO NIETES, respondents.
WHEREFORE, the petition is hereby GRANTED. The decision
of the labor arbiter dated December 10, 1995 and the NLRC
resolution dated August 30, 1996, are SET ASIDE.
PUNO, J.:
No costs.
In this petition for certiorari, petitioner Kanlaon Construction
SO ORDERED. Enterprises Co., Inc. seeks to annul the decision of
respondent National Labor Relations Commission, Fifth
Division and remand the cases to the Arbitration Branch for a
retrial on the merits.

Petitioner is a domestic corporation engaged in the


construction business nationwide with principal office at No.
11 Yakan St., La Vista Subdivision, Quezon City. In 1988,
petitioner was contracted by the National Steel Corporation
to construct residential houses for its plant employees in
Steeltown, Sta. Elena, Iligan City. Private respondents were
G.R. No. 126625 September 18, 1997
hired by petitioner as laborers in the project and worked
KANLAON CONSTRUCTION ENTERPRISES CO., under the supervision of Engineers Paulino Estacio and Mario
INC., petitioner, Dulatre. In 1989, the project neared its completion and
vs. petitioner started terminating the services of private
NATIONAL LABOR RELATIONS COMMISSION, 5TH respondents and its other employees.
DIVISION, and BENJAMIN RELUYA, JR., EDGARDO
In 1990, private respondents filed separate complaints
GENAYAS, ERNESTO CANETE, PROTACIO ROSALES,
against petitioner before Sub-Regional Arbitration Branch XII,
NESTOR BENOYA, RODOLFO GONGOB, DARIO BINOYA,
Iligan City. Numbering forty-one (41) in all, they claimed that
BENJAMIN BASMAYOR, ABELARDO SACURA,
petitioner paid them wages below the minimum and sought
FLORENCIO SACURA, ISABELO MIRA, NEMESIO LACAR,
payment of their salary differentials and thirteenth-month
JOSEPH CABIGKIS, RODRIGO CILLON, VIRGILIO
pay. Engineers Estacio and Dulatre were named co-
QUIZON, GUARINO EVANGELISTA, ALEJANDRO GATA,
respondents.
BENEDICTO CALAGO, NILO GATA, DIONISIO PERMACIO,
JUANITO SALUD, ADOR RIMPO, FELIPE ORAEZ, JULIETO
TEJADA, TEOTIMO LACIO, ONOFRE QUIZON, RUDY
Some of the cases were assigned to Labor Arbiter Guardson upon by the parties or proved by evidence." (Yu Chin Piao v.
A. Siao while the others were assigned to Labor Arbiter Lim Tuaco, 33 Phil. 92; Benedicto v. Yulo, 26 Phil. 160)
Nicodemus G. Palangan. Summonses and notices of
preliminary conference were issued and served on the two WHEREFORE, premises considered, the respondent is hereby
engineers and petitioner through Engineer Estacio. The ordered to pay the individual claims of the above-named
preliminary conferences before the labor arbiters were complainants representing their wage differentials within ten
attended by Engineers Estacio and Dulatre and private (10) days from receipt of this order.
respondents. At the conference of June 11, 1990 before The Fiscal Examiner II of this Branch is likewise hereby
Arbiter Siao, Engineer Estacio admitted petitioner's liability to ordered to compute the individual claims of the herein
private respondents and agreed to pay their wage complainants.
differentials and thirteenth-month pay on June 19, 1990. As a
result of this agreement, Engineer Estacio allegedly waived SO ORDERED. 3
petitioner's right to file its position paper. 1 Private
respondents declared that they, too, were dispensing with On June 29, 1990, Arbiter Palangan issued a similar order,
their position papers and were adopting their complaints as thus:
their position paper. 2
When the above-entitled cases were called for hearing on
On June 19, 1990, Engineer Estacio appeared but requested June 19, 1990 at 10:00 a.m. respondent thru their
for another week to settle the claims. Labor Arbiter Siao representative manifested that they were willing to pay the
denied this request. On June 21, 1990, Arbiter Siao issued an claims of the complainants and promised to pay the same on
order granting the complaint and directing petitioner to pay June 28, 1990 at 10:30 a.m.
private respondents' claims. Arbiter Siao held:
However, when these cases were called purposely to
xxx xxx xxx materialize the promise of the respondent, the latter failed to
appear without any valid reason.
Considering the length of time that has elapsed since these
cases were filed, and what the complainants might think as Considering therefore that the respondent has already
to how this branch operates and/or conducts its proceedings admitted the claims of the complainants, we believe that the
as they are now restless, this Arbiter has no other alternative issues raised herein have become moot and academic.
or recourse but to order the respondent to pay the claims of
WHEREFORE premises considered, the above-entitled cases
the complainants, subject of course to the computation of the
are hereby ordered Closed and Terminated, however, the
Fiscal Examiner II of this Branch pursuant to the oral
respondent is hereby ordered to pay the complainants their
manifestation of respondent. The Supreme Court ruled:
differential pay and 13th-month pay within a period of ten
"Contracts though orally made are binding on the parties."
(10) days from receipt hereof based on the employment
(Lao Sok v. Sabaysabay, 138 SCRA 134).
record on file with the respondent.
Similarly, this Branch would present in passing that "a court
SO ORDERED. 4
cannot decide a case without facts either admitted or agreed
Petitioner appealed to respondent National Labor Relations D. The NLRC committed manifest error in relying merely on
Commission. It alleged that it was denied due process and private, respondents' unsubstantiated complaints to hold
that Engineers Estacio and Dulatre had no authority to petitioner liable for damages. 5
represent and bind petitioner. Petitioner's appeal was filed by
one Atty. Arthur Abundiente. In brief, petitioner alleges that the decisions of the labor
arbiters and respondent Commission are void for the
In a decision dated April 27, 1992, respondent Commission following reasons: (1) there was no valid service of summons;
affirmed the orders of the Arbiters. (2) Engineers Estacio and Dulatre and Atty. Abundiente had
no authority to appear and represent petitioner at the
Petitioner interposed this petition alleging that the decision of hearings before the arbiters and on appeal to respondent
respondent Commission was rendered without jurisdiction Commission; (3) the decisions of the arbiters and respondent
and in grave abuse of discretion. Petitioner claims that: Commission are based on unsubstantiated and self-serving
I evidence and were rendered in violation of petitioner's right
to due process.
THE QUESTIONED DECISION RENDERED BY THE HONORABLE
COMMISSION IS A NULLITY, IT HAVING BEEN ISSUED Service of summons in cases filed before the labor arbiters is
WITHOUT JURISDICTION; governed by Sections 4 and 5 of Rule IV of the New Rules of
Procedure of the NLRC. They provide:
II
Sec. 4. Service of Notices and Resolutions. (a) Notices or
PUBLIC RESPONDENT NATIONAL LABOR RELATIONS summons and copies of orders, resolutions or decisions shall
COMMISSION GRAVELY ABUSED ITS DISCRETION IN be served on the parties to the case personally by the bailiff
ARBITRARILY, CAPRICIOUSLY AND WHIMSICALLY MAKING THE or duly authorized public officer within three (3) days from
FOLLOWING CONCLUSIONS BASED NOT ON FACTS AND BUT receipt thereof or by registered mail; Provided that where a
ON SPECULATION, SURMISE AND EVIDENCE CONJECTURE: party is represented by counsel or authorized representative,
service shall be made on such counsel or authorized
A. Petitioner was deprived of the constitutional right to due representative; provided further that in cases of decision and
process of law when it was adjudged by the NLRC liable final awards, copies thereof shall be served on both the
without trial on the merits and without its knowledge; parties and their counsel; provided finally, that in case where
the parties are so numerous, service shall be made on
B. The NLRC erroneously, patently and unreasonably
counsel and upon such number of complainants as may be
interpreted the principle that the NLRC and its Arbitration
practicable, which shall be considered substantial compliance
Branch are not strictly bound by the rules of evidence;
with Article 224 (a) of the Labor Code, as amended.
C. There is no legal nor actual basis in the NLRC's ruling that
xxx xxx xxx
petitioner is already in estoppel to disclaim the authority of
its alleged representatives. Sec. 5. Proof and completeness of service. The return
is prima facie proof of the facts indicated therein.Service by
registered mail is complete upon receipt by the addressee or of petitioner. Summons for petitioner was therefore validly
his agent. . . . served on him.

Under the NLRC Rules of Procedure, summons on the Engineer Estacio's appearance before the labor arbiters and
respondent shall be served personally or by registered mail his promise to settle the claims of private respondents is
on the party himself. If the party is represented by counsel or another matter.
any other authorized representative or agent, summons shall
be served on such person. The general rule is that only lawyers are allowed to appear
before the labor arbiter and respondent Commission in cases
It has been established that petitioner is a private domestic before them. The Labor Code and the New Rules of Procedure
corporation with principal address in Quezon City. The of the NLRC, nonetheless, lists three (3) exceptions to the
complaints against petitioner were filed in Iligan City and rule, viz:
summonses therefor served on Engineer Estacio in Iligan City.
The question now is whether Engineer Estacio was an agent Sec. 6. Appearances. . . . .
and authorized representative of petitioner. A non-lawyer may appear before the Commission or any
To determine the scope or meaning of the term "authorized Labor Arbiter only if:
representative" or "agent" of parties on whom summons may (a) he represents himself as party to the case;
be served, the provisions of the Revised Rules of Court may
be resorted to. 6 (b) he represents the organization or its members, provided
that he shall be made to present written proof that he is
Under the Revised Rules of Court, 7 service upon a private properly authorized; or
domestic corporation or partnership must be made upon its
officers, such as the president, manager, secretary, cashier, (c) he is a duly-accredited member of any legal aid office
agent, or any of its directors. These persons are deemed so duly recognized by the Department of Justice or the
integrated with the corporation that they know their Integrated Bar of the Philippines in cases referred thereto by
responsibilities and immediately discern what to do with any the latter. . . . 10
legal papers served on them. 8
A non-lawyer may appear before the labor arbiters and the
In the case at bar, Engineer Estacio, assisted by Engineer NLRC only if: (a) he represents himself as a party to the case;
Dulatre, managed and supervised the construction (b) he represents an organization or its members, with
project. 9 According to the Solicitor General and private written authorization from them: or (c) he is a duly-accredited
respondents, Engineer Estacio attended to the project in member of any legal aid office duly recognized by the
Iligan City and supervised the work of the employees thereat. Department of Justice or the Integrated Bar of the Philippines
As manager, he had sufficient responsibility and discretion to in cases referred to by the latter. 11
realize the importance of the legal papers served on him and
to relay the same to the president or other responsible officer Engineers Estacio and Dulatre were not lawyers. Neither were
they duly-accredited members of a legal aid office. Their
appearance before the labor arbiters in their capacity as special power of attorney or express consent, enter into a
parties to the cases was authorized under the first exception compromise agreement with the opposing party in full or
to the rule. However, their appearance on behalf of petitioner partial discharge of a client's claim.
required written proof of authorization. It was incumbent
upon the arbiters to ascertain this authority especially since The promise to pay allegedly made by Engineer Estacio was
both engineers were named co-respondents in the cases made at the preliminary conference and constituted an offer
before the arbiters. Absent this authority, whatever to settle the case amicably. The promise to pay could not be
statements and declarations Engineer Estacio made before presumed to be a single unilateral act, contrary to the claim
the arbiters could not bind petitioner. of the Solicitor General. 14 A defendant's promise to pay and
settle the plaintiff's claims ordinarily requires a reciprocal
The appearance of Atty. Arthur Abundiente in the cases obligation from the plaintiff to withdraw the complaint and
appealed to respondent Commission did not cure Engineer discharge the defendant from liability. 15 In effect, the offer to
Estacio's representation. Atty. Abundiente, in the first place, pay was an offer to compromise the cases.
had no authority to appear before the respondent
Commission. The appellants' brief he filed was verified by In civil cases, an offer to compromise is not an admission of
him, not by petitioner. 12 Moreover, respondent Commission any liability, and is not admissible in evidence against the
did not delve into the merits of Atty. Abundiente's appeal and offeror. 16 If this rule were otherwise, no attempt to settle
determine whether Engineer Estacio was duly authorized to litigation could safely be made. 17 Settlement of disputes by
make such promise. It dismissed the appeal on the ground way of compromise is an accepted and desirable practice in
that notices were served on petitioner and that the latter was courts of law and administrative tribunals.18 In fact, the Labor
estopped from denying its promise to pay. Code mandates the labor arbiter to exert all efforts to enable
the parties to arrive at an amicable settlement of the dispute
Nevertheless, even assuming that Engineer Estacio and Atty. within his jurisdiction on or before the first hearing. 19
Abundiente were authorized to appear as representatives of
petitioner, they could bind the latter only in procedural Clearly, respondent Commission gravely abused its discretion
matters before the arbiters and respondent Commission. in affirming the decisions of the labor arbiters which were not
Petitioner's liability arose from Engineer Estacio's alleged only based on unauthorized representations, but were also
promise to pay. A promise to pay amounts to an offer to made in violation of petitioner's right to due process.
compromise and requires a special power of attorney or the Section 3 of Rule V of the NLRC Rules of Procedure provides:
express consent of petitioner. The authority to compromise
cannot be lightly presumed and should be duly established Sec. 3. Submission of Position Papers/Memorandum.
by evidence.13 This is explicit from Section 7 of Rule III of the Should the parties fail to agree upon an amicable settlement,
NLRC Rules of Procedure, viz: in whole or in part, during the conferences, the Labor Arbiter
shall issue an order stating therein the matters taken up and
Sec. 7. Authority to bind party. Attorneys and other agreed upon during the conferences and directing the parties
representatives of parties shall have authority to bind their to simultaneously file their respective verified position papers
clients in all matters of procedure; but they cannot, without a
xxx xxx xxx Division, is annulled and set aside and the case is remanded
to the Regional Arbitration Branch, Iligan City for further
After petitioner's alleged representative failed to pay the proceedings.
workers' claims as promised, Labor Arbiters Siao and
Palangan did not order the parties to file their respective SO ORDERED.
position papers. The arbiters forthwith rendered a decision on
the merits without at least requiring private respondents to
substantiate their complaints. The parties may have earlier
waived their right to file position papers but petitioner's
waiver was made by Engineer Estacio on the premise that
petitioner shall have paid and settled the claims of private
respondents at the scheduled conference. Since petitioner
reneged on its "promise," there was a failure to settle the
case amicably. This should have prompted the arbiters to
order the parties to file their position papers.

Article 221 of the Labor Code mandates that in cases before


labor arbiters and respondent Commission, they "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." The rule that respondent Commission and the
Labor Arbiters are not bound by technical rules of evidence
and procedure should not be interpreted so as to dispense
with the fundamental and essential right of due
process. 20 And this right is satisfied, at the very least, 'when
the parties are given the opportunity to submit position
papers. 21 Labor Arbiters Siao and Palangan erred in
dispensing with this requirement.

Indeed, the labor arbiters and the NLRC must not, at the
expense of due process, be the first to arbitrarily disregard
G.R. No. 116568. September 3, 1999]
specific provisions of the Rules which are precisely intended
to assist the parties in obtaining the just, expeditious and DELFIN GARCIA, doing business under the name
inexpensive settlement of labor disputes. 22 NAPCO-LUZMART, Inc., petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION and CARLITO
IN VIEW WHEREOF, the petition for certiorari is granted. The
LACSON, respondents.
decision of the National Labor Relations Commission, Fifth
DECISION memorandum order. Complainant filed a complaint for illegal
dismissal and other monetary claims but the same was
GONZAGA-REYES, J.: dismissed without prejudice. On September 1, 1993, the
Before us is a Petition for Certiorari under Rule 65 of the complainant refiled this case.[2]
Rules of Court to annul and set aside the decision of the The Labor Arbiter[3] ruled in favor of the respondent Carlito
National Labor Relations Commission[1] in NLRC CA No. L- Lacson (LACSON). Petitioner NAPCO-Luzmart (LUZMART)
001268 dated April 12, 1994 which affirmed the decision of appealed to the NLRC which affirmed the decision of the
the Sub-Regional Arbitration Branch No. I in Dagupan City Labor Arbiter after finding that the Labor Arbiter did not
finding that the private respondent Carlito Lacson was commit any reversible error. The NLRC however deleted the
constructively dismissed by the petitioner Delfin Garcia doing award of attorneys fees in favor of LACSON. Its decision,
business under the name NAPCO-LUZMART, Inc. and which adopted the conclusions of the Labor Arbiter, reads:
awarding respondent backwages and separation pay.
In finding for the complainant, the Labor Arbiter ruled:
The following facts as adopted by the National Labor
Relations Commission (NLRC) are uncontroverted: The issues to be resolved in this case are: (1) whether or
not the complainant was dismissed from his employment; (2)
Complainant Carlito Lacson was employed on March 5, 1987 whether or not he is entitled to his claim for overtime
as boiler operator technician by Northwest Agro-Marine services, separation pay, 13th month pay, premium pay for
Products Corporation (NAPCO). On December 12, 1990 working on holidays and rest days, separation pay,
respondent Luzmart, Inc., acquired NAPCO in a foreclosure 13th month pay and service incentive leave pay; and, (3)
sale. Both companies were managed by respondent Delfin whether or not the complainant is considered an employee of
Garcia. the respondents since March 1987.
On January 28, 1993, there was a mauling incident which The first issue: Respondent Delfin Garcia insists that he did
involved the complainant and Julius Z. Viray, his immediate not dismiss the complainant and that he can return to his
supervisor and allegedly a friend and compadre of work after his one month suspension, (affidavit of respondent
respondent Garcia. As complainant suffered injuries as a Garcia, marked as Annex H of his position paper). On the
result thereof he reported the matter to police authorities other hand, complainant Lacson maintains that he reported
and he sought treatment at the Teofilo Sison Memorial for work several times but respondent Garcia refused to take
Provincial Hospital. Both the complainant and Viray were him back and that the former told him to look for another job.
asked to explain their sides. After the submission of the
written explanations, Delfin Garcia suspended both of them Let us scrutinize the evidence. The incident involving the
from work for a period of one month effective April 15, complainant and Julius Viray, also an employee of the
1993. In the same suspension order, complainant was respondents, wherein Viray allegedly mauled the
further directed to explain in writing why he should not be complainant, happened on January 28, 1993. On February
dealt with disciplinary action or terminated for his continued 1993, the complainant submitted his handwritten explanation
absences from February 15, 1993 up to the date of the blaming Viray as the aggressor. According to the
complainant, Viray was drunk at the time of the incident and he was paid accordingly. Is he entitled to his claim for
although he avoided Viray, the latter armed with a lead pipe, 13th monthpay, service incentive leave pay, vacation in sick
followed him and wanted to kill him (Annex C leave pay and separation pay? Respondents maintain that
complainant). Viray also submitted his handwritten since the complainant was employed by them only on
explanation on February 2, 1993 (see Annex E-1 of February 1, 1991, he has no right to claim benefits that arose
respondents position paper). Viray only stated that a before his employment with them. That since he was not
heated argument transpired. On March 31, 1993, dismissed from his employment, he is not also entitled to his
respondent Garcia issued a Memorandum suspending both claim for separation pay. (The resolution of this issue will
the complainant and Viray for one (1) month effective April also resolve the second issue)
15, 1993 and at the same time required the complainant to
explain why he should not be terminated for being absent Respondents argue that the services of the complainant with
from Feb. 15, 1993, (Annex F, respondents). The question NAPCO since March 1987, cannot be credited or counted to
is, why did it take respondent Delfin Garcia one (1) month or his length of service with LUZMART because his subsequent
more to decide and issue an order suspending the employment with LUZMART is a new employment as shown in
complainant and Viray? Why did he not suspend the two his employment contract (Annex D respondents) with
immediately after the incident? This leads credence to the LUZMART.
complainants allegation that he reported for work after In the case of MDII Supervisors and Confidential Employees
submitting his explanation but respondent Garcia refused to Association (FFW) vs. Presidential Assistant on Legal Affairs,
admit him back and told him to take a vacation or to look for 79 SCRA 40 (1977), the Supreme Court ruled that:
another work, hence he decided to file a complaint against
him on Feb. 4, 1993, which was later dismissed without xxx And there is no law which requires the purchaser to
prejudice, the reason for the dismissal of which was not absorb the employees of the selling corporation.
explained to us by the complainant. Moreover, it is true that
the complainant failed to report for work since Feb. 15, 1993, As there is no such law, the most that the purchasing
why did respondent Garcia not issue an order or company may do, for purposes of public policy and social
memorandum after the complainant failed to report for a justice, is to give preference to the qualified separated
number of days and directing the complainant to report employees of the selling company, who in their judgment are
immediately otherwise his employment will be necessary in the continued operation of the business
terminated? We also agree with the complainants argument establishment. This RCAM did. It required private
that the respondents should not have asked him to explain respondents to reapply as new employees as a condition for
his alleged failure to report for work since Feb. 15, 1993, rehiring subject to the usual probationary status, the latters
because he has already filed a complaint against Garcia past services with the petitioners, transferors not recognized
earlier. (San Felipe Neri School of Mandaluyong, Inc., et. Al. Vs. NLRC,
Roman Catholic Archbishop of Manila (RCAM), et. al., G.R. No.
The second issue; Annexes G, G-1 to G-14 of the 78350, Sept. 11, 1991.).
respondents, which are samples of respondents payroll, show
that whenever the complainant rendered overtime services,
Except for his bare allegation that LUZMART was only LUZMARTs motion for reconsideration [5] was denied hence,
organized by the controlling stockholders of NAPCO to this petition wherein LUZMART claims that the NLRC
acquire or gain control of the latter, the complainant did not committed grave abuse of discretion in holding that LACSON
present sufficient evidence to prove his allegation, LUZMART was illegally dismissed.
is an entirely new corporation or entity with a distinct
personality from NAPCO, and is not an alter ego of In support of its petition, LUZMART claims that LACSON was
NAPCO. Therefore, LUZMART is not under obligation to not dismissed but was merely suspended as shown by the
absorb the workers of NAPCO or to absorb the length of March 31, 1993 memorandum.[6] His suspension was a
service earned by its employees. consequence of the imposition of disciplinary measures on
him as fighting within the company premises constitutes
The respondents are therefore correct in their assertion that serious misconduct and disorderly behavior. The fact that
they should not be answerable for the complainants claim LUZMART did not immediately suspend him after the fighting
for benefits that may be due him before January 1, 1991. incident does not establish that he was dismissed from his
employment as there is no law which requires an employer to
As we have discussed earlier, the complainant herein was immediately rule on any infraction under investigation after
constructively dismissed from his employment by respondent the filing of the explanation of the person under
Delfin Garcia because of the latters refusal to admit him investigation. Neither is LACSON entitled to backwages nor
back to work inspite of the complainants insistence to separation pay as these are only granted to employees who
resume his work after he has given his explanation. have been illegally dismissed from work and not to
On appeal, respondent contends that the Labor Arbiter erred employees like LACSON who abandoned his employment as
in awarding backwages to the complainant from February 1, he failed to report to work from February 15, 1993 to March
1993 up to the date of the promulgation of the decision, and 31, 1993.[7]
in awarding separation pay of one month pay for every year We resolve to affirm the judgment of the NLRC.
of service.
LUZMARTs claim that LACSON was merely suspended and
We are in full accord with the Labor Arbiters conclusion that was still employed by LUZMART does not convince us that
the complainant was constructively dismissed by the LACSON was not dismissed from his employment. Said claim
respondent Delfin Garcia when he refused to admit the was a mere afterthought to preempt or thwart the impending
complainant despite his insistence to go back to work. illegal dismissal case filed by LACSON against LUZMART. As
However, we delete the award of attorneys fees as this is not found by the labor arbiter, LACSONs failure to report to work
a case of unlawful withholding of wages. was due to LUZMARTs refusal to admit him back. In fact,
LUZMART told him to go on vacation or to look for other work.
[8]
WHEREFORE, premises considered, the appealed decision is
modified by deleting the award of attorneys fees. In all
other respect, the same is affirmed. LACSONs dismissal is clearly established by the following
chronology of events: The mauling incident occurred on
SO ORDERED.[4] January 28, 1993. LACSON submitted his written explanation
of the event on February 1, 1993. On February 4, 1993, acts from which an employee may be deduced as having no
LACSON attempted to report for work but LUZMART refused more intention to work.[16] Such intent to discontinue the
to admit him. On February 11, 1993, LACSON filed an action employment must be shown by clear proof that it was
for illegal dismissal with the NLRC. [9] On April 13, 1993, deliberate and unjustified.[17]
LUZMART sent LACSON the memorandum ordering LACSONs
suspension dated on March 31, 1993. By this time, LUZMART LACSONs absence from work was not without a valid
already knew of the pending illegal dismissal case against it reason. It was petitioner who did not allow him to work and
as it was already directed by the NLRC to submit its position in fact told him to go on vacation or to look for other
paper on April 5, 1993. LUZMARTs reliance on the March 31, work. This is tantamount to a constructive dismissal which is
1993 memorandum[10] and the February 1-15, 1993 defined as a quitting because continued employment is
payroll[11] to prove that LACSON was merely suspended is rendered impossible, unreasonable or unlikely; as an offer
therefore unavailing. The March 31, 1993 memorandum is at involving a demotion in rank and diminution in pay [18] Since
most self-serving; a ploy to cover up the dismissal of LACSON LACSON was denied entry into his workplace, it was
since this was issued after LUZMART had knowledge of the impossible for him to return to work. It would be unjust to
illegal dismissal case filed against it by LACSON on February allow herein petitioners to claim as a ground for
11, 1993. Likewise, the veracity of the February 1-15, 1993 abandonment a situation which they themselves had brought
payroll that purportedly shows that LACSON was included in about.[19] Moreover, LACSONs filing of the complaint for
LUZMARTs payroll is of doubtful probative value. First of all, illegal dismissal on February 11, 1993, or seven days after his
it does not contain a certification by Charito Fernandez at its alleged abandonment, negates said charge. It is highly
back page, unlike the other payrolls [12] attached as annexes illogical for an employee to abandon his employment and
to LUZMARTs petition. Secondly, said payroll does not thereafter file a complaint for illegal dismissal. [20]
contain the signatures of the other employees as proof that We also do not agree with LUZMART that LACSON gave just
they received their salaries for the said period. Given these cause for the imposition of disciplinary measures upon
circumstances, both documents appear to have been him. Although fighting within company premises may
prepared in contemplation of the pending illegal dismissal constitute serious misconduct under Article 282 [21] of the
case filed against LUZMART. Labor Code and may be a just cause to terminate ones
The contention that LACSON abandoned his employment is employment[22], every fight within company premises in
also without merit. Mere absence or failure to report for which an employee is involved would not warrant his
work, after notice to return, is not enough to amount to such dismissal. This is especially true when the employee
abandonment.[13] For a valid finding of abandonment, two concerned did not instigate the fight and was in fact the
factors must be present, viz; (1) the failure to report for work victim who was constrained to defend himself. In the present
or absence without valid or justifiable reason; and (2) a clear case, it appears that LACSON was assaulted by Julius Viray
intention to sever the employer-employee relationship, (VIRAY), a co-employee, after they were questioned about
[14]
with the second element as the more determinative factor missing diesel fuel. LACSON attempted to avoid the conflict
being manifested by some overt acts. [15] There must be since VIRAY was intoxicated but VIRAY followed him and after
a concurrence of the intention to abandon and some overt an exchange of words, VIRAY punched him while saying
Papatayin Kita (I will kill you). After being punched a An illegally dismissed employee is entitled to 1) either
second time, LACSON punched back. He thereafter ran reinstatement or separation pay if reinstatement is no longer
towards the dressing plant after his companion, a certain viable, and 2) backwages.[25] In the present case, LACSON is
DANNY, told him to run. VIRAY was persistent and followed entitled to be reinstated, as there is no evidence to show that
LACSON and continued delivering punches at him. LACSON reinstatement is no longer possible considering LUZMARTs
ran away for a second time but VIRAY still pursued him and position in this appeal is that LACSON was never dismissed
even armed himself with a lead pipe. LACSON sustained but merely suspended. He is also entitled to backwages
wounds on his head and forehead due to VIRAYs use of the computed from the time of illegal dismissal, in this case on
lead pipe. The Medico-Legal Certificate[23] issued by the Gov. February 4, 1993[26] (not February 1, 1993 as found by the
Teofilo Sison Memorial Hospital corroborates LACSONs NLRC) up to the time of actual reinstatement, without
injuries. Given the above circumstances, it is not difficult to qualification or deduction[27]
understand why LACSON had to defend himself.
WHEREFORE, the assailed decision of the NLRC is
Even assuming that there was just cause to dismiss LACSON, AFFIRMED and the instant petition is hereby DISMISSED with
strict compliance by the employer with the demands of both the MODIFICATION that LUZMART reinstate LACSON to his
procedural and substantive due process is a condition sine former position and pay him backwages computed from the
qua non for the termination to be declared valid. The law date of illegal dismissal on February 4, 1993 up to the time of
requires that the employer must furnish the worker sought to actual reinstatement.
be dismissed with two written notices before termination of
employment can be legally effected: No pronouncement as to costs.

1. notice which apprises the employee of the particular acts SO ORDERED.


or omissions for which his dismissal is sought; and

2. the subsequent notice which informs the employee of the


employers decision to dismiss him.[24]

It is unclear whether LUZMART complied with the first


required written notice; apparently, LACSON was able to give
his account of the fight. However, even assuming that
LUZMART complied with the first written notice i.e. the charge
against LACSON with fighting within company premises, the
evidence fails to show compliance with the second notice
requirement; to inform LACSON of the decision to dismiss
him. Such failure to comply with said requirements taints
LACSONs dismissal with illegality.
ALFREDO VELOSO and EDITO LIGUATON petitioners,
vs.
DEPARTMENT OF LABOR AND EMPLOYMENT, NOAH'S
ARK SUGAR CARRIERS AND WILSON T. GO,respondents.

CRUZ, J.:p

The law looks with disfavor upon quitclaims and releases by


employees who are inveigled or pressured into signing them
by unscrupulous employers seeking to evade their legal
responsibilities. On the other hand, there are legitimate
waivers that represent a voluntary settlement of laborer's
claims that should be respected by the courts as the law
between the parties.

In the case at bar, the petitioners claim that they were forced
to sign their respective releases in favor of their employer,
the herein private respondent, by reason of their dire
necessity. The latter, for its part, insists that the petitioner
entered into the compromise agreement freely and with open
eyes and should not now be permitted to reject their solemn
commitments.

The controversy began when the petitioners, along with


several co-employees, filed a complaint against the private
respondent for unfair labor practices, underpayment, and
non-payment of overtime, holiday, and other benefits. This
was decided in favor of the complainants on October 6,1987.
The motion for reconsideration, which was treated as an
appeal, was dismissed in a resolution dated February 17,
1988, the dispositive portion of which read as follows:

WHEREFORE, the instant appeal is hereby DISMISSED and the


questioned Order affirmed with the modification that the
monetary awards to Jeric Dequito, Custodio Ganuhay
G.R. No. 87297 August 5, 1991 Conrado Mori and Rogelio Veloso are hereby deleted for
being settled. Let execution push through with respect to the
awards to Alfredo Veloso and Edito Liguaton.
On February 23, 1988, the private respondent filed a motion ... while rights may be waived, the same must not be
for reconsideration and recomputation of the amount contrary to law, public order, public policy, morals or good
awarded to the petitioners. On April 15, 1988, while the customs or prejudicial to a third person with a right
motion was pending, petitioner Alfredo Veloso, through his recognized by law. (Art. 6, New Civil Code) ...
wife Connie, signed a Quitclaim and Release for and in
consideration of P25,000.00, 1 and on the same day his ... The above-quoted provision renders the quitclaim
counsel, Atty. Gaga Mauna, manifested "Satisfaction of agreements void ab initio in their entirety since they
Judgment" by receipt of the said sum by Veloso. 2 For his obligated the workers concerned to forego their benefits,
part, petitioner Liguaton filed a motion to dismiss dated July while at the same time, exempted the petitioner from any
16, 1988, based on a Release and Quitclaim dated July liability that it may choose to reject. This runs counter to Art.
19,1988 , 3 for and in consideration of the sum of P20,000.00 22 of the new Civil Code which provides that no one shall be
he acknowledged to have received from the private unjustly enriched at the expense of another.
respondent. 4 The Court had deliberated on the issues and the arguments
These releases were later impugned by the petitioners on of the parties and finds that the petition must fail. The
September 20, 1988, on the ground that they were exception and not the rule shall be applied in this case.
constrained to sign the documents because of their "extreme The case cited is not apropos because the quitclaims therein
necessity." In an Order dated December 16, 1988, the invoked were secured by the employer after it had already
Undersecretary of Labor rejected their contention and ruled: lost in the lower court and were subsequently rejected by this
IN VIEW THEREOF, complainants Motion to Declare Quitclaim Court when the employer invoked it in a petition
Null and Void is hereby denied for lack of merit and the for certiorari. By contrast, the quitclaims in the case before
compromise agreements/settlements dated April 15, 1988 us were signed by the petitioners while the motion for
and July 19, 1988 are hereby approved. Respondents' motion reconsideration was still pending in the DOLE, which finally
for reconsideration is hereby denied for being moot and deemed it on March 7, 1989. Furthermore, the quitclaims in
academic. the cited case were entered into without leave of the lower
court whereas in the case at bar the quitclaims were made
Reconsideration of the order having been denied on March 7, with the knowledge and approval of the DOLE, which
1989, the petitioners have come to this Court oncertiorari. declared in its order of December 16, 1988, that "the
They ask that the quitclaims they have signed be annulled compromise agreement/settlements dated April 15, 1988 and
and that writs of execution be issued for the sum of July 19, 1988 are hereby approved."
P21,267.92 in favor of Veloso and the sum of P26,267.92 in
favor of Liguaton in settlement of their claims. It is also noteworthy that the quitclaims were voluntarily and
knowingly made by both petitioners even if they may now
Their petition is based primarily on Pampanga Sugar deny this. In the case of Veloso, the quitclaim he had signed
Development Co., Inc. v. Court of Industrial Relations, 5where carried the notation that the sum stated therein had been
it was held: paid to him in the presence of Atty. Gaga Mauna, his counsel,
and the document was attested by Atty. Ferdinand Magabilin,
Chief of the Industrial Relations Division of the National Art. 227. Compromise agreements. Any compromise
Capitol Region of the DOLE. In the case of Liguaton, his settlement, including those involving labor standard laws,
quitclaim was made with the assistance of his counsel, Atty. voluntarily agreed upon by the parties with the assistance of
Leopoldo Balguma, who also notarized it and later confirmed the Bureau or the regional office of the Department of Labor,
it with the filing of the motion to dismiss Liguaton's shall be final and binding upon the parties. The National
complaint. Labor Relations Commission or any court shall not assume
jurisdiction over issues involved therein except in case of
The same Atty. Balguma is the petitioners' counsel in this non-compliance thereof or if there is prima facie evidence
proceeding. Curiously, he is now challenging the very same that the settlement was obtained through fraud,
quitclaim of Liguaton that he himself notarized and invoked misrepresentation or coercion.
as the basis of Liguaton's motion to dismiss, but this time for
a different reason. whereas he had earlier argued for The petitioners cannot renege on their agreement simply
Liguaton that the latter's signature was a forgery, he has because they may now feel they made a mistake in not
abandoned that contention and now claims that the quitclaim awaiting the resolution of the private respondent's motion for
had been executed because of the petitioners' dire necessity. reconsideration and recomputation. The possibility that the
original award might have been affirmed does not justify the
"Dire necessity" is not an acceptable ground for annulling the invalidation of the perfectly valid compromise agreements
releases, especially since it has not been shown that the they had entered into in good faith and with full
employees had been forced to execute them. It has not even voluntariness. In General Rubber and Footwear Corp. vs.
been proven that the considerations for the quitclaims were Drilon, 6 we "made clear that the Court is not saying that
unconscionably low and that the petitioners had been tricked accrued money claims can never be effectively waived by
into accepting them. While it is true that the writ of execution workers and employees." As we later declared in Periquet v.
dated November 24, 1987, called for the collection of the NLRC: 7
amount of P46,267.92 each for the petitioners, that amount
was still subject to recomputation and modification as the Not all waivers and quitclaims are invalid as against public
private respondent's motion for reconsideration was still policy. If the agreement was voluntarily entered into and
pending before the DOLE. The fact that the petitioners represents a reasonable settlement, it is binding on the
accepted the lower amounts would suggest that the original parties and may not later be disowned simply because of a
award was exorbitant and they were apprehensive that it change of mind. It is only where there is clear proof that the
would be adjusted and reduced. In any event, no deception waiver was wangled from an unsuspecting or gullible person,
has been established on the part of the Private respondent or the terms of settlement are unconscionable on its face,
that would justify the annulment of the Petitioners' that the law will step in to annul the questionable
quitclaims. transaction. But where it is shown that the person making the
waiver did so voluntarily, with full understanding of what he
The applicable law is Article 227 of the Labor Code providing was doing, and the consideration for the quitclaim is credible
clearly as follows: and reasonable, the transaction must be recognized as a
valid and binding undertaking. As in this case.
We find that the questioned quitclaims were voluntarily and
knowingly executed and that the petitioners should not be
relieved of their waivers on the ground that they now feel
they were improvident in agreeing to the compromise. What
they call their "dire necessity" then is no warrant to nullify
their solemn undertaking, which cannot be any less binding
on them simply because they are laborers and deserve the
protection of the Constitution. The Constitution protects the
just, and it is not the petitioners in this case.

WHEREFORE, the petition is DISMISSED, with costs against


the petitioners. It is so ordered.

G.R. No. 105710 February 23, 1995

JAG & HAGGAR JEANS AND SPORTSWEAR


CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LAKAS
MANGGA-GAWA SA JAG, DOMINGO NAMIA, RIZALDE
FLORES, JULIETA ADRIANO, ROBERTO ALAMO, JOSE
BALDELOBAR, LILIBETH BIDES, NARCISO GARBIN,
AMELITA LEBRIAS, MARIBEL MADRID, VERONICA
MAGPILI, IMELDA NEPOMUCENO, AND DAN
VILLAMOR,respondents.
QUIASON, J.: are hereby declared to have legally lost their employment
status.
This is a petition for certiorari to set aside the Decision dated
February 26, 1992 of the National Labor Relations Likewise, for commission of illegal acts as averred in the
Commission (NLRC) in NCR Case No. 00-09-04050-88 and its affidavits of witnesses for petitioner which were not
Resolution dated April 22, 1992, denying petitioner's motion controverted by respondents, the following rank-and-file
for reconsideration. The decision held that the members of employees, to wit:
the Union who did not ratify or avail of the benefits under the
Compromise Agreement entered into between petitioner and xxx xxx xxx
the Union were not bound thereby (Rollo, pp. 32-41). In our are hereby declared to have legally lost their employment
Resolution dated June 29, 1992, we issued a temporary status.
restraining order.
The rest of the striking workers are hereby ordered to
I immediately dismantle their pickets and barricades and
In September 1988, the Lakas Manggagawa sa Jag (Union) return to work within seventy-two (72) hours from receipt of
composed of the rank-and-file employees of Jag & Haggar copy of this Decision.
Jeans and Sportswear Corporation, petitioner herein, staged a Finally, both parties are hereby enjoined to maintain
strike. Petitioner filed a petition to declare the strike illegal. the status quo prior to the strike staged by respondents
On November 29, 1988, Labor Arbiter Eduardo Madriaga (Rollo, pp. 12-14).
rendered a decision, declaring the strike illegal and ordering The affected officers and members of the Union appealed the
the dismissal of the officers, as well as the members of the decision to NLRC. On August 31, 1989, NLRC rendered its
Union who took part in the illegal strike. The dispositive decision setting aside the Labor Arbiter's decision and
portion of said decision reads as follows: ordering the reinstatement of the affected employees (Rollo,
WHEREFORE, premises considered, the strike conducted by pp. 14-15).
respondent union and individual respondents on September Acting on the motion for reconsideration filed by petitioner,
22, 1988 and subsisting to date, is hereby declared to be NLRC, on May 31, 1990 modified its earlier decision as
illegal for failure to observe the cooling-off period as agreed follows:
upon by the parties and the conduct of the strike vote as
required by law, as well as for commission of illegal acts in WHEREFORE, premises considered, the Commission's
the staging of the said strike as averred in the affidavits of Decision dated 31 August 1989, is hereby modified as
witnesses for petitioner. follows:

Accordingly, the officers of the union, to wit: 1. The following officers of the Union Norma Jocson-President
Narciso Sinag-Vice President; Gloria Gavis-Treasurer;
xxx xxx xxx
Luzviminda Guspid-Secretary; and Apolinario Sta. Ana-PRO 3. The Company shall also pay to the members of the Union
are hereby declared to have lost their employment; mentioned in item No. 3 of the Decision, namely those who
should be allowed to work, financial assistance in the amount
2. The Union Board Members and Shop Stewards may be of Two Thousand (P2,000.00) Pesos.
dismissed by respondent-appellee subject to the payment of
separation pay equivalent to one-half month for every year of xxx xxx xxx
service; and
Out of a total of 114 affected employees, 90 of them availed
3. The mere union members are directed to report for work of the benefits provided for under the Compromise
within ten (10) days from receipt of this Decision and Agreement (Rollo, pp. 16-19).
management is ordered to accept them to their former or
equivalent position. (Rollo, p. 15) On May 15, 1991, 24 of the affected employees moved for
the execution of the May 31, 1990 Decision of NLRC (Rollo, p.
Again, the aggrieved officers and members of the Union filed 19).
a motion for reconsideration while petitioner filed a
Manifestation/Motion for Clarification (Rollo, p. 15). Petitioner filed an opposition, citing the Compromise
Agreement, which had been availed of by 90 of the affected
Pending resolution of the two motions by NLRC, both parties employees (Rollo, p. 19)
agreed to negotiate a settlement and to defer the
enforcement of the decision. On September 12, 1991, Labor Arbiter Salimathar Nambi
issued an order, denying the motion for execution (Rollo, p.
On July 30, 1990, the two motions were dismissed by the 19). In the meantime, 12 of the 24 affected employees also
NLRC (Rollo, p. 15). availed of the benefits under the Compromise Agreement.
The remaining 12 employees appealed to NLRC from the
On October 23, 1990, a compromise agreement was denial of their motion for execution. On February 26, 1992,
executed and signed by petitioner and the Union represented NLRC set aside the order of Labor Arbiter Nambi and directed
by its officers (Rollo, pp. 16-18). The parties agreed that: petitioner to accept the union members to their former or
1. The Company shall pay to the officers and members of the equivalent position with back wages from July 30, 1990 until
Union named in the aforesaid decision separation pay they were reinstated (Rollo, p. 40).
equivalent to one-half (1/2) month basic pay for every year of A motion for reconsideration was filed by petitioner but this
service. was denied on April 22, 1992 (Rollo, p. 42).
2. Additionally, the Company shall pay to the officers of the On May 19, 1992, petitioner filed with this Court a petition
Union mentioned in item No. 2 of the Decision, namely the for certiorari with prayer for issuance of a restraining order
Union Board members, and Shop Stewards financial and/or writ of preliminary injunction docketed as G.R. No.
assistance in the amount of One Thousand (P1,000.00) 105184. However, the petition was dismissed by the First
Pesos. Division in a resolution dated May 27, 1992 for failure to
comply with the Revised Rules of Court and Circular Nos. 1- "Settlement of disputes by way of compromise whereby the
88 and 28-91 (G.R. No. 105184, Rollo, p. 35). parties, by making reciprocal concessions, avoid a litigation
or put an end to one already commenced, is an accepted,
On June 19, 1992, petitioner filed a motion for leave to refile nay desirable practice encouraged by the courts of law and
its petition for certiorari (G.R. No. 105710). In a resolution administrative tribunals" (Santiago v. De Guzman, 177 SCRA
dated June 29, 1992, the Third Division of this Court granted 344 [1989]).
the petition and resolved to issue a temporary restraining
order (Rollo, p. 44). The case was reassigned to the First The authority of attorneys to bind their clients is governed by
Division. Section 7, Rule IV of the New Rules of Procedure of the
National Labor Relations Commission, which provides:
II
Authority to bind party. Attorneys and other
The main issue to be resolved is whether or not the representatives of parties shall have authority to bind their
Compromise Agreement entered into by petitioner and the clients in all matters of procedure; but they cannot, without a
Union is binding upon private respondents. special power of attorney or express consent, enter into a
Petitioner contends that the Compromise Agreement was compromise agreement with the opposing party in full or
deemed ratified by the union members considering that 102 partial discharge of a client's claim (Emphasis supplied).
out of the 114 affected employees already availed of and It will be noted that the Compromise Agreement provides in
received the benefits under the said agreement and that paragraphs 2 and 3 thereof that:
private respondents were represented in all stages of the
proceedings without them questioning the authority of their 2. The union Board Members and Shop Stewards may be
union officers and their counsel. It cites the case of Betting dismissed by respondent-appellee subject to the payment of
Ushers Union (PLUM) v. Jai-alai, 101 Phil. 822 (1957) wherein separation pay equivalent to one-half month for every year of
we ruled that the "will of the majority should prevail over the service; and
minority" and which ruling was reiterated in Dionela v. Court
of Industrial Relations, 8 SCRA 832 (1963) and Chua 3. The mere union members are directed to report for work
v. National Labor Relations Commison, 190 SCRA 558 (1990). within 10 days from receipt of this Decision and management
is ordered to accept them to their former or equivalent
On the other hand, private respondents allege that for a position (Rollo, pp. 16-17).
compromise agreement to be binding upon them, a special
power of attorney or their express consent was necessary for The Decision dated May 8, 1990 ordered the reinstatement of
what was being waived or surrendered under the agreement the union members to their former or equivalent position
was their right to an employment. Such right is protected while in the case of the Union board members and shop
under the security of tenure provision of the Labor Code of stewards, petitioner was given the option to dismiss them
the Philippines and cannot be lost without due process of law subject to the payment of separation pay. However, in the
(Rollo, p. 62). Compromise Agreement, not only the union officers, board
members and shop stewards were considered dismissed from
the service but also the union members subject to the The Compromise Agreement does not apply to private
payment of separation pay and financial assistance. respondents who did not sign the Compromise Agreement,
nor avail of its benefits.
The waiver of reinstatement, like waivers of money claims,
must be regarded as a personal right which must be However, while respondents Domingo Namia and Rizalde
exercised personally by the workers themselves. "For a Flores are not bound by the terms of the Compromise
waiver thereof to be legally effective, the individual consent Agreement, they are bound by the amended decision of NLRC
or ratification of the workers or employees involved must be rendered on May 3, 1990 which provides that members of
shown. Neither the officers nor the majority of the union had the board of directors of the union may be dismissed by
any authority to waive the accrued rights pertaining to the petitioner subject to the payment of separation pay. The two
dissenting minority members, . . . . The members of the respondents did not appeal the amended decision after the
union need the protective shield of this doctrine not only vis- denial by NLRC of their motion for reconsideration thereof.
a-vis their employer but also, at times,vis-a-vis the
management of their own union, and at other times even WHEREFORE, the Decision dated February 26, 1992 of the
against their own imprudence or impecuniousaess" (General NLRC is AFFIRMED with the modification stated above with
Rubber and Footwear Corporation v. Drilon, 169 SCRA 808 respect to respondents Domingo Namia and Rizalde Flores.
[1989]). The temporary restraining order is lifted except with respect
to aforementioned respondents.
We have ruled that ". . . when it comes to individual benefits
accruing to members of a union from a favorable final SO ORDERED.
judgment of any court, the members themselves become the
real parties in interest and it is for them, rather than for the
union, to accept or reject individually the fruits of litigation"
(Esso Philippines, Inc. v. Malayang Manggagawa sa Esso
(MME), 75 SCRA 73 [1977]).

The authority to compromise cannot lightly be presumed and


should be duly established by evidence (General Rubber and
Footwear Corporation v. Drilon, supra; Kaisahan ng mga
Manggagawa sa La Campana v. Sarmiento, 133 SCRA 220,
[1984]).

We also find no reason for the union members to enter into a


compromise when the decision of NLRC ordering their
reinstatement is more advantageous to them than their
being dismissed from their jobs under said Compromise
Agreement.
MANALANG, ANGELINA QUIAMBAO, LANIE GARCIA,
ELVIRA PIEDRA, LOURDES PANLILIO, LUISA PANLILIO,
LERIZA PANLILIO, ALMA CASTRO, ALDA DAVID, MYRA T.
OLALIA, MARIFE PINLAC, NENITA DE GUZMAN, JULIE
GACAD, EVELYN MANALO, NORA PATIO, JANETH
CARREON, ROWENA MENDOZA, ROWENA MANALO,
LENY GARCIA, FELISISIMA PATIO, SUSANA SALOMON,
JOYDEE LANSANGAN, REMEDIOS AGUAS, JEANIE
LANSANGAN, ELIZABETH MERCADO, JOSELYN
MANALESE, BERNADETH RALAR, LOLITA ESPIRITU,
AGNES SALAS, VIRGINIA MENDIOLA, GLENDA SALITA,
JANETH RALAR, ERLINDA BASILIO, CORA PATIO,
ANTONIA CALMA, AGNES CARESO, GEMMA BONUS,
MARITESS OCAMPO, LIBERTY GELISANGA, JANETH
MANARANG, AMALIA DELA CRUZ, EVA CUEVAS, TERESA
MANIAGO, ARCELY PEREZ, LOIDA BIE, ROSITA CANLAS,
ANALIZA ESGUERRA, LAILA MANIAGO, JOSIE MANABAT,
ROSARIO DIMATULAC, NYMPA TUAZON, DAIZY
TUASON, ERLINDA NAVARRO, EMILY MANARANG,
EMELITA CAYANAN, MERCY CAYANAN, LUZVIMINDA
CAYANAN, ANABEL MANALO, SONIA DIZON, ERNA
CANLAS, MARIAN BENEDICTA, DOLORES DOLETIN,
JULIE DAVID, GRACE VILLANUEVA, VIRGINIA MAGBAG,
CORAZON RILLION, PRECY MANALILI, ELENA RONOZ,
G.R. No. 123938 May 21, 1998
IMELDA MENDOZA, EDNA CANLAS and ANGELA
LABOR CONGRESS OF THE PHILIPPINES (LCP) for and CANLAS, petitioners,
in behalf of its members, ANA MARIE OCAMPO, MARY vs.
INTAL, ANNABEL CARESO, MARLENE MELQIADES, NATIONAL LABOR RELATIONS COMMISSION, EMPIRE
IRENE JACINTO, NANCY GARCIA, IMELDA SARMIENTO, FOOD PRODUCTS, its Proprietor/President & Manager,
LENITA VIRAY, GINA JACINTO, ROSEMARIE DEL MR. GONZALO KEHYENG and MRS. EVELYN
ROSARIO, CATHERINE ASPURNA, WINNIE PENA, VIVIAN KEHYENG, respondents.
BAA, EMILY LAGMAN, LILIAN MARFIL, NANCY DERACO,
JANET DERACO, MELODY JACINTO, CAROLYN DIZON,
IMELDA MANALOTO, NORY VIRAY, ELIZA SALAZAR, GIGI DAVIDE, JR., J.:
MANALOTO, JOSEFINA BASILIO, MARY ANN MAYATI,
ZENAIDA GARCIA, MERLY CANLAS, ERLINDA
In this special civil action for certiorari under Rule 65, WORK, AND OTHER TERMS AND CONDITIONS OF
petitioners seek to reverse the 29 March 1995 resolution 1of EMPLOYMENT;"
the National Labor Relations Commission (NLRC) in NLRC RAB
III Case No. 01-1964-91 which affirmed the Decision 2 of 2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-
Labor Arbiter Ariel C. Santos dismissing their complaint for 90 pending with the NLRC parties jointly and mutually agreed
utter lack of merit. that the issues thereof, shall be discussed by the parties and
resolve[d] during the negotiation of the Collective Bargaining
The antecedents of this case, as summarized by the Office of Agreement;
the Solicitor General in its Manifestation and Motion in Lieu of
Comment, 3 are as follows: 3. That Management of the Empire Food Products shall make
the proper adjustment of the Employees Wages within fifteen
The 99 persons named as petitioners in this proceeding were (15) days from the signing of this Agreement and further
rank-and-file employees of respondent Empire Food Products, agreed to register all the employees with the SSS;
which hired them on various dates (Paragraph 1, Annex "A"
of Petition, Annex "B;" Page 2, Annex "F" of Petition). 4. That Employer, Empire Food Products thru its Management
agreed to deduct thru payroll deduction UNION DUES and
Petitioners filed against private respondents a complaint for other Assessment[s] upon submission by the LCP Labor
payment of money claim[s] and for violation of labor Congress individual Check-Off Authorization[s] signed by the
standard[s] laws (NLRC Case No. RAB-111-10-1817-90). They Union Members indicating the amount to be deducted and
also filed a petition for direct certification of petitioner Labor further agreed all deduction[s] made representing Union
Congress of the Philippines as their bargaining representative Dues and Assessment[s] shall be remitted immediately to the
(Case No. R0300-9010-RU-005). LCP Labor Congress Treasurer or authorized representative
within three (3) or five (5) days upon deductions [sic], Union
On October 23, 1990, petitioners represented by LCP dues not deducted during the period due, shall be refunded
President Benigno B. Navarro, Sr. and private respondents or reimbursed by the Employer/Management.
Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Employer/Management further agreed to deduct Union dues
Food Products, Inc. entered into a Memorandum of from non-union members the same amount deducted from
Agreement which provided, among others, the following: union members without need of individual Check-Off
1. That in connection with the pending Petition for Direct Authorizations [for] Agency Fee;
Certification filed by the Labor Congress with the DOLE, 5. That in consideration [of] the foregoing covenant, parties
Management of the Empire Food Products has no objection jointly and mutually agreed that NLRC CASE NO. RAB-III-10-
[to] the direct certification of the LCP Labor Congress and is 1817-90 shall be considered provisionally withdrawn from the
now recognizing the Labor Congress of the Philippines (LCP) Calendar of the National Labor Relations Commission (NLRC),
and its Local Chapter as the SOLE and EXCLUSIVE Bargaining while the Petition for direct certification of the LCP Labor
Agent and Representative for all rank and file employees of Congress parties jointly move for the direct certification of
the Empire Food Products regarding "WAGES, HOURS Of the LCP Labor Congress;
6. That parties jointly and mutually agreed that upon signing On January 23, 1991, petitioners filed a complaint docketed
of this Agreement, no Harassments [sic], Threats, as NLRC Case No. RAB-III-01-1964-91 against private
Interferences [sic] of their respective rights under the law, no respondents for:
Vengeance or Revenge by each partner nor any act of ULP
which might disrupt the operations of the business; a. Unfair Labor Practice by way of Illegal Lockout and/or
Dismissal;
7. Parties jointly and mutually agreed that pending
negotiations or formalization of the propose[d] CBA, this b. Union busting thru Harassments [sic], threats, and
Memorandum of Agreement shall govern the parties in the interfering with the rights of employees to self-organization;
exercise of their respective rights involving the Management c. Violation of the Memorandum of Agreement dated October
of the business and the terms and condition[s] of 23, 1990;
employment, and whatever problems and grievances may
arise by and between the parties shall be resolved by them, d. Underpayment of Wages in violation of R.A. No. 6640 and
thru the most cordial and good harmonious relationship by R.A. No. 6727, such as Wages promulgated by the Regional
communicating the other party in writing indicating said Wage Board;
grievances before taking any action to another forum or
government agencies; e. Actual, Moral and Exemplary Damages. (Annex "D" of
Petition)
8. That parties [to] this Memorandum of Agreement jointly
and mutually agreed to respect, abide and comply with all After the submission by the parties of their respective
the terms and conditions hereof. Further agreed that violation position papers and presentation of testimonial evidence,
by the parties of any provision herein shall constitute an act Labor Arbiter Ariel C. Santos absolved private respondents of
of ULP. (Annex "A" of Petition). the charges of unfair labor practice, union busting, violation
of the memorandum of agreement, underpayment of wages
In an Order dated October 24, 1990, Mediator Arbiter Antonio and denied petitioners' prayer for actual, moral and
Cortez approved the memorandum of agreement and exemplary damages. Labor Arbiter Santos, however, directed
certified LCP "as the sole and exclusive bargaining agent the reinstatement of the individual complainants:
among the rank-and-file employee of Empire Food Products
for purposes of collective bargaining with respect to wages, The undersigned Labor Arbiter is not oblivious to the fact that
hours of work and other terms and conditions of respondents have violated a cardinal rule in every
employment" (Annex "B" of Petition). establishment that a payroll and other papers evidencing
hours of work, payments, etc. shall always be maintained
On November 9, 1990, petitioners through LCP President and subjected to inspection and visitation by personnel of the
Navarro submitted to private respondents a proposal for Department of Labor and Employment. As such penalty,
collective bargaining (Annex "C" of Petition). respondents should not escape liability for this technicality,
hence, it is proper that all individual complainants except
those who resigned and executed quitclaim[s] and releases
prior to the filing of this complaint should be reinstated to
their former position[s] with the admonition to respondents namely: ERLINDA BASILIO (13 March 1991, RECORD,
that any harassment, intimidation, coercion or any form of p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENIE GARCIA (16
threat as a result of this immediately executory April 1991, Record, p. 96, see back portion thereof ; 2 May
reinstatement shall be dealt with accordingly. 1991, Record, p. 102; 16 May 1991, Record, p. 103, 11 June
1991, Record, p. 105). Formal offer of Documentary and
SO ORDERED. (Annex "G" of petition) Testimonial Evidence was made by complainant on June 24,
On appeal, the National Labor Relations Commission vacated 1991 (Record, p. 106-109)
the Decision dated April 14, 1972 [sic] and remanded the The Labor Arbiter must have overlooked the testimonies of
case to the Labor Arbiter for further proceedings for the some of the individual complainants which are now on
following reasons: record. Other individual complainants should have been
The Labor Arbiter, through his decision, noted that ". . . summoned with the end in view of receiving their
complainant did not present any single witness while testimonies. The complainants should be afforded the time
respondent presented four (4) witnesses in the persons of and opportunity to fully substantiate their claims against the
Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira respondents. Judgment should be rendered only based on the
Bulagan . . ." (p. 183, Records), that ". . . complainant before conflicting positions of the parties. The Labor Arbiter is called
the National Labor Relations Commission must prove with upon to consider and pass upon the issues of fact and law
definiteness and clarity the offense charged. . . ." (Record, p. raised by the parties.
183); that ". . . complainant failed to specify under what Toward this end, therefore, it is Our considered view [that]
provision of the Labor Code particularly Art. 248 did the case should be remanded to the Labor Arbiter of origin
respondents violate so as to constitute unfair labor for further proceedings. (Annex "H" of Petition)
practice . . ." (Record, p. 183); that "complainants failed to
present any witness who may describe in what manner In a Decision dated July 27, 1994, Labor Arbiter Santos made
respondents have committed unfair labor practice . . ." the following determination:
(Record, p. 185); that ". . . complainant LCP failed to present
anyone of the so-called 99 complainants in order to testify Complainants failed to present with definiteness and clarity
who committed the threats and intimidation . . ." (Record, p. the particular act or acts constitutive of unfair labor practice.
185). It is to be borne in mind that a declaration of unfair labor
Upon review of the minutes of the proceedings on record, practice connotes a finding of prima facieevidence of
however, it appears that complainant presented witnesses, probability that a criminal offense may have been committed
namely, BENIGNO NAVARRO, JR. (28 February 1991, RECORD, so as to warrant the filing of a criminal information before the
p. 91; 8 March 1991, RECORD, p. 92, who adopted its regular court. Hence, evidence which is more than a scintilla
POSITION PAPER AND CONSOLIDATED AFFIDAVIT, as Exhibit is required in order to declare respondents/employers guilty
"A" and the annexes thereto as Exhibit "B", "B-1" to "B-9", of unfair labor practice. Failing in this regard is fatal to the
inclusive. Minutes of the proceedings on record show that cause of complainants. Besides, even the charge of illegal
complainant further presented other witnesses, lockout has no leg to stand on because of the testimony of
respondents through their guard Orlando Cairo (TSN, July 31, Anent the charge that there was underpayment of wages, the
1991 hearing; p. 5-35) that on January 21, 1991, evidence points to the contrary. The enumeration of
complainants refused and failed to report for work, hence complainants' wages in their consolidated Affidavits of merit
guilty of abandoning their post without permission from and position paper which implies underpayment has no leg to
respondents. As a result of complainants['] failure to report stand on in the light of the fact that complainants' admission
for work, the cheese curls ready for repacking were all that they are piece workers or paid on a pakiao [basis] i.e. a
spoiled to the prejudice of respondents. Under cross- certain amount for every thousand pieces of cheese curls or
examination, complainants failed to rebut the authenticity of other products repacked. The only limitation for piece
respondents' witness testimony. workers or pakiao workers is that they should receive
compensation no less than the minimum wage for an eight
As regards the issue of harassments [sic], threats and (8) hour work [sic]. And compliance therewith was
interference with the rights of employees to self-organization satisfactorily explained by respondent Gonzalo Kehyeng in
which is actually an ingredient of unfair labor practice, his testimony (TSN, p. 12-30) during the July 31, 1991
complainants failed to specify what type of threats or hearing. On cross-examination, complainants failed to rebut
intimidation was committed and who committed the same. or deny Gonzalo Kehyeng's testimony that complainants
What are the acts or utterances constitutive of harassments have been even receiving more than the minimum wage for
[sic] being complained of? These are the specifics which an average workers [sic]. Certainly, a lazy worker earns less
should have been proven with definiteness and clarity by than the minimum wage but the same cannot be attributable
complainants who chose to rely heavily on its position paper to respondents but to the lazy workers.
through generalizations to prove their case.
Finally, the claim for moral and exemplary damages has no
Insofar as violation of [the] Memorandum of Agreement leg to stand on when no malice, bad faith or fraud was ever
dated October 23, 1990 is concerned, both parties agreed proven to have been perpetuated by respondents.
that:
WHEREFORE, premises considered, the complaint is hereby
2 That with regards [sic] to the NLRC Case No. RAB III-10- DISMISSED for utter lack of merit. (Annex "I" of Petition). 4
1817-90 pending with the NLRC, parties jointly and mutually
agreed that the issues thereof shall be discussed by the On appeal, the NLRC, in its Resolution dated 29 March
parties and resolve[d] during the negotiation of the CBA. 1995, 5 affirmed in toto the decision of Labor Arbiter Santos.
In so doing, the NLRC sustained the Labor Arbiter's findings
The aforequoted provision does not speak of [an] obligation that: (a) there was a dearth of evidence to prove the
on the part of respondents but on a resolutory condition that existence of unfair labor practice and union busting on the
may occur or may not happen. This cannot be made the part of private respondents; (b) the agreement of 23 October
basis of an imposition of an obligation over which the 1990 could not be made the basis of an obligation within the
National Labor Relations Commission has exclusive ambit of the NLRC's jurisdiction, as the provisions thereof,
jurisdiction thereof. particularly Section 2, spoke of a resolutory condition which
could or could not happen; (c) the claims for underpayment
of wages were without basis as complainants were WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED
admittedly"pakiao" workers and paid on the basis of their FROM THE DATE OF THEIR DISMISSAL UP TO THE TIME OF
output subject to the lone limitation that the payment THEIR REINSTATEMENT, WITH BACKWAGES, STATUTORY
conformed to the minimum wage rate for an eight-hour BENEFITS, DAMAGES AND ATTORNEY'S FEES. 7
workday; and (d) petitioners were not underpaid.
We required respondents to file their respective Comments.
Their motion for reconsideration having been denied by the
NLRC in its Resolution of 31 October 1995, 6petitioners filed In their Manifestation and Comment, private respondents
the instant special civil action for certiorari raising the asserted that the petition was filed out of time. As petitioners
following issues: admitted in their Notice to File Petition for Review
on Certiorari that they received a copy of the resolution
I (denying their motion for reconsideration) on 13 December
1995, they had only until 29 December 1995 to file the
WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL petition. Having failed to do so, the NLRC thus already
LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS entered judgment in private respondents' favor.
DISCRETION WHEN IT DISREGARDED OR IGNORED NOT ONLY
THE EVIDENCE FAVORABLE TO HEREIN PETITIONERS, In their Reply, petitioners averred that Mr. Navarro, a non-
APPLICABLE JURISPRUDENCE BUT ALSO ITS OWN DECISIONS lawyer who filed the notice to file a petition for review on
AND THAT OF THIS HONORABLE HIGHEST TRIBUNAL WHICH their behalf, mistook which reglementary period to apply.
[WAS] TANTAMOUNT NOT ONLY TO THE DEPRIVATION OF Instead of using the "reasonable time" criterion
PETITIONERS' RIGHT TO DUE PROCESS BUT WOULD RESULT forcertiorari under Rule 65, he used the 15-day period for
[IN] MANIFEST INJUSTICE. petitions for review on certiorari under Rule 45. They
hastened to add that such was a mere technicality which
II should not bar their petition from being decided on the
WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY merits in furtherance of substantial justice, especially
ABUSED ITS DISCRETION WHEN IT DEPRIVED THE considering that respondents neither denied nor contradicted
PETITIONERS OF THEIR CONSTITUTIONAL RIGHT TO SELF- the facts and issues raised in the petition.
ORGANIZATION, SECURITY OF TENURE, PROTECTION TO In its Manifestation and Motion in Lieu of Comment, the
LABOR, JUST AND HUMANE CONDITIONS OF WORK AND DUE Office of the Solicitor General (OSG) sided with petitioners. It
PROCESS. pointed out that the Labor Arbiter, in finding that petitioners
III abandoned their jobs, relied solely on the testimony of
Security Guard Rolando Cairo that petitioners refused to work
WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED on 21 January 1991, resulting in the spoilage of cheese curls
OUT [OF] OR CONSTRUCTIVELY DISMISSED FROM THEIR ONLY ready for repacking. However, the OSG argued, this refusal to
MEANS OF LIVELIHOOD. report for work for a single day did not constitute
abandonment, which pertains to a clear, deliberate and
IV unjustified refusal to resume employment, and not mere
absence. In fact, the OSG stressed, two days after allegedly justifying the Labor Arbiter's volte facefrom his 14 April 1992
abandoning their work, petitioners filed a complaint for, inter decision reinstating petitioners to his diametrically opposed
alia, illegal lockout or illegal dismissal. Finally, the OSG 27 July 1994 decision, when in both instances, he had before
questioned the lack of explanation on the part of Labor him substantially the same evidence. Neither do we find the
Arbiter Santos as to why he abandoned his original decision 29 March 1995 NLRC resolution to have sufficiently discussed
to reinstate petitioners. the facts so as to comply with the standard of substantial
evidence. For one thing, the NLRC confessed its reluctance to
In view of the stand of the OSG, we resolved to require the inquire into the veracity of the Labor Arbiter's factual
NLRC to file its own Comment. findings, staunchly declaring that it was "not about to
In its Comment, the NLRC invokes the general rule that substitute [its] judgment on matters that are within the
factual findings of an administrative agency bind a reviewing province of the trier of facts." Yet, in the 21 July 1992 NLRC
court and asserts that this case does not fall under the resolution, 8 it chastised the Labor Arbiter for his errors both
exceptions. The NLRC further argues that grave abuse of in judgment and procedure; for which reason it remanded the
discretion may not be imputed to it, as it affirmed the factual records of the case to the Labor Arbiter for compliance with
findings and legal conclusions of the Labor Arbiter only after the pronouncements therein.
carefully reviewing, weighing and evaluating the evidence in What cannot escape from our attention is that the Labor
support thereof, as well as the pertinent provisions of law and Arbiter did not heed the observations and pronouncements of
jurisprudence. the NLRC in its resolution of 21 July 1992, neither did he
In their Reply, petitioners claim that the decisions of the understand the purpose of the remand of the records to him.
NLRC and the Labor Arbiter were not supported by In said resolution, the NLRC summarized the grounds for the
substantial evidence; that abandonment was not proved; and appeal to be:
that much credit was given to self-serving statements of 1. that there is a prima facie evidence of abuse of discretion
Gonzalo Kehyeng, owner of Empire Foods, as to payment of and acts of gross incompetence committed by the Labor
just wages. Arbiter in rendering the decision.
On 7 July 1997, we gave due course to the petition and 2. that the Labor Arbiter in rendering the decision committed
required the parties to file their respective memoranda. serious errors in the findings of facts.
However, only petitioners and private respondents filed their
memoranda, with the NLRC merely adopting its Comment as After which, the NLRC observed and found:
its Memorandum.
Complainant alleged that the Labor Arbiter disregarded the
We find for petitioners. testimonies of the 99 complainants who submitted their
Consolidated Affidavit of Merit and Position Paper which was
Invocation of the general rule that factual findings of the adopted as direct testimonies during the hearing and cross-
NLRC bind this Court is unavailing under the circumstances. examined by respondents' counsel.
Initially, we are unable to discern any compelling reason
The Labor Arbiter, through his decision, noted that ". . . testimonies. The complainants should [have been] afforded
complainant did not present any single witness while the time and opportunity to fully substantiate their claims
respondent presented four (4) witnesses in the persons of against the respondents. Judgment should [have been]
Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira rendered only based on the conflicting positions of the
Bulagan . . ." (Records, p. 183), that ". . . complainant before parties. The Labor Arbiter is called upon to consider and pass
the National Labor Relations Commission must prove with upon the issues of fact and law raised by the parties.
definiteness and clarity the offense charged. . . ." (Record, p.
183; that ". . . complainant failed to specify under what Toward this end, therefore, it is Our considered view the case
provision of the Labor Code particularly Art. 248 did should be remanded to the Labor Arbiter of origin for further
respondents violate so as to constitute unfair labor proceedings.
practice . . ." (Record, p. 183); that "complainants failed to Further, We take note that the decision does not contain a
present any witness who may describe in what manner dispositive portion or fallo. Such being the case, it may be
respondents have committed unfair labor practice . . ." well said that the decision does not resolve the issues at
(Record, p. 185); that ". . . complainant a [sic] LCP failed to hand. On another plane, there is no portion of the decision
present anyone of the so called 99 complainants in order to which could be carried out by way of execution.
testify who committed the threats and intimidation . . ."
(Record, p.185). It may be argued that the last paragraph of the decision may
be categorized as the dispositive portion thereof:
Upon review of the minutes of the proceedings on record,
however, it appears that complainant presented witnesses, xxx xxx xxx
namely BENIGNO NAVARRO, JR. (28 February 1991, RECORD,
p. 91; 8 March 1991, RECORD, p. 92), who adopted its The undersigned Labor Arbiter is not oblivious [to] the fact
POSITION PAPER AND CONSOLIDATED AFFIDAVIT as Exhibit A that respondents have violated a cardinal rule in every
and the annexes thereto as Exhibit B, B-1 to B-9, inclusive. establishment that a payroll and other papers evidencing
Minutes of the proceedings on record show that complainant hour[s] of work, payment, etc. shall always be maintained
further presented other witnesses, namely: ERLINDA BASILIO and subjected to inspection and visitation by personnel of the
(13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE Department of Labor and Employment. As such penalty,
PINLAC, LENI GARCIA (16 April 1991, Record, p. 96, see back respondents should not escape liability for this technicality,
portion thereof; 2 May 1991, Record, p. 102; 16 May 1991, hence, it is proper that all the individual complainants except
Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of those who resigned and executed quitclaim[s] and release[s]
Documentary and Testimonial Evidence was made by the prior to the filing of this complaint should be reinstated to
complainant on June 24, 1991 (Record, p.106-109). their former position with the admonition to respondents that
any harassment, intimidation, coercion or any form of threat
The Labor Arbiter must have overlooked the testimonies of as a result of this immediately executory reinstatement shall
some of the individual complainants which are now on be dealt with accordingly.
record. Other individual complainants should have been
summoned with the end in view of receiving their SO ORDERED.
It is Our considered view that even assuming arguendo that NLRC, 212 SCRA 631; Dagupan Bus Co. v. NLRC, 191 SCRA
the respondents failed to maintain their payroll and other 328; Atlas Consolidated Mining and Development Corp. v.
papers evidencing hours of work, payment etc., such NLRC, 190 SCRA 505; Hua Bee Shirt Factory v. NLRC, 186
circumstance, standing alone, does not warrant the directive SCRA 586; Mabaylan v. NLRC, 203 SCRA 570 and Flexo
to reinstate complainants to their former positions. It is [a] Manufacturing v. NLRC, 135 SCRA 145). In Atlas
well settled rule that there must be a finding of illegal Consolidated, supra, this Honorable Court explicitly stated:
dismissal before reinstatement be mandated.
It would be illogical for Caballo, to abandon his work and then
In this regard, the LABOR ARBITER is hereby directed to immediately file an action seeking for his reinstatement. We
include in his clarificatory decision, after receiving evidence, can not believe that Caballo, who had worked for Atlas for
considering and resolving the same, the requisite dispositive two years and ten months, would simply walk away from his
portion. 9 job unmindful of the consequence of his act. i.e. the
forfeiture of his accrued employment benefits. In opting to
Apparently, the Labor Arbiter perceived that if not for finally to [sic] contest the legality of his dismissal instead of
petitioners, he would not have fallen victim to this stinging just claiming his separation pay and other benefits, which he
rebuke at the hands of the NLRC. Thus does it appear to us actually did but which proved to be futile after all, ably
that the Labor Arbiter, in concluding in his 27 July 1994 supports his sincere intention to return to work, thus
Decision that petitioners abandoned their work, was moved negating Atlas' stand that he had abandoned his job.
by, at worst, spite, or at best, lackadaisically glossed over
petitioner's evidence. On this score, we find the following In De Ysasi III v. NLRC (supra), this Honorable Court stressed
observations of the OSG most persuasive: that it is the clear, deliberate and unjustified refusal to
resume employment and not mere absence that constitutes
In finding that petitioner employees abandoned their work, abandonment. The absence of petitioner employees for one
the Labor Arbiter and the NLRC relied on the testimony of day on January 21, 1991 as testified [to] by Security Guard
Security Guard Rolando Cairo that on January 21, 1991, Orlando Cairo did not constitute abandonment.
petitioners refused to work. As a result of their failure to
work, the cheese curls ready for repacking on said date were In his first decision, Labor Arbiter Santos expressly directed
spoiled. the reinstatement of the petitioner employees and
admonished the private respondents that "any harassment,
The failure to work for one day, which resulted in the spoilage intimidation, coercion or any form of threat as a result of this
of cheese curls does not amount to abandonment of work. In immediately executory reinstatement shall be dealt with
fact two (2) days after the reported abandonment of work or accordingly.
on January 23, 1991, petitioners filed a complaint for, among
others, unfair labor practice, illegal lockout and/or illegal In his second decision, Labor Arbiter Santos did not state why
dismissal. In several cases, this Honorable Court held that he was abandoning his previous decision directing the
"one could not possibly abandon his work and shortly reinstatement of petitioner employees.
thereafter vigorously pursue his complaint for illegal
dismissal (De Ysasi III v. NLRC, 231 SCRA 173; Ranara v.
By directing in his first decision the reinstatement of amended by R.A. No. 6715. Nevertheless, the records
petitioner employees, the Labor Arbiter impliedly held that disclose that taking into account the number of employees
they did not abandon their work but were not allowed to work involved, the length of time that has lapsed since their
without just cause. dismissal, and the perceptible resentment and enmity
between petitioners and private respondents which
That petitioner employees are "pakyao" or piece workers necessarily strained their relationship, reinstatement would
does not imply that they are not regular employees entitled be impractical and hardly promotive of the best interests of
to reinstatement. Private respondent Empire Food Products, the parties. In lieu of reinstatement then, separation pay at
Inc. is a food and fruit processing company. In Tabas the rate of one month for every year of service, with
v. California Manufacturing Co., Inc. (169 SCRA 497), this a fraction of at least six (6) months of service considered as
Honorable Court held that the work of merchandisers of one (1) year, is in order. 13
processed food, who coordinate with grocery stores and
other outlets for the sale of the processed food is necessary That being said, the amount of back wages to which each
in the day-to-day operation[s] of the company. With more petitioner is entitled, however, cannot be fully settled at this
reason, the work of processed food repackers is necessary in time. Petitioners, as piece-rate workers having been paid by
the day-to-day operation[s] of respondent Empire Food the piece, 14 there is need to determine the varying degrees
Products. 10 of production and days worked by each worker. Clearly, this
issue is best left to the National Labor Relations Commission.
It may likewise be stressed that the burden of proving the
existence of just cause for dismissing an employee, such as As to the other benefits, namely, holiday pay, premium pay,
abandonment, rests on the employer, 11 a burden private 13th month pay and service incentive leave which the labor
respondents failed to discharge. arbiter failed to rule on but which petitioners prayed for in
their complaint, 15 we hold that petitioners are so entitled to
Private respondents, moreover, in considering petitioners' these benefits. Three (3) factors lead us to conclude that
employment to have been terminated by abandonment, petitioners, although piece-rate workers, were regular
violated their rights to security of tenure and constitutional employees of private respondents. First, as to the nature of
right to due process in not even serving them with a written petitioners' tasks, their job of repacking snack food was
notice of such termination. 12 Section 2, Rule XIV, Book V of necessary or desirable in the usual business of private
the Omnibus Rules Implementing the Labor Code provides: respondents, who were engaged in the manufacture and
Sec. 2. Notice of Dismissal Any employer who seeks to selling of such food products; second, petitioners worked for
dismiss a worker shall furnish him a written notice stating the private respondents throughout the year, their employment
particular acts or omission constituting the grounds for his not having been dependent on a specific project or season;
dismissal. In cases of abandonment of work, the notice shall and third, the length of time 16that petitioners worked for
be served at the worker's last known address. private respondents. Thus, while petitioners' mode of
compensation was on a "per piece basis," the status and
Petitioners are therefore entitled to reinstatement with full nature of their employment was that of regular employees.
back wages pursuant to Article 279 of the Labor Code, as
The Rules Implementing the Labor Code exclude certain d. Employers of those who are paid on purely commission,
employees from receiving benefits such as nighttime pay, boundary or task basis, and those who are paid a fixed
holiday pay, service incentive leave 17 and 13th month amount for performing specific work, irrespective of the time
pay, 18 inter alia, "field personnel and other employees whose consumed in the performance thereof, except where the
time and performance is unsupervised by the employer, workers are paid on piece-rate basis in which case the
including those who are engaged on task or contract basis, employer shall grant the required 13th month pay to such
purely commission basis, or those who are paid a fixed workers. (emphasis supplied)
amount for performing work irrespective of the time
consumed in the performance thereof." Plainly, petitioners as The Revised Guidelines as well as the Rules and Regulations
piece-rate workers do not fall within this group. As mentioned identify those workers who fall under the piece-rate category
earlier, not only did petitioners labor under the control of as those who are paid a standard amount for every piece or
private respondents as their employer, likewise did unit of work produced that is more or less regularly
petitioners toil throughout the year with the fulfillment of replicated, without regard to the time spent in producing the
their quota as supposed basis for compensation. Further, in same. 20
Section 8 (b), Rule IV, Book III which we quote hereunder, As to overtime pay, the rules, however, are different.
piece workers are specifically mentioned as being entitled to According to Sec. 2(e), Rule I, Book III of the Implementing
holiday pay. Rules, workers who are paid by results including those who
Sec. 8. Holiday pay of certain employees. are paid on piece-work, takay, pakiao, or task basis, if their
output rates are in accordance with the standards prescribed
(b) Where a covered employee is paid by results or output, under Sec. 8, Rule VII, Book III, of these regulations, or where
such as payment on piece work, his holiday pay shall not be such rates have been fixed by the Secretary of Labor in
less than his average daily earnings for the last seven (7) accordance with the aforesaid section, are not entitled to
actual working days preceding the regular holiday: Provided, receive overtime pay. Here, private respondents did not
however, that in no case shall the holiday pay be less than allege adherence to the standards set forth in Sec. 8 nor with
the applicable statutory minimum wage rate. the rates prescribed by the Secretary of Labor. As such,
petitioners are beyond the ambit of exempted persons and
In addition, the Revised Guidelines on the Implementation of are therefore entitled to overtime pay. Once more, the
the 13th Month Pay Law, in view of the modifications to P.D. National Labor Relations Commission would be in a better
No. 851 19 by Memorandum Order No. 28, clearly exclude the position to determine the exact amounts owed petitioners, if
employer of piece rate workers from those exempted from any.
paying 13th month pay, to wit:
As to the claim that private respondents violated petitioners'
2. EXEMPTED EMPLOYERS right to self-organization, the evidence on record does not
The following employers are still not covered by P.D. No. 851: support this claim. Petitioners relied almost entirely on
documentary evidence which, per se, did not prove any
wrongdoing on private respondents' part. For example,
petitioners presented their complaint 21 to prove the violation receipt of a copy of this decision and of the records of the
of labor laws committed by private respondents. The case and to submit to this Court a report of its compliance
complaint, however, is merely "the pleading alleging the hereof within ten (10) days from the rendition of its
plaintiff's cause or causes of action." 22 Its contents are resolution.
merely allegations, the verity of which shall have to be
proved during the trial. They likewise offered their Costs against private respondents.
Consolidated Affidavit of Merit and Position Paper 23which, SO ORDERED.
like the offer of their Complaint, was a tautological exercise,
and did not help nor prove their cause. In like manner, the
petition for certification election 24 and the subsequent order
of certification 25 merely proved that petitioners sought and
acquired the status of bargaining agent for all rank-and-file
employees. Finally, the existence of the memorandum of
agreement 26 offered to substantiate private respondents'
non-compliance therewith, did not prove either compliance or
non-compliance, absent evidence of concrete, overt acts in
contravention of the provisions of the memorandum.

IN VIEW WHEREOF, the instant petition is hereby GRANTED.


The Resolution of the National Labor Relations Commission of
29 March 1995 and the Decision of the Labor Arbiter of 27
July 1994 in NLRC Case No. RAB-III-01-1964-91 are hereby
SET ASIDE, and another is hereby rendered:

1. DECLARING petitioners to have been illegally dismissed by G.R. No. 85393 September 5, 1991
private respondents, thus entitled to full back wages and
ALBA PATIO DE MAKATI, ANASTACIO ALBA and
other privileges, and separation pay in lieu of reinstatement
CLAUDIO OLABARRIETA, petitioners,
at the rate of one month's salary for every year of service
vs.
with a fraction of six months of service considered as one
NATIONAL LABOR RELATIONS COMMISSION, ALBA
year;
PATIO DE MAKATI EMPLOYEES ASSOCIATION,
2. REMANDING the records of this case to the National Labor HERMOGENES CAGANO, LUCIO CAGANO, RUPERTO
Relations Commission for its determination of the back wages CRUZ and BONIFACIO ACIADO respondents.
and other benefits and separation pay, taking into account
Justo & Magpale Law Offices for petitioners.
the foregoing observations; and
Felipe P. Fuentes, Jr. for private respondents.
3. DIRECTING the National Labor Relations Commission to
resolve the referred issues within sixty (60) days from its
Hermogenes Cagano, Ruperto Cruz, Lucio Cagano, and
Bonifacio Aclado, respondents, G.R. No. L-37922." 3
PADILLA, J.:p
On 16 March 1984, this Court rendered a decision in the
This is a petition for certiorari with prayer for the issuance of above-mentioned case, dismissing the petition for review and
a writ of preliminary injunction, seeking to set aside or affirming the decision and resolution of the CIR.
modify the Order of the respondent National Labor Relations
Commission (NLRC), dated 6 September 1988, which set Thereafter, the National Labor Relations Commission (which
aside the order of the Labor Arbiter dated 31 October 1984. 1 had succeeded the Court of Industrial Relations), through
Labor Arbiter Antonio Tria Tirona directed the Chief of the
On 5 December 1988, a temporary restraining order was Research and Information Division of the NLRC to have the
issued by this Court enjoining the respondents from enforcing award due the complainants computed. The pertinent part of
the questioned NLRC Order until further orders from the the "Report of Examiner" submitted stated that the total
Court. 2 money value of the backwages and service charges due
The antecedent facts of the case are as follows: herein private respondents amounts to P196,270.84, and that
the herein petitioners had not as of the date of the report
On 30 April 1973, the Court of Industrial Relations (CIR) reinstated the private respondents.
rendered a decision in Case No. 5478-ULP, entitled "Alba
Patio de Makati Employees Association, et al, complainants, With the submission of the Report of Examiner, private
vs. Alba Patio de Makati, et al., respondents," the dispositive respondents moved for the issuance of a writ of execution.
part of which reads as follows: Petitioners opposed the motion, contending, among other
things, that the computation of back wages should be limited
WHEREFORE, respondents are hereby declared guilty of to three (3) years without qualification or deduction, in
unfair labor practices as charged and are ordered to cease accordance with the rulings of this Court on the matter, and
and desist from further committing said acts, to reinstate the that if complainants would insist on payment based on the
herein four (4) individual complainants with full back wages "Report of Examiner", they should then render an accounting
and to pay them their respective shares in the service of their income realized elsewhere from 1 May 1970 up to 15
charges for May 1 to 15, 1970 and for the rest of that month August 1984.
until their forced resignation.
The Report and the petitioners' opposition to the motions
A motion for reconsideration of the said decision filed by were set for hearing on 29 October 1984. At the said hearing,
respondents (herein petitioners) was denied on 6 November Lucio Cagano, for himself and as the alleged attorney-in-fact
1973. of the other complainants, filed a document entitled
"Satisfaction of Judgment, Release and Quit-claim" which
Petitioners then sought a review by this Court of the CIR's declares inter alia that complainants have received the sum
decision and resolution. The case was docketed as "Alba of P54,000.00 from the Alba Patio de Makati, which amount
Patio de Makati, Anastacio Alba and Claudio Olabarrieta, corresponds to three (3) years back wages, including
petitioners, vs. Alba Patio de Makati Employees Association, attorney's fees, in full and complete satisfaction of the
judgment and releasing the petitioners from any further Lucio Cagano as his attorney-in-fact. 7 Petitioners filed an
liability in connection with their claims against Omnibus Motion 8 alleging, among other things, that the
petitioners. 4 Filed with the above-said document were the Labor Arbiter/ NLRC had already lost jurisdiction over the
respective special powers of attorney purportedly executed case by reason of the satisfaction of the judgment and that
by Bonifacio Aclado, Ruperto Cruz, and Esteban Cagano, any question as to the validity of the "Satisfaction of
father of deceased Hermogenes Cagano, appointing Lucio Judgment, Release and Quit-claim" which is in the nature of a
Cagano as their attorney-in-fact. 5Said documents were compromise agreement must be brought before the regular
notarized by Atty. Eugenio Tumulak, counsel for Lucio courts.
Cagano.
On 6 September 1988, the NLRC promulgated the questioned
Acting on the foregoing documents, Labor Arbiter Tirona Order, annulling and setting aside the order of Labor Arbiter
issued the order of 31 October 1984. the dispositive part of Antonio Tria Tirona dated 31 October 1984 and directing the
which reads: immediate enforcement of the decision of the Court of
Industrial Relations dated 30 April 1973 as affirmed by this
Finding said "Satisfaction of Judgment, Release and Quit- Court. It held:
claim" to be in order and it appearing thereon that
complainants have already received P54,000.00 for and in Resolving this issue, we rule that the special power of
consideration thereof, the instant case is hereby considered attorney executed by Esteban Cagano in behalf of his
CLOSED and TERMINATED. 6 deceased son, Hermogenes Cagano, one of the complainants
in this case, who have (sic) children but still minors and the
On 10 December 1985, private co-respondent Bonifacio mother of said children (alleged common law wife of the
Aclado wrote his counsel Atty. Felipe P. Fuentes, Jr., informing deceased), and in favor of Lucio Cagano as attorney-in-fact is
the latter that as of said date, he had not been reinstated patently null and void since Esteban Cagano had no legal
and paid his back wages by the petitioners. The following authority to execute a special power of attorney in behalf of a
day, or on 11 December 1985, Atty. Fuentes filed before the deceased person or represent the minor children of the
NLRC a motion for the immediate execution of the CIR deceased complainant. If an agency is extinguished by death
decision. Petitioners opposed the motion, alleging that the of the principal, with more reason that an agency cannot be
case was already considered closed and terminated as per constituted for and in behalf of a deceased person or the
order of 31 October 1.984 and that the said order was issued latter's minor children unless duly authorized by the Court. A
pursuant to the "Satisfaction of Judgment, Release and Quit- cursory reading of these (sic) special power of attorney
claim" which had been executed by Lucio Cagano as the shows that the attorney-in-fact was practically granted
attorney-in-fact of complainant (private co-respondent) blanket authority to negotiate with respondent any amount of
Bonifacio Aclado. back wages due the complainants. However, such back
Thereafter, on 3 March 1986, other private co-respondent wages awarded to them and which the attorney-in-fact is
Ruperto Cruz filed a similar motion for execution and to annul allowed to negotiate or receive in their behalf under the
and set aside the order dated 31 October 1984, alleging that special power of attorney is an 'amount (shall) be due in
he had not executed any specific power of attorney naming accordance with law.'A fortiori, We should carefully scrutinize
and determine in what manner and to what extent was this aforesaid document, petitioners allege, is in the nature of a
express authority exercised and whether or not the compromise agreement which has, upon the parties, the
settlement arrived at by the complainants through their effect of res judicata; that the allegations in the private
attorney-in-fact and respondents is in accordance with the respondents' subsequent motions set forth a cause of action
terms of the special power of attorney and that the same is that does not involve a question arising out of employer
not contrary to law, morals, good customs, public order, or employee relations but the validity and enforceability of a
public policy. compromise agreement between petitioners and private
respondents, for which reason, the matter should properly be
To Us, the settlement of the computed award of P196,270.84 raised before the regular courts.
for only a minuscule sum of P54,000.00 is grossly
disproportionate, unconscionable and inequitable. We cannot On the other hand, the Solicitor General maintains that
therefore give imprimatur to such settlement, release and petitioners, having submitted themselves to the jurisdiction
quitclaim for being clearly contrary to the authority granted of the NLRC, should not be snowed, for reasons of public
to the attorney-in-fact and also violative of law and public policy, to repudiate the very same jurisdiction they had
policy. We cannot allow this miscarriage of justice. invoked to seek affirmative relief, citing in support of his
Accordingly, the approval of the settlement constitutes a submission the case of Tijam vs. Sibonghanoy, 23 SCRA 29.
reversible error. Labor justice may not be thwarted or
frustrated by strait-jacketed technicalities by denying this In addition, private respondents insist that they had not
Commission its jurisdiction to pass upon these issues. For Us executed any special power of attorney in favor of their co-
to refer this matter to another forum would necessarily make complainant Lucio Cagano; that they have not received their
the complainants who are affected thereby to undergo their backwages and have not been reinstated to their former
calvary twice after so many long years of litigation. respective positions by petitioners pursuant to the CIR
decision as affirmed by this Court.
Hence, the present petition for certiorari filed by petitioners
with prayer for the issuance of a writ of preliminary The petition is bereft of merit.
injunction. Time and again, this Court has set aside technicalities in the
The only issue to be resolved in this case is whether or not interest of substantial justice. In the present case, the
the NLRC still had jurisdiction to issue the resolution or order judgment of the Court of Industrial Relations had long
of 6 September 1988, setting aside the Labor Arbiter's order become final and executory. A final and executory judgment
of 31 October 1984. can no longer be altered. As we held in a recent case, 9 "(t)he
judgment may no longer be modified in any respect, even if
Petitioners claim that the jurisdiction of the National Labor the modification is meant to correct what is perceived to be
Relations Commission over the case had already been lost by an erroneous conclusion of fact or law, and regardless of
virtue of the order dated 31 October 1984, wherein the Labor whether the modification is attempted to be made by the
Arbiter declared the case closed and terminated in view of court rendering it or by the highest court of the land."
the document filed by the private respondents entitled Moreover, a final and executory judgment cannot be
"Satisfaction of Judgment, Release and Quit-claim"; that the negotiated, hence, any act to subvert it is contemptuous. 10
The NLRC was correct in setting aside the order of the Labor jurisdiction simply because they have failed to obtain a
Arbiter dated 31 October 1984, as the same was void. It favorable decision.
rendered the very decision of this Court meaningless, and
showed disrespect for the administration of justice. 11 This This case has been pending for almost eighteen (18) years
should not be sanctioned. since the order of the CIR was rendered on 30 April 1973. The
private respondents have already suffered for a long time. To
It was incumbent upon the counsel for the complainant (now further prolong the proceedings in this case would be
respondent) Lucio Cagano to have seen to it that the interest tantamount to a denial of justice to private respondents. It is
of an complainants (now private respondents) was protected. about time that the decision of the Court of Industrial
The quitclaim and release in the preparation of which he Relations of 30 April 1973, as affirmed by this Court, be fully
assisted clearly worked to the grave disadvantage of the and finally implemented.
complainants (private respondents). As we have stated
earlier, to render the decision of this Court meaningless by WHEREFORE, the petition is DISMISSED, and the temporary
paying the backwages of the affected employees in a much restraining order LIFTED. Costs against petitioners.
lesser amount clearly manifested a disregard of the authority SO ORDERED.
of this Court as the final arbiter of cases brought to it. 12

As for the Labor Arbiter, he should have consciensciously


examined the veracity and reliability of the quitclaim
purportedly executed by the other complainants (now
respondents) through Lucio Cagano, especially so when the
counsel of record of private respondents Cruz and Aclado,
Atty. Felipe Fuentes, Jr., was not present when the document
was filed. Moreover, he should have been aware of this
Court's standing rulings that quit-claims and releases signed
by employees are normally frowned upon as contrary to
public policy. His precipitate approval of the release and
quitclaim resulted in the reduction of the backwages to a
much lesser amount due the private respondents and in
releasing petitioners from their obligation to reinstate the
complainants under a final judgment of this Court. This is
indeed lamentable.

Finally, we agree with the Solicitor General, that having


submitted themselves to the jurisdiction of the NLRC,
petitioners should not be allowed to repudiate that same
Region) in behalf of the rank and file employees of the
Progressive Development Corporation (Pizza Hut) docketed
as NCR Case No. NCR-OD-M-9307-020. 1

Petitioner filed on August 20, 1993, a verified Motion to


Dismiss the petition alleging fraud, falsification and
misrepresentation in the respondent. Union's registration
making it void and invalid. The motion specifically alleged
that: a) respondent Union's registration was tainted with
false, forged, double or multiple signatures of those who
allegedly took part in the ratification of the respondent
Union's constitution and by-laws and in the election of its
officers that there were two sets of supposed attendees to
the alleged organizational meeting that was alleged to have
taken place on June 26, 1993; that the alleged chapter is
claimed to have been supported by 318 members when in
fact the persons who actually signed their names were much
less; and b) while the application for registration of the
charter was supposed to have been approved in the
organizational meeting held on June 27, 1993, the charter
certification issued by the federation KATIPUNAN was
dated June 26, 1993 or one (1) day prior to the formation of
the chapter, thus, there were serious falsities in the dates of
the issuance of the charter certification and the organization
G.R. No. 115077 April 18, 1997 meeting of the alleged chapter.

PROGRESSIVE DEVELOPMENT CORPORATION-PIZZA Citing other instances of misrepresentation and fraud,


HUT, petitioner, petitioner, on August 29, 1993, filed a Supplement to its
vs. Motion to Dismiss, 2 claiming that:
HON. BIENVENIDO LAGUESMA, in his capacity as
Undersecretary of Labor, and NAGKAKAISANG LAKAS 1) Respondent Union alleged that the election of its officers
NG MANGGAGAWA (NLM)-KATIPUNAN, respondents. was held on June 27, 1993; however, it appears from the
documents submitted by respondent union to the BIR-DOLE
KAPUNAN, J.: that the Union's constitution and by-laws were adopted only
on July 7, 1993, hence, there was no bases for the supposed
On July 9, 1993, Nagkakaisang Lakas ng Manggagawa (NLM)-
election of officers on June 27, 1993 because as of this date,
Katipunan (respondent Union) filed a petition for certification
election with the Department of Labor (National Capital
there existed no positions to which the officers could be the Revised Rules of Court where the principal issue raised is
validly elected; whether or not the public respondent committed grave abuse
of discretion in affirming the Med-Arbiter's order to conduct a
2) Voting was not conducted by secret ballot in violation of certification election among petitioner's rank and file
Article 241, section (c) of the Labor Code; employees, considering that: (1) respondent Union's legal
3) The Constitution and by Laws submitted in support of its personality was squarely put in issue; (2) allegations of fraud
petition were not properly acknowledged and notarized. 3 and falsification, supported by documentary evidence were
made; and (3) a petition to cancel respondent Union's
On August 30, 1993, petitioner filed a Petition 4 seeking the registration is pending with the regional office of the
cancellation of the Union's registration on the grounds of Department of Labor and Employment. 10
fraud and falsification, docketed as BIR Case No. 8-21-
83. 5 Motion was likewise filed by petitioner with the Med- We grant the petition.
Arbiter requesting suspension of proceedings in the In the public respondent's assailed Resolution dated
certification election case until after the prejudicial question December 29, 1993, the suggestion is made that once a
of the Union's legal personality is determined in the labor organization has filed the necessary documents and
proceedings for cancellation of registration. papers and the same have been certified under oath and
However, in an Order dated September 29, 1993, 6 Med- attested to, said organization necessarily becomes clothed
Arbiter Rasidali C. Abdullah directed the holding of a with the character of a legitimate labor organization. The
certification election among petitioner's rank and file resolution declares:
employees. The Order explained: Records show that at the time of the filing of the subject
. . . Sumasaklaw sa Manggagawa ng Pizza Hut is a legitimate petition on 9 July 1993 by the petitioner NLM-KATIPUNAN, for
labor organization in contemplation of law and shall remain and in behalf of its local affiliate Sumasaklaw sa
as such until its very charter certificate is canceled or Manggagawa ng Pizza Hut, the latter has been clothed with
otherwise revoked by competent authority. The alleged the status and/or character of a legitimate labor organization.
misrepresentation, fraud and false statement in connection This is so, because on 8 July 1993, petitioner submitted to
with the issuance of the charter certificate are collateral the Bureau of Labor Relations (BLR), this Department, the
issues which could be properly ventilated in the cancellation following documents: Charter Certificate, Minutes of the
proceedings. 7 Organizational Meeting, List of Officers, and their respective
addresses, financial statement, Constitution and By-Laws
On appeal to the office of the Secretary of Labor, Labor (CBL, and the minutes of the ratification of the CBL). Said
Undersecretary Bienvenido E. Laguesma in a Resolution documents (except the charter certificate) are certified under
dated December 29, 1993 8 denied the same. oath and attested to by the local union's Secretary/Treasurer
and President, respectively.
A motion for reconsideration of the public respondent's
resolution was denied in his Order 9 dated January 27, 1994, As to the contention that the certification election
hence, this special civil action for certiorari under Rule 65 of proceedings should be suspended in view of the pending
case for the cancellation of the petitioner's certificate of (d) If the applicant union has been in existence for one or
registration, let it be stressed that the pendency of a more years, copies of its annual financial reports; and
cancellation case is not a ground for the dismissal or
suspension of a representation proceedings considering that (e) Four (4) copies of the constitution and by-laws of the
a registered labor organization continues to be a legitimate applicant union, minutes of its adoption or ratification, and
one entitled to all the rights appurtenant thereto until a final the list of the members who participated in it.
valid order is issued canceling such registration. 11 A more than cursory reading of the aforecited provisions
In essence, therefore, the real controversy in this case clearly indicates that the requirements embodied therein are
centers on the question of whether or not, after the intended as preventive measures against the commission of
necessary papers and documents have been filed by a labor fraud. After a labor organization has filed the necessary
organization, recognition by the Bureau of Labor Relations papers and documents for registration, it becomes
merely becomes a ministerial function. mandatory for the Bureau of Labor Relations to check if the
requirements under Article 234 have been sedulously
We do not agree. complied with. If its application for registration is vitiated by
falsification and serious irregularities, especially those
In the first place, the public respondent's views as expressed appearing on the face of the application and the supporting
in his December 29, 1993 Resolution miss the entire point documents, a labor organization should be denied
behind the nature and purpose of proceedings leading to the recognition as a legitimate labor organization. And if a
recognition of unions as legitimate labor organizations. certificate of recognition has been issued, the propriety of
Article 234 of the Labor Code provides: the labor organization's registration could be assailed directly
Art. 234. Requirements of registration. Any applicant labor through cancellation of registration proceedings in
organization, association or group of unions or workers shall accordance with Articles 238 and 239 of the Labor Code, or
acquire legal personality and shall be entitled to the rights indirectly, by challenging its petition for the issuance of an
and privileges granted by law to legitimate labor order for certification election.
organizations upon issuance of the certificate of registration These measures are necessary and may be undertaken
based on the following requirements: simultaneously if the spirit behind the Labor Code's
(a) Fifty pesos (P50.00) registration fee; requirements for registration are to be given flesh and blood.
Registration requirements specifically afford a measure of
(b) The names of its officers, their addresses, the principal protection to unsuspecting employees who may be lured into
address of the labor organization, the minutes of the joining unscrupulous or fly-by-night unions whose sole
organizational meetings and the list of the workers who purpose is to control union funds or use the labor
participated in such meetings; organization for illegitimate ends. 12 Such requirements are a
valid exercise of the police power, because the activities in
(c) The names of all its members comprising at least twenty which labor organizations, associations and unions of workers
percent (20%) of all the employees in the bargaining unit
where it seeks to operate;
are engaged directly affect the public interest and should be . . . It is not this Court's function to augment the
protected. 13 requirements prescribed by law in order to make them wiser
or to allow greater protection to the workers and even their
Thus, in Progressive Development Corporation vs. Secretary employer. Our only recourse is, as earlier discussed, to exact
of Labor and Employment, 14 we held: strict compliance with what the law provides as requisites for
The controversy in this case centers on the requirements local or chapter formation.
before a local or chapter of a federation may file a petition xxx xxx xxx
for certification election and be certified as the sole and
exclusive bargaining agent of the petitioner's employees. The Court's conclusion should not be misconstrued as
impairing the local union's right to be certified as the
xxx xxx xxx employees' bargaining agent in the petitioner's
But while Article 257 cited by the Solicitor General directs the establishment. We are merely saying that the local union
automatic conduct of a certification election in an must first comply with the statutory requirements in order to
unorganized establishment, it also requires that the petition exercise this right. Big federations and national unions of
for certification election must be filed by a legitimate labor workers should take the lead in requiring their locals and
organization . . . chapters to faithfully comply with the law and the rules
instead of merely snapping union after union into their folds
xxx xxx xxx in a furious bid with rival federations to get the most number
of members
. . . The employer naturally needs assurance that the union it
is dealing with is a bona-fide organization, one which has not Furthermore, the Labor Code itself grants the Bureau of Labor
submitted false statements or misrepresentations to the Relations a period of thirty (30) days within which to review
Bureau. The inclusion of the certification and attestation all applications for registration. Article 235 provides:
requirements will in a marked degree allay these
apprehensions of management. Not only is the issuance of Art. 235. Action on application. The Bureau shall act on all
any false statement and misrepresentation or ground for applications for registration within thirty (30) days from filing.
cancellation of registration (see Article 239 (a), (c) and (d)); it All requisite documents and papers shall be certified under
is also a ground for a criminal charge of perjury. oath by the secretary or the treasurer of the organization, as
The certification and attestation requirements are preventive the case may be, and attested to by its president.
measures against the commission of fraud. They likewise The thirty-day period in the aforecited provision ensures that
afford a measure of protection to unsuspecting employees any action taken by the Bureau of Labor Relations is made in
who may be lured into joining unscrupulous or fly-by-night consonance with the mandate of the Labor Code, which, it
unions whose sole purpose is to control union funds or to use bears emphasis, specifically requires that the basis for the
the union for dubious ends. issuance of a certificate of registration should be compliance
xxx xxx xxx with the requirements for recognition under Article 234.
Since, obviously, recognition of a labor union or labor (a) Misrepresentation, false statement or fraud in connection
organization is not merely a ministerial function, the question with the adoption or ratification of the constitution and by-
now arises as to whether or not the public respondent laws or amendments thereto, the minutes of ratification, the
committed grave abuse of discretion in affirming the Med- list of members who took part in the ratification of the
Arbiter's order in spite of the fact that the question of the constitution and by-laws or amendments thereto, the
Union's legitimacy was squarely put in issue and that the minutes of ratification, the list of members who took part in
allegations of fraud and falsification were adequately the ratification;
supported by documentary evidence.
xxx xxx xxx
The Labor Code requires that in organized and
unorganized 15 establishments, a petition for certification (c) Misrepresentation, false statements or fraud in connection
electionmust be filed by a legitimate labor organization. The with the election of officers, minutes of the election of
acquisition of rights by any union or labor organization, officers, the list of voters, or failure to submit these
particularly the right to file a petition for certification documents together with the list of the newly elected-
election, first and foremost, depends on whether or not the appointed officers and their postal addresses within thirty
labor organization has attained the status of a legitimate (30) days from election.
labor organization. xxx xxx xxx
In the case before us, the Med-Arbiter summarily disregarded The grounds ventilated in cancellation proceedings in
the petitioner's prayer that the former look into the accordance with Article 239 of the Labor Code constitute a
legitimacy of the respondent. Union by a sweeping grave challenge to the right of respondent Union to ask for
declaration that the union was in the possession of a charter certification election. The Med-Arbiter should have looked
certificate so that "for all intents and purposes, Sumasaklaw into the merits of the petition for cancellation before issuing
sa Manggagawa sa Pizza Hut (was) a legitimate labor an order calling for certification election. Registration based
organization." 16 Glossing over the transcendental issue of on false and fraudulent statements and documents confer no
fraud and misrepresentation raised by herein petitioner, Med- legitimacy upon a labor organization irregularly recognized,
Arbiter Rasidali Abdullah held that: which, at best, holds on to a mere scrap of paper. Under such
The alleged misrepresentation, fraud and false statement in circumstances, the labor organization, not being a legitimate
connection with the issuance of the charter certificate are labor organization, acquires no rights, particularly the right to
collateral issues which could be ventilated in the cancellation ask for certification election in a bargaining unit.
proceedings. 17 As we laid emphasis in Progressive Development Corporation
It cannot be denied that the grounds invoked by petitioner for Labor, 18 "[t]he employer needs the assurance that the union
the cancellation of respondent Union's registration fall under it is dealing with is a bona fide organization, one which has
paragraph (a) and (c) of Article 239 of the Labor Code, to wit: not submitted false statements or misrepresentations to the
Bureau." Clearly, fraud, falsification and misrepresentation in
obtaining recognition as a legitimate labor organization are
contrary to the Med-Arbiter's conclusion not merely collateral
issues. The invalidity of respondent Union's registration
would negate its legal personality to participate in
certification election.

Once a labor organization attains the status of a legitimate


labor organization it begins to possess all of the rights and
privileges granted by law to such organizations. As such
rights and privileges ultimately affect areas which are
constitutionally protected, the activities in which labor
organizations, associations and unions are engaged directly
affect the public interest and should be zealously protected.
A strict enforcement of the Labor Code's requirements for the
acquisition of the status of a legitimate labor organization is
in order.

Inasmuch as the legal personality of respondent Union had


been seriously challenged, it would have been more prudent
for the Med-Arbiter and public respondent to have granted
petitioner's request for the suspension of proceedings in the
certification election case, until the issue of the legality of the
Union's registration shall have been resolved. Failure of the
Med-Arbiter and public respondent to heed the request
constituted a grave abuse of discretion.

WHEREFORE, PREMISES CONSIDERED, the instant petition is


GRANTED and the Resolution and Order of the public
respondent dated December 29, 1993 and January 24, 1994,
respectively, are hereby SET ASIDE.

The case is REMANDED to the Med-Arbiter to resolve with


reasonable dispatch petitioner's petition for cancellation of
G.R. No. 76427 February 21, 1989
respondent Union's registration.
JOHNSON AND JOHNSON LABOR UNION-FFW, DANTE
SO ORDERED.
JOHNSON MORANTE, MYRNA OLOVEJA AND ITS OTHER
INDIVIDUAL UNION MEMBERS, petitioners
vs.
DIRECTOR OF LABOR RELATIONS, AND OSCAR officers had refused to provide the private respondent the
PILI, respondents. financial aid as provided in the union constitution despite
demands for payment thereof The petitioner-union and its
Rogelio R. Udarbe for petitioners. officers counter-alleged, in their answer, that the said
The Solicitor General for public respondent. financial aid was to be given only in cases of termination or
suspension without any reasonable cause; that the union's
Manuel V. Nepomuceno for private respondent. executive board had the prerogative to determine whether
the suspension or termination was for a reasonable cause or
not; and that the union, in a general membership meeting,
had resolved not to extend financial aid to the private
GUTIERREZ, JR., J.:
respondent.
The sole issue in this petition for review on certiorari is
While the grievance procedure as contained in the union's
whether or not the public respondent committed grave abuse
collective bargaining agreement was being undertaken, the
of discretion in ruling that the private respondent is entitled
private respondent, on August 26, 1985, filed a case for
to the financial aid from the compulsory contributions of the
unfair labor practice and illegal dismissal against his
petitioner-union afforded to its members who have been
employer docketed as NLRC-NCR Case No. 6-1912-85.
suspended or terminated from work without reasonable
cause. On September 27, 1985, Med-Arbiter Anastacio L. Bactin
issued an order dismissing for lack of merit the complaint of
The provision for the grant of financial aid in favor of a union
the private respondent against the petitioners for alleged
member is embodied in the petitioner-union's Constitution
violation of the union constitution and by-laws.
and By-laws, Article XIII, Section 5, of which reads:
On appeal, the then public respondent Director Cresenciano
A member who have (sic) been suspended or terminated
B. Trajano, on April 17, 1986, rendered the decision assailed
without reasonable cause shall be extended a financial aid
in this petition. The dispositive portion of the said decision
from the compulsory contributions in the amount of SEVENTY
reads:
FIVE CENTAVOS (P0. 75) from each member weekly. (p. 18,
Rollo) WHEREFORE, premises considered, the appeal of
complainant Oscar Pili is hereby granted and the Order
On May 6, 1985, the private respondent, a member of the
appealed from is hereby set aside. Appellees, therefore, are
petitioner-union was dismissed from his employment by
hereby ordered to pay the complainant the sum of
employer Johnson & Johnson (Phil.) Inc., for non-disclosure in
P0.75/week per union member to be computed from the time
his job application form of the fact that he had a relative in
of the complainant's termination from employment to the
the company in violation of company policies.
time he acquired another employment should his complaint
On July 1985, a complaint was filed by the private respondent for illegal dismissal against the company be resolved in his
against the officers of the petitioner-union docketed as NRC- favor; provided, that if his complaint against the company be
LRD-M-7-271-85 alleging, among others, that the union
dismissed, appellees are absolved from paying the WHEREFORE, and as above qualified, this Bureau's Decision
complainant anything. (p. 115, Records) dated 17 April 1986 and the Order dated 26 June 1986 are
hereby modified to the extent that the respondents are
Both parties moved for reconsideration. The petitioners directed to immediately pay complainant the sum of
reiterated that since the private respondent's termination P0.75/week per union member to be computed from the time
was for a reasonable cause, it would be unjust and unfair if of his termination from his employment until his case against
financial aid were to be given in the event that the latter's the employer company shall have been finally resolved
case for illegal dismissal is decided against him. The private and/or disposed. (p. 53, Rollo)
respondent, on the other hand, prayed for the amendment of
the dispositive portion in order that the grant of financial aid Meanwhile, on July 25, 1986, a motion for issuance of a writ
be made without any qualifications. of execution was filed by the private respondent in order to
collect from the petitioners the amount of financial aid to
On June 16, 1986, a Manifestation and/or Opposition to the which the former was entitled.
Motion for Reconsideration filed by the petitioners was filed
by the private respondent stating that he was being On September 1, 1986, the petitioners moved for a
discriminated against considering that one Jerwin Taguba, reconsideration of the public respondent's resolution dated
another union member, was terminated for dishonesty and August 19, 1986 on the grounds that Taguba's affidavit
loss of confidence but was granted financial aid by the cannot support the private respondent's claim that he is also
petitioners while Taguba's complaint against the company entitled to the financial aid provided in the union's
was still pending with the National Labor Relation constitution and that the union cannot be compelled to grant
Commission. the said aid in the absence of a special fund for the purpose.

The public respondent separately resolved the above On October 28, 1986, the public respondent through Director
motions. On June 26, 1986, an order was issued denying the Pura Ferrer-Calleja denied the petitioners' motion for
petitioners' motion for reconsideration. On August 19, 1986, reconsideration stating that Article XIII, Section 5 of the
the public respondent modified its decision dated April 17, union's constitution and by-laws does not require a special
1986 and its aforestated order as follows: fund so that all union members similarly situated as the
private respondent must be entitled to the same right and
Considering that complainant Pili is similarly situated as privilege regarding the grant of financial aid as therein
Jerwin Taguba coupled with the need to obviate any provided.
discriminating treatment to the former, it is only just and
appropriate that our Decision dated 17 April 1986 be On December 18, 1986, a writ of execution was issued by the
modified in such a manner that respondents immediately pay public respondent in the following tenor:
the complainant the sum of P0.75/ week per union member
to be computed from the time of his dismissal from the NOW THEREFORE, you are hereby directed to proceed to the
company, without prejudice to refund of the amount that premises of Johnson and Johnson (FFW) located at Edison
shall be paid to Pili in the event the pending case is finally Road, Bo. Ibayo, Paranaque, Metro Manila to collect from the
resolved against him. said union through its Treasurer, Myrna Oloveja or to any
responsible officer of the union the amount of Twenty compulsory under the said provision in the amount of
Thousand Five Hundred Twenty Pesos (P20,520.00), more or seventy-five centavos due weekly from each union member.
less representing financial assistance to complainant under The nature of the said contributions being compulsory and
the union's constitution and by-laws. In case you fail to the fact that the purpose as stated is for financial aid clearly
collect said amount in cash, you are to cause the satisfaction indicate that individual payroll authorizations of the union
of the same on the union's movable or immovable properties members are not necessary. The petitioner-union's
not exempt from execution. You are to return this writ within constitution and by-laws govern the relationship between and
fifteen (15) days from your compliance hereby together with among its members. As in the interpretation of contracts, if
your report thereon. You may collect your legal fees from the the terms are clear and leave no doubt as to the intention of
respondent union. (p. 55, Rollo) the parties, the literal meaning of the stipulations shall
control. (See Government Service Insurance System v. Court
On December 24, 1986, the instant petition was filed with of Appeals, 145 SCRA 311 [1986]). Section 5, Article XIII of
prayer for a preliminary injunction. The temporary restraining the said constitution and by-laws is in line with the petitioner-
order issued by the Chief Justice on December 24, 1986 was union's aims and purposes which under Sec. 2, Article II
confirmed in our resolution dated January 7, 1987. include
The grounds relied upon by the petitioners are as follows: To promote, establish and devise schemes of mutual
A. THAT THE DECISION/ORDER IN QUESTION IS CONTRARY TO assistance among the members in labor disputes.
LAW. Thus, there is no doubt that the petitioner-union can be
B. THAT RESPONDENT OFFICIAL ACTED WITH GRAVE ABUSE ordered to release its funds intended for the promotion of
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION. mutual assistance in favor of the private respondent.

C. THAT WITH RESPECT TO PETITIONING MEMBERS, THEY We likewise find untenable the argument of the petitioners
HAVE BEEN DEPRIVED OF THEIR CONSTITUTIONAL RIGHT TO that the public respondent, in granting financial aid to the
DUE PROCESS OF LAW. (P. 13, Rollo) private respondent, in effect, substituted the decision of the
petitioner-union to do otherwise and that in so doing, the
We find unmeritorious the contention of the petitioners that public respondent gravely abused its discretion amounting to
the questioned decision and order are contrary to law for lack of jurisdiction. The union constitution is a covenant
being tantamount to compelling the union to disburse it between the union and its members and among the
funds without the authority of the general membership and members. There is nothing in their constitution which leaves
to collect from its members without the benefit of individual the legal interpretation of its terms unilaterally to the union
payroll authorization. or its officers or even the general membership. It is
noteworthy to quote the ruling made by the public
Section 5, Article XIII of the petitioner-union's constitution respondent in this respect, to wit:
and by-laws earlier aforequoted is self-executory. The
financial aid extended to any suspended or terminated union The union constitution and by-laws clearly show that any
member is realized from the contributions declared to be member who is suspended or terminated from employment
without reasonable cause is entitled to financial assistance does not have to be brought against each individual member,
from the union and its members. The problem, however, is especially where several thousand members form the
that the constitution does not indicate which body has the membership. If there is any violation of the right to due
power to determine whether a suspension or dismissal is for process in the case at bar it is as regards the private
reasonable cause or not. To our mind, the constitution's respondent since the petitioners-union has dispensed with
silence on this matter is a clear recognition of the labor due process in deciding not to extend financial aid to the
arbiter's exclusive jurisdiction over dismissal cases. After all, private respondent in the absence yet of a ruling by the labor
the union's constitution and by-laws is valid only insofar as it arbiter on whether his dismissal was for a reasonable cause
is not inconsistent with existing laws. ... . (BLR decision, p. 2; or not.
p. 115, Records)
The remedy of the petitioners is to strike out or amend the
An aggrieved member has to resort to a government agency objectionable features of their constitution. They cannot
or tribunal. Considering that quasi-judicial agencies like the expect the public respondent to assist them in its non-
public respondent's office have acquired expertise since their enforcement or violation.
jurisdiction is confined to specific matter, their findings of
fact in connection with their rulings are generally accorded WHEREFORE, PREMISES CONSIDERED, the instant petition is
not only respect but at times even finality if supported by hereby DISMISSED in the absence of a showing of grave
substantial evidence. (See Manila Mandarin Employees Union abuse of discretion on the part of the public respondent. The
v. National Labor Relations Commission, 154 SCRA 368 decision of the public respondent dated April 17, 1986 as
[1987]) Riker v. Ople, 155 SCRA 85 [1987]; and Palencia v. modified in a resolution dated August 17, 1986 is AFFIRMED.
National Labor Relations Commission, 153 SCRA 247 [1987]. The temporary restraining order issued by the Court on
We note from the records that the petitioners have conflicting December 24,1986 is SET ASIDE.
interpretations of the same disputed provision one in favor of SO ORDERED.
Jerwin Taguba and another against the private respondent.

On the ancillary issue presented by the petitioners whether


or not the petitioning union members have been deprived of
their right to due process of law because they were never
made parties to the case under consideration, we rule that
the fact that the union officers impleaded since the inception
of the case acted in a representative capacity on behalf of
the entire union's membership substantially meets the
requirements of due process with respect to the said union
members. Moreover, the complaint filed against the union
involves the interpretation of its constitution favoring an
aggrieved member. The members are bound by the terms of
their own constitution. A suit to enforce a union constitution
CAMPO, ZACARIAS DAMING, PRUDENCIO LADION,
FULGENCIO BERSALUNA, ALBERTO PERALES, ROMEO
MAGRAMO, GODOFREDO CAMINOS, GILDARDO DUMAS,
JORGE SALDIVAR, GENARO MADRIO, SEGUNDINO
KUIZON, LUIS SANDOVAL, NESTOR JAPAY, ROGELIO
CUIZON, RENATO ANTIPADO, GREGORIO CUEVO,
MARTIN BALAZUELA, CONSTANCIO CHU, CRISPIN
TUBLE, FLORENCIO CHIU, FABIAN CAHUCOM, EMILIANO
VILLAMOR, RESTITUTO HANDAYAN, VICTORINO
ESPEDILLA, NOEL CHUA, ARMANDO ALCORANO,
ELEUTERIO TAGUIK, SAMSON CRUDA, DANILO CASTRO,
CENON VALLENAS, DANILO CAWALING, SIMPLICIO
GALLEROS, PERFECTO CUIZON, PROCESO LAUROS,
ANICETO BAYLON, EDISON ANDRES, REYNALDO
BAGOHIN, IRENEO SUPANGAN, RODRIGO CAGATIN,
TEODORO ORENCIO, ARMANDO LUAYON, JAIME NERVA,
NARCISO CUIZON, ALFREDO DEL ROSARIO, EDUARDO
LORENZO, PEDRO ARANGO, VICENTE SUPANGAN,
JACINTO BANAL AND BONIFACIO PUERTO, petitioners,
vs.
TROPICAL HUT FOOD MARKET, INC., ESTELITA J. QUE,
ARTURO DILAG, MARCELINO LONTOK JR., NATIONAL
ASSOCIATION OF TRADE UNIONS (NATU), NATIONAL
LABOR RELATIONS COMMISSION (NLRC), HON. DIEGO
P. ATIENZA, GERONIMO Q. QUADRA, FEDERICO C.
G.R. No. L-43495-99 January 20, 1990 BORROMEO, AND HON. BLAS F. OPLE,respondents.

TROPICAL HUT EMPLOYEES' UNION-CGW, JOSE Pacifico C. Rosal for petitioners.


ENCINAS, JOSE LUIS TRIBINO, FELIPE DURAN, MANUEL
Marcelino Lontok, Jr. for private respondents.
MANGYAO, MAMERTO CAHUCOM, NEMESIO BARRO,
TEODULFO CAPAGNGAN, VICTORINO ABORRO, VIDAL Dizon, Vitug & Fajardo Law Office for Tropical Hut Food
MANTOS, DALMACIO DALDE, LUCIO PIASAN, CANUTO Market, Inc. and Que.
LABADAN, TERESO ROMERDE, CONRADO ENGALAN,
SALVADOR NERVA, BERNARDO ENGALAN, BONIFACIO
CAGATIN, BENEDICTO VALDEZ, EUSEBIO SUPILANAS,
MEDIALDEA, J.:
ALFREDO HAMAYAN, ASUERO BONITO, GAVINO DEL
This is a petition for certiorari under Rule 65 seeking to set Republic of the Philippines, with principal office at Quezon
aside the decisions of the public respondents Secretary of City, represented in this Act by its President, Cesar B. Azcona
Labor and National Labor Relations Commission which (hereinafter referred to as the Company)
reversed the Arbitrators rulings in favor of petitioners herein.
and
The following factual background of this case appears from
the record: The Tropical Hut Employees Union NATU, a legitimate labor
organization duly organized and existing in accordance with
On January 2, 1968, the rank and file workers of the Tropical the laws of the Republic of the Philippines, and affiliated with
Hut Food Market Incorporated, referred to herein as the National Association of Trade Unions, with offices at San
respondent company, organized a local union called the Luis Terraces, Ermita, Manila, and represented in this Act by
Tropical Hut Employees Union, known for short as the THEU, its undersigned officers (hereinafter referred to as the UNION)
elected their officers, adopted their constitution and by-laws
and immediately sought affiliation with the National Witnesseth:
Association of Trade Unions (NATU). On January 3, 1968, the xxx xxx xxx
NATU accepted the THEU application for affiliation. Following
such affiliation with NATU, Registration Certificate No. 5544-IP Article I
was issued by the Department of Labor in the name of the
Tropical Hut Employees Union NATU. It appears, however, Coverage and Effectivity
that NATU itself as a labor federation, was not registered with
Sec. 1. The COMPANY recognizes the UNION as the sole and
the Department of Labor.
exclusive collective bargaining agent for all its workers and
After several negotiations were conducted between THEU- employees in all matters concerning wages, hours of work,
NATU, represented by its local president and the national and other terms and conditions of employment.
officers of the NATU, particularly Ignacio Lacsina, President,
xxx xxx xxx
Pacifico Rosal, Executive Vice-President and Marcelino
Lontok, Jr., Vice President, and respondent Tropical Hut Food Article III
Market, Incorporated, thru its President and General
Manager, Cesar Azcona, Sr., a Collective Bargaining Union Membership and Union Check-off
Agreement was concluded between the parties on April 1,
Sec. 1 . . . Employees who are already members of the
1968, the term of which expired on March 31, 1971. Said
UNION at the time of the signing of this Agreement or who
agreement' contained these clear and unequivocal terms:
become so thereafter shall be required to maintain their
This Agreement made and entered into this __________ day of membership therein as a condition of continued employment.
___________, 1968, by and between:
xxx xxx xxx
The Tropical Hut Food Market, Inc., a corporation duly
Sec. 3Any employee who is expelled from the UNION for
organized and existing under and by virtue of the laws of the
joining another federation or forming another union, or who
fails or refuses to maintain his membership therein as announcement in an open letter to the general membership
required, . . . shall, upon written request of the UNION be of the THEU, concerning the latter's disaffiliation from the
discharged by the COMPANY. (Rollo, pp. 667-670) NATU and its affiliation with the Confederation of General
Workers (CGW). The letter was passed around among the
And attached to the Agreement as Appendix "A" is a check- members of the THEU-NATU, to which around one hundred
off Authorization Form, the terms of which are as follows: and thirty-seven (137) signatures appeared as having given
We, the undersigned, hereby designate the NATIONAL their consent to and acknowledgment of the decision to
Association of Trade Unions, of which the TROPICAL HUT disaffiliate the THEU from the NATU.
EMPLOYEES UNION is an affiliate as sole collective bargaining On January 1, 1974, the general membership of the so-called
agent in all matters relating to salary rates, hours of work THEU-CGW held its annual election of officers, with Jose
and other terms and conditions of employment in the Tropical Encinas elected as President. On January 3, 1974, Encinas, in
Hut Food Market, Inc. and we hereby authorize the said his capacity as THEU-CGW President, informed the
company to deduct the amount of Four (P 4.00) Pesos each respondent company of the result of the elections. On
every month as our monthly dues and to deliver the amount January 9, 1974, Pacifico Rosal, President of the
to the Treasurer of the Union or his duly authorized Confederation of General Workers (CGW), wrote a letter in
representatives. (Rollo, pp. 680-684) behalf of complainant THEU-CGW to the respondent company
On May 21, 1971, respondent company and THEU-NATU demanding the remittance of the union dues collected by the
entered into a new Collective Bargaining Agreement which Tropical Hut Food Mart, Incorporated to the THEU-CGW, but
ended on March 31, 1974. This new CBA incorporated the this was refused by the respondent company.
previous union-shop security clause and the attached check- On January 11, 1974, the NATU thru its Vice-President
off authorization form. Marcelino Lontok, Jr., wrote Vidal Mantos, requiring the latter
Sometime in July, 1973, Arturo Dilag, incumbent President of to assume immediately the position of President of the THEU-
THEU-NATU, was appointed by the respondent company as NATU in place of Jose Encinas, but the position was declined
Assistant Unit Manager. On July 24, 1973, he wrote the by Mantos. On the same day, Lontok, Jr., informed Encinas in
general membership of his union that for reason of his a letter, concerning the request made by the NATU federation
present position, he was resigning as President of the THEU- to the respondent company to dismiss him (Encinas) in view
NATU effective that date. As a consequence thereof, his Vice- of his violation of Section 3 of Article III of the Collective
President, Jose Encinas, assumed and discharged the duties Bargaining Agreement. Encinas was also advised in the letter
of the presidency of the THEU-NATU. that NATU was returning the letter of disaffiliation on the
ground that:
On December 19,1973, NATU received a letter dated
December 15, 1973, jointly signed by the incumbent officers 1. Under the restructuring program NOT of the Bureau of
of the local union informing the NATU that THEU was Labor but of the Philippine National Trade Union Center in
disaffiliating from the NATU federation. On December 20, conjunction with the NATU and other established national
1973, the Secretary of the THEU, Nemesio Barro, made an labor centers, retail clerks and employees such as our
members in the Tropical Hut pertain to Industry II which by special election to be called at a later date. In the alleged
consensus, has been assigned already to the jurisdiction of election, Arturo Dilag was elected acting THEU-NATU
the NATU; President together with the other union officers. On February
14, 1974, these temporary officers were considered as
2. The right to disaffiliate belongs to the union membership having been elected as regular officers for the year 1974.
who on the basis of verified reports received by have
not even been consulted by you regarding the matter; On January 30, 1974, petitioner THEU-CGW wrote a letter to
Juan Ponce Enrile, Secretary of National Defense, complaining
3. Assuming that the disaffiliation decision was properly of the unfair labor practices committed by respondent
reached; your letter nevertheless is unacceptable in view of company against its members and requesting assistance on
Article V, Section 1, of the NATU Constitution which provides the matter. The aforementioned letter contained the
that "withdrawal from the organization shall he valid provided signatures of one hundred forty-three (143) members.
three (3) months notice of intention to withdraw is served
upon the National Executive Council." (p. 281, Rollo) On February 24,1974, the secretary of THEU-NATU, notified
the entire rank and file employees of the company that they
In view of NATU's request, the respondent company, on the will be given forty-eight (48) hours upon receipt of the notice
same day, which was January 11, 1974, suspended Encinas within which to answer and affirm their membership with
pending the application for clearance with the Department of THEU-NATU. When the petitioner employees failed to reply,
Labor to dismiss him. On January 12, 1974, members of the Arturo Dilag advised them thru letters dated February 26,
THEU-CGW passed a resolution protesting the suspension of March 2 and 5, 1974, that the THEU-NATU shall enforce the
Encinas and reiterated their ratification and approval of their union security clause set forth in the CBA, and that he had
union's disaffiliation from NATU and their affiliation with the requested respondent company to dismiss them.
Confederation of General Workers (CGW). It was Encinas'
suspension that caused the filing of NLRC Case No. LR-2511 Respondent company, thereafter, wrote the petitioner
on January 11, 1974 against private respondents herein, employees demanding the latter's comment on Dilag's
charging them of unfair labor practice. charges before action was taken thereon. However, no
comment or reply was received from petitioners. In view of
On January 15,1974, upon the request of NATU, respondent this, Estelita Que, President/General Manager of respondent
company applied for clearance with the Secretary of Labor to company, upon Dilag's request, suspended twenty four (24)
dismiss the other officers and members of THEU-CGW. The workers on March 5, 1974, another thirty seven (37) on
company also suspended them effective that day. NLRC Case March 8, 1974 and two (2) more on March 11, 1974, pending
No. LR-2521 was filed by THEU-CGW and individual approval by the Secretary of Labor of the application for their
complainants against private respondents for unfair labor dismissal.
practices.
As a consequence thereof, NLRC Case Nos. LR-2971, LR-3015
On January 19, 1974, Lontok, acting as temporary chairman, and an unnumbered case were filed by petitioners against
presided over the election of officers of the remaining THEU- Tropical Hut Food Market, Incorporated, Estelita Que,
NATU in an emergency meeting pending the holding of a Hernando Sarmiento and Arturo Dilag.
It is significant to note that the joint letter petition signed by reinstatement without loss of seniority and other
sixty-seven (67) employees was filed with the Secretary of employment rights and privileges, and ordering the
Labor, the NLRC Chairman and Director of Labor Relations to respondents to desist from further committing acts of unfair
cancel the words NATU after the name of Tropical Hut labor practice. The respondent company's application for
Employee Union under Registration Certificate No. 5544 IP. clearance filed with the Secretary of Labor to terminate the
Another letter signed by one hundred forty-six (146) subject complainants' services effective March 20 and 23,
members of THEU-CGW was sent to the President of the 1974, should be denied.
Philippines informing him of the unfair labor practices
committed by private respondents against THEU-CGW SO ORDERED. (pp. 147-148, Rollo)
members. From the orders rendered above by Abitrator Daniel Lucas in
After hearing the parties in NLRC Cases Nos. 2511 and 2521 NLRC Cases No. LR-2511 and LR-2521 and by Arbitrator Cleto
jointly filed with the Labor Arbiter, Arbitrator Daniel Lucas Villatuya in NLRC Cases Nos. LR-2971, LR-3015, and the
issued an order dated March 21, 1974, holding that the unnumbered case, all parties thereto, namely, petitioners
issues raised by the parties became moot and academic with herein, respondent company, NATU and Dilag appealed to the
the issuance of NLRC Order dated February 25, 1974 in NLRC National Labor Relations Commission.
Case No. LR-2670, which directed the holding of a In a decision rendered on August 1, 1975, the National Labor
certification election among the rank and file workers of the Relations Commission found the private respondents' appeals
respondent company between the THEU-NATU and THEU- meritorious, and stated, inter alia:
CGW. He also ordered: a) the reinstatement of all
complainants; b) for the respondent company to cease and WHEREFORE, in view of the foregoing premises, the Order of
desist from committing further acts of dismissals without Arbitrator Lucas in NLRC CASE NOS. LR-2511, 2521 and the
previous order from the NLRC and for the complainant decision of Arbitrator Villatuya in NLRC CASE NOS. LR-2971,
Tropical Hut Employees UNION-CGW to file representation 3015 and the unnumbered Case are hereby REVERSED.
cases on a case to case basis during the freedom period Accordingly, the individual complainants are deemed to have
provided for by the existing CBA between the parties (pp. 91- lost their status as employees of the respondent company.
93, Rollo). However, considering that the individual complainants are
not presumed to be familiar with nor to have anticipated the
With regard to NLRC Case Nos. LR-2971, LR-3015, and the legal mesh they would find themselves in, after their
unnumbered case, Arbitrator Cleto T. Villatuya rendered a "disaffiliation" from National Association of Trade Unions and
decision dated October 14, 1974, the dispositive portion of the THEU-NATU, much less the legal consequences of the
which states: said action which we presume they have taken in all good
Premises considered, a DECISION is hereby rendered ordering faith; considering, further, that the thrust of the new
respondent company to reinstate immediately the sixty three orientation in labor relations is not towards the punishment
(63) complainants to their former positions with back wages of acts violative of contractual relations but rather towards
from the time they were illegally suspended up to their actual fair adjustments of the resulting complications; and
considering, finally, the consequent economic hardships that
would be visited on the individual complainants, if the law In lieu of the foregoing, and to give complainants positive
were to be strictly enforced against them, this Commission is relief pursuant to Section 9, Implementing Instruction No. 1.
constrained to be magnanimous in this instant, dated November 9, 1972, respondent is hereby ordered to
notwithstanding its obligation to give full force and effect to grant to all the individual complainants financial assistance
the majesty of the law, and hereby orders the respondent equivalent to one (1) month salary for every year of service.
company, under pain of being cited for contempt for failure
to do so, to give the individual complainants a second chance WHEREFORE, with the modification as above indicated, the
by reemploying them upon their voluntary reaffirmation of Decision of the National Labor Relations Commission is
membership and loyalty to the Tropical Hut Employees Union- hereby affirmed.
NATU and the National Association of Trade Unions in the SO ORDERED.(pp. 317-318, Rollo)
event it hires additional personnel.
From the various pleadings filed and arguments adduced by
SO ORDERED. (pp. 312-313, Rollo) petitioners and respondents, the following issues appear to
The petitioner employees appealed the decision of the be those presented for resolution in this petition to wit: 1)
respondent National Labor Relations Commission to the whether or not the petitioners failed to exhaust
Secretary of Labor. On February 23, 1976, the Secretary of administrative remedies when they immediately elevated the
Labor rendered a decision affirming the findings of the case to this Court without an appeal having been made to
Commission, which provided inter alia: the Office of the President; 2) whether or not the disaffiliation
of the local union from the national federation was valid; and
We find, after a careful review of the record, no sufficient 3) whether or not the dismissal of petitioner employees
justification to alter the decision appealed from except that resulting from their unions disaffiliation for the mother
portion of the dispositive part which states: federation was illegal and constituted unfair labor practice on
the part of respondent company and federation.
. . . this Commission . . . hereby orders respondent company
under pain of being cited for contempt for failure to do so, to We find the petition highly meritorious.
give the individual complainants a second chance by
reemploying them upon their voluntary reaffirmation of The applicable law then is the Labor Code, PD 442, as
membership and loyalty to the Tropical Hut Employees amended by PD 643 on January 21, 1975, which states:
UNION-NATU and the National Association of Trade Union in Art. 222. Appeal . . .
the event it hires additional personnel.
xxx xxx xxx
Compliance by respondent of the above undertaking is not
immediately feasible considering that the same is based on Decisions of the Secretary of Labor may be appealed to the
an uncertain event, i.e., reemployment of individual President of the Philippines subject to such conditions or
complainants "in the event that management hires additional limitations as the President may direct. (Emphasis ours)
personnel," after they shall have reaffirmed their loyalty to
THEU-NATU, which is unlikely.
The remedy of appeal from the Secretary of Labor to the purpose of collective bargaining and to engage in concerted
Office of the President is not a mandatory requirement before activities for their mutual aid or protection. This is a
resort to courts can be had, but an optional relief provided by fundamental right of labor that derives its existence from the
law to parties seeking expeditious disposition of their labor Constitution. In interpreting the protection to labor and social
disputes. Failure to avail of such relief shall not in any way justice provisions of the Constitution and the labor laws or
served as an impediment to judicial intervention. And where rules or regulations, We have always adopted the liberal
the issue is lack of power or arbitrary or improvident exercise approach which favors the exercise of labor rights.
thereof, decisions of the Secretary of Labor may be
questioned in a certiorari proceeding without prior appeal to Relevant on this point is the basic principle We have
the President (Arrastre Security Association TUPAS v. Ople, repeatedly in affirmed in many rulings:
No. L-45344, February 20, 1984, 127 SCRA 580). Since the . . . The locals are separate and distinct units primarily
instant petition raises the same issue of grave abuse of designed to secure and maintain an equality of bargaining
discretion of the Secretary of Labor amounting to lack of or in power between the employer and their employee-members
excess of jurisdiction in deciding the controversy, this Court in the economic struggle for the fruits of the joint productive
can properly take cognizance of and resolve the issues raised effort of labor and capital; and the association of the locals
herein. into the national union (PAFLU) was in furtherance of the
This brings Us to the question of the legality of the dismissal same end. These associations are consensual entities
meted to petitioner employees. In the celebrated case capable of entering into such legal relations with their
of Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, member. The essential purpose was the affiliation of the local
L-33187, September 4, 1975, 66 SCRA 512, We held that the unions into a common enterprise to increase by collective
validity of the dismissals pursuant to the union security action the common bargaining power in respect of the terms
clause in the collective bargaining agreement hinges on the and conditions of labor. Yet the locals remained the basic
validity of the disaffiliation of the local union from the units of association, free to serve their own and the common
federation. interest of all, subject to the restraints imposed by the
Constitution and By-Laws of the Association, and free also to
The right of a local union to disaffiliate from its mother renounce the affiliation for mutual welfare upon the terms
federation is well-settled. A local union, being a separate and laid down in the agreement which brought it into existence.
voluntary association, is free to serve the interest of all its (Adamson & Adamson, Inc. v. CIR, No. L-35120, January 31,
members including the freedom to disaffiliate when 1984, 127 SCRA 268; Elisco-Elirol Labor Union (NAFLU) v.
circumstances warrant. This right is consistent with the Noriel, No. L-41955, December 29, 1977, 80 SCRA 681;
constitutional guarantee of freedom of association (Volkschel Liberty Cotton Mills Workers Union v. Liberty Cotton Mills,
Labor Union v. Bureau of Labor Relations, No. L-45824, June Inc., supra).
19, 1985, 137 SCRA 42).
The inclusion of the word NATU after the name of the local
All employees enjoy the right to self organization and to form union THEU in the registration with the Department of Labor
and join labor organizations of their own choosing for the is merely to stress that the THEU is NATU's affiliate at the
time of the registration. It does not mean that the said local Respondent Secretary of Labor, in affirming the decision of
union cannot stand on its own. Neither can it be interpreted the respondent Commission, concluded that the supposed
to mean that it cannot pursue its own interests decision to disaffiliate was not the subject of a free and open
independently of the federation. A local union owes its discussion and decision on the part of the THEU-NATU
creation and continued existence to the will of its members general membership (p. 305, Rollo). This, however, is
and not to the federation to which it belongs. contradicted by the evidence on record. Moreover, We are
inclined to believe Arbitrator Villatuya's findings to the
When the local union withdrew from the old federation to join contrary, as follows:
a new federation, it was merely exercising its primary right to
labor organization for the effective enhancement and . . . . However, the complainants refute this allegation by
protection of common interests. In the absence of submitting the following: a) Letter dated December 20, 1.973
enforceable provisions in the federation's constitution signed by 142 members (Exhs. "B to B-5") resolution dated
preventing disaffiliation of a local union a local may sever its January 12, 1974, signed by 140 members (Exhs. "H to H-6")
relationship with its parent (People's Industrial and letter dated February 26, 1974 to the Department of Labor
Commercial Employees and Workers Organization (FFW) v. signed by 165 members (Exhs. "I to I-10"); d) letter dated
People's Industrial and Commercial Corporation, No. 37687, January 30, 1974 to the Secretary of the National Defense
March 15, 1982, 112 SCRA 440). signed by 144 members (Exhs. "0 to 0-5") and; e) letter
dated March 6, 1974 signed by 146 members addressed to
There is nothing in the constitution of the NATU or in the the President of the Philippines (Exhs. "HH to HH-5"), to show
constitution of the THEU-NATU that the THEU was expressly that in several instances, the members of the THEU-NATU
forbidden to disaffiliate from the federation (pp. 62, have acknowledged their disaffiliation from NATU. The letters
281, Rollo), The alleged non-compliance of the local union of the complainants also indicate that an overwhelming
with the provision in the NATU Constitution requiring the majority have freely and voluntarily signed their union's
service of three months notice of intention to withdraw did disaffiliation from NATU, otherwise, if there was really
not produce the effect of nullifying the disaffiliation for the deception employed in securing their signatures as claimed
following grounds: firstly, NATU was not even a legitimate by NATU/ Dilag, it could not be possible to get their
labor organization, it appearing that it was not registered at signatures in five different documents. (p. 144, Rollo)
that time with the Department of Labor, and therefore did not
possess and acquire, in the first place, the legal personality We are aware of the time-honored doctrine that the findings
to enforce its constitution and laws, much less the right and of the NLRC and the Secretary of Labor are binding on this
privilege under the Labor Code to organize and affiliate Court if supported by substantial evidence. However, in the
chapters or locals within its group, and secondly, the act of same way that the findings of facts unsupported by
non-compliance with the procedure on withdrawal is substantial and credible evidence do not bind this Court,
premised on purely technical grounds which cannot rise neither will We uphold erroneous conclusions of the NLRC and
above the fundamental right of self-organization. the Secretary of Labor when We find that the latter
committed grave abuse of discretion in reversing the decision
of the labor arbiter (San Miguel Corporation v. NLRC, L-50321,
March 13, 1984, 128 SCRA 180). In the instant case, the are inclined to agree instead with the Arbitrator's findings
factual findings of the arbitrator were correct against that of when he declared:
public respondents.
. . . . Much more, the so-called THEU-NATU under Dilag's
Further, there is no merit in the contention of the group which assumes to be the original THEU-NATU has a
respondents that the act of disaffiliation violated the union very doubtful and questionable existence not to mention that
security clause of the CBA and that their dismissal as a the alleged president is performing supervisory functions and
consequence thereof is valid. A perusal of the collective not qualified to be a bona fide member of the rank and file
bargaining agreements shows that the THEU-NATU, and not union. (p. 146, Rollo)
the NATU federation, was recognized as the sole and
exclusive collective bargaining agent for all its workers and Records show that Arturo Dilag had resigned in the past as
employees in all matters concerning wages, hours of work President of THEU-NATU because of his promotion to a
and other terms and conditions of employment (pp. 667- managerial or supervisory position as Assistant Unit Manager
706, Rollo). Although NATU was designated as the sole of respondent Company. Petitioner Jose Encinas replaced
bargaining agent in the check-off authorization form attached Dilag as President and continued to hold such position at the
to the CBA, this simply means it was acting only for and in time of the disaffiliation of the union from the federation. It is
behalf of its affiliate. The NATU possessed the status of an therefore improper and contrary to law for Dilag to reassume
agent while the local union remained the basic principal the leadership of the remaining group which was alleged to
union which entered into contract with the respondent be the true union since he belonged to the managerial
company. When the THEU disaffiliated from its mother personnel who could not be expected to work for the
federation, the former did not lose its legal personality as the betterment of the rank and file employees. Besides,
bargaining union under the CBA. Moreover, the union security managers and supervisors are prohibited from joining a rank
clause embodied in the agreements cannot be used to justify and file union (Binalbagan Isabela Sugar Co., Inc. (BISCOM) v.
the dismissals meted to petitioners since it is not applicable Philippine Association of Free Labor Unions (PAFLU), et al., L-
to the circumstances obtaining in this case. The CBA imposes 18782, August 29, 1963, 8 SCRA 700). Correspondingly, if a
dismissal only in case an employee is expelled from the manager or supervisor organizes or joins a rank and file
union for joining another federation or for forming another union, he will be required to resign therefrom (Magalit, et al.
union or who fails or refuses to maintain membership therein. v. Court of Industrial Relations, et al., L-20448, May 25,
The case at bar does not involve the withdrawal of merely 1965,14 SCRA 72).
some employees from the union but of the whole THEU itself Public respondents further submit that several employees
from its federation. Clearly, since there is no violation of the who disaffiliate their union from the NATU subsequently
union security provision in the CBA, there was no sufficient retracted and reaffirmed their membership with the THEU-
ground to terminate the employment of petitioners. NATU. In the decision which was affirmed by respondent
Public respondents considered the existence of Arturo Dilag's Secretary of Labor, the respondent Commission stated that:
group as the remaining true and valid union. We, however, . . . out of the alleged one hundred and seventy-one (171)
members of the THEU-CGW whose signatures appeared in
the "Analysis of Various Documents Signed by Majority petitioners failed to do so, respondent company immediately
Members of the THEU-CGW, (Annex "T", Complainants), suspended them and thereafter effected their dismissal. This
which incidentally was relied upon by Arbitrator Villatuya in is certainly not in fulfillment of the mandate of due process,
holding that complainant THEU-CGW commanded the which is to afford the employee to be dismissed an
majority of employees in respondent company, ninety-three opportunity to be heard.
(93) of the alleged signatories reaffirmed their membership
with the THEU-NATU and renounced whatever connection The prerogative of the employer to dismiss or lay-off an
they may have had with other labor unions, (meaning the employee should be done without abuse of discretion or
complainant THEU-CGW) either through resolution or arbitrainess, for what is at stake is not only the employee's
membership application forms they have unwittingly signed." name or position but also his means of livelihood. Thus, the
(p. 306, Rollo) discharge of an employee from his employment is null and
void where the employee was not formally investigated and
Granting arguendo, that the fact of retraction is true, the given the opportunity to refute the alleged findings made by
evidence on record shows that the letters of retraction were the company (De Leon v. NLRC, L-52056, October 30, 1980,
executed on various dates beginning January 11, 1974 to 100 SCRA 691). Likewise, an employer can be adjudged
March 8, 1974 (pp. 278-280, Rollo). This shows that the guilty of unfair labor practice for having dismissed its
retractions were made more or less after the suspension employees in line with a closed shop provision if they were
pending dismissal on January 11, 1974 of Jose Encinas, not given a proper hearing (Binalbagan-Isabela Sugar Co.,
formerly THEU-NATU President, who became THEU-CGW Inc.,(BISCOM) v. Philippine Association of Free Labor Unions
President, and the suspension pending their dismissal of the (PAFLU) et al., L-18782, August 29, 1963, 8 SCRA 700).
other elected officers and members of the THEU-CGW on
January 15, 1974. It is also clear that some of the retractions In view of the fact that the dispute revolved around the
occurred after the suspension of the first set of workers mother federation and its local, with the company
numbering about twenty-four (24) on March 5, 1974. There is suspending and dismissing the workers at the instance of the
no use in saying that the retractions obliterated the act of mother federation then, the company's liability should be
disaffiliation as there are doubts that they were freely and limited to the immediate reinstatement of the workers. And
voluntarily done especially during such time when their own since their dismissals were effected without previous hearing
union officers and co-workers were already suspended and at the instance of NATU, this federation should be held
pending their dismissal. liable to the petitioners for the payment of their backwages,
as what We have ruled in the Liberty Cotton Mills Case
Finally, with regard to the process by which the workers were (supra).
suspended or dismissed, this Court finds that it was hastily
and summarily done without the necessary due process. The ACCORDINGLY, the petition is hereby GRANTED and the
respondent company sent a letter to petitioners herein, assailed decision of respondent Secretary of Labor is
advising them of NATU/Dilag's recommendation of their REVERSED and SET ASIDE, and the respondent company is
dismissal and at the same time giving them forty-eight (48) hereby ordered to immediately reinstate all the petitioner
hours within which to comment (p. 637, Rollo). When employees within thirty (30) days from notice of this
decision. If reinstatement is no longer feasible, the
respondent company is ordered to pay petitioners separation
pay equivalent to one (1) month pay for every year of
service. The respondent NATU federation is directed to pay
petitioners the amount of three (3) years backwages without
deduction or qualification. This decision shall be immediately
executory upon promulgation and notice to the parties.
G.R. No. 82914 June 20, 1988
SO ORDERED.
KAPATIRAN SA MEAT AND CANNING DIVISION (TUPAS
Local Chapter No. 1027), petitioner,
vs.
THE HONORABLE BLR DIRECTOR PURA FERRER
CALLEJA, MEAT AND CANNING DIVISION UNIVERSAL
ROBINA CORPORATION and MEAT AND CANNING
DIVISION NEW EMPLOYEES AND WORKERS UNITED
LABOR ORGANIZATION, respondents.

Alar, Comia, Manalo and Associates for petitioner.

Danilo Bolos for respondent Robina Corporation.

RESOLUTION

GRIO-AQUINO, J.:

The petitioner, Kapatiran sa Meat and Canning Division


TUPAS Local Chapter No. 1027) hereinafter referred to as
"TUPAS," seeks a review of the resolution dated January 27,
1988 (Annex D) of public respondent Pura Ferrer-Calleja,
Director of the Bureau of Labor Relations, dismissing its
appeal from the Order dated November 17, 1987 (Annex C)
of the Med-Arbiter Rasidali C. Abdullah ordering a
certification election to be conducted among the regular daily
paid rank and file employees/workers of Universal Robina
Corporation-Meat and Canning Division to determine which of
the contending unions:
a) Kapatiran sa Meat and Canning Division TUPAS Local previous refused to affiliate with any labor union. It also
Chapter No. 1027 (or "TUPAS" for brevity); accused the company of using the NEW ULO to defeat TUPAS'
bargaining rights (Annex B).
b) Meat and Canning Division New Employees and Workers
United Labor Organization (or "NEW ULO" for brevity); On November 17, 1987, the Med-Arbiter ordered the holding
of a certification election within 20 days (Annex C).
c) No union.
TUPAS appealed to the Bureau of Labor Relations BLR. In the
shall be the bargaining unit of the daily wage rank and file meantime, it was able to negotiate a new 3-year CBA with
employees in the Meat and Canning Division of the company. ROBINA, which was signed on December 3, 1987 and to
From 1984 to 1987 TUPAS was the sole and exclusive expire on November 15, 1990.
collective bargaining representative of the workers in the On January 27, 1988, respondent BLR Director Calleja
Meat and Canning Division of the Universal Robina dismissed the appeal (Annex D).
Corporation, with a 3-year collective bargaining agreement
(CBA) which was to expire on November 15, 1987. TUPAS' motion for reconsideration (Annex E) was denied on
March 17, 1988 (Annex F). On April 30, 1988, it filed this
Within the freedom period of 60 days prior to the expiration petition alleging that the public respondent acted in excess
of its CBA, TUPAS filed an amended notice of strike on of her jurisdiction and with grave abuse of discretion in
September 28, 1987 as a means of pressuring the company affirming the Med-Arbiter's order for a certification election.
to extend, renew, or negotiate a new CBA with it.
After deliberating on the petition and the documents annexed
On October 8, 1987, the NEW ULO, composed mostly of thereto, We find no merit in the Petition. The public
workers belonging to the IGLESIA NI KRISTO sect, registered respondent did not err in dismissing the petitioner's appeal in
as a labor union. BLR Case No. A-12-389-87. This Court's decision inVictoriano
On October 12, 1987, the TUPAS staged a strike. ROBINA vs. Elizalde Rope Workers' Union, 59 SCRA 54, upholding the
obtained an injunction against the strike, resulting in an right of members of the IGLESIA NI KRISTO sect not to join a
agreement to return to work and for the parties to negotiate labor union for being contrary to their religious beliefs, does
a new CBA. not bar the members of that sect from forming their own
union. The public respondent correctly observed that the
The next day, October 13, 1987, NEW ULO, claiming that it "recognition of the tenets of the sect ... should not infringe on
has "the majority of the daily wage rank and file employees the basic right of self-organization granted by the
numbering 191," filed a petition for a certification election at constitution to workers, regardless of religious affiliation."
the Bureau of Labor Relations (Annex A).
The fact that TUPAS was able to negotiate a new CBA with
TUPAS moved to dismiss the petition for being defective in ROBINA within the 60-day freedom period of the existing
form and that the members of the NEW ULO were mostly CBA, does not foreclose the right of the rival union, NEW ULO,
members of the Iglesia ni Kristo sect which three (3) years to challenge TUPAS' claim to majority status, by filing a
timely petition for certification election on October 13, 1987
before TUPAS' old CBA expired on November 15, 1987 and
before it signed a new CBA with the company on December
3, 1987. As pointed out by Med-Arbiter Abdullah, a
"certification election is the best forum in ascertaining the
majority status of the contending unions wherein the workers
themselves can freely choose their bargaining representative
thru secret ballot." Since it has not been shown that this
order is tainted with unfairness, this Court will not thwart the
holding of a certification election (Associated Trade Unions
[ATU] vs. Noriel, 88 SCRA 96).

WHEREFORE, the petition for certiorari is denied, with costs


against the petitioner.

SO ORDERED.
G.R. No. L-25246 September 12, 1974

BENJAMIN VICTORIANO, plaintiff-appellee,


vs.
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE
FACTORY, INC., defendants, ELIZALDE ROPE WORKERS'
UNION, defendant-appellant.

Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-


appellee.

Cipriano Cid & Associates for defendant-appellant.

ZALDIVAR, J.:p

Appeal to this Court on purely questions of law from the


decision of the Court of First Instance of Manila in its Civil
Case No. 58894.

The undisputed facts that spawned the instant case follow:


Benjamin Victoriano (hereinafter referred to as Appellee), a with the Union, the Company would be constrained to
member of the religious sect known as the "Iglesia ni Cristo", dismiss him from the service. This prompted Appellee to file
had been in the employ of the Elizalde Rope Factory, Inc. an action for injunction, docketed as Civil Case No. 58894 in
(hereinafter referred to as Company) since 1958. As such the Court of First Instance of Manila to enjoin the Company
employee, he was a member of the Elizalde Rope Workers' and the Union from dismissing Appellee. 1 In its answer, the
Union (hereinafter referred to as Union) which had with the Union invoked the "union security clause" of the collective
Company a collective bargaining agreement containing a bargaining agreement; assailed the constitutionality of
closed shop provision which reads as follows: Republic Act No. 3350; and contended that the Court had no
jurisdiction over the case, pursuant to Republic Act No. 875,
Membership in the Union shall be required as a condition of Sections 24 and 9 (d) and (e). 2 Upon the facts agreed upon
employment for all permanent employees workers covered by the parties during the pre-trial conference, the Court a
by this Agreement. quorendered its decision on August 26, 1965, the dispositive
The collective bargaining agreement expired on March 3, portion of which reads:
1964 but was renewed the following day, March 4, 1964. IN VIEW OF THE FOREGOING, judgment is rendered enjoining
Under Section 4(a), paragraph 4, of Republic Act No. 875, the defendant Elizalde Rope Factory, Inc. from dismissing the
prior to its amendment by Republic Act No. 3350, the plaintiff from his present employment and sentencing the
employer was not precluded "from making an agreement defendant Elizalde Rope Workers' Union to pay the plaintiff
with a labor organization to require as a condition of P500 for attorney's fees and the costs of this action. 3
employment membership therein, if such labor organization From this decision, the Union appealed directly to this Court
is the representative of the employees." On June 18, 1961, on purely questions of law, assigning the following errors:
however, Republic Act No. 3350 was enacted, introducing an
amendment to paragraph (4) subsection (a) of section 4 of I. That the lower court erred when it did not rule that
Republic Act No. 875, as follows: ... "but such agreement Republic Act No. 3350 is unconstitutional.
shall not cover members of any religious sects which prohibit
affiliation of their members in any such labor organization". II. That the lower court erred when it sentenced appellant
herein to pay plaintiff the sum of P500 as attorney's fees and
Being a member of a religious sect that prohibits the the cost thereof.
affiliation of its members with any labor organization,
Appellee presented his resignation to appellant Union in In support of the alleged unconstitutionality of Republic Act
1962, and when no action was taken thereon, he reiterated No. 3350, the Union contented, firstly, that the Act infringes
his resignation on September 3, 1974. Thereupon, the Union on the fundamental right to form lawful associations; that
wrote a formal letter to the Company asking the latter to "the very phraseology of said Republic Act 3350, that
separate Appellee from the service in view of the fact that he membership in a labor organization is banned to all those
was resigning from the Union as a member. The management belonging to such religious sect prohibiting affiliation with
of the Company in turn notified Appellee and his counsel that any labor organization" 4 , "prohibits all the members of a
unless the Appellee could achieve a satisfactory arrangement given religious sect from joining any labor union if such sect
prohibits affiliations of their members thereto" 5 ; and, Constitution, it being a discriminately legislation, inasmuch
consequently, deprives said members of their constitutional as by exempting from the operation of closed shop
right to form or join lawful associations or organizations agreement the members of the "Iglesia ni Cristo", it has
guaranteed by the Bill of Rights, and thus becomes granted said members undue advantages over their fellow
obnoxious to Article III, Section 1 (6) of the 1935 workers, for while the Act exempts them from union
Constitution. 6 obligation and liability, it nevertheless entitles them at the
same time to the enjoyment of all concessions, benefits and
Secondly, the Union contended that Republic Act No. 3350 is other emoluments that the union might secure from the
unconstitutional for impairing the obligation of contracts in employer. 10
that, while the Union is obliged to comply with its collective
bargaining agreement containing a "closed shop provision," Sixthly, the Union contended that Republic Act No. 3350
the Act relieves the employer from its reciprocal obligation of violates the constitutional provision regarding the promotion
cooperating in the maintenance of union membership as a of social justice. 11
condition of employment; and that said Act, furthermore,
impairs the Union's rights as it deprives the union of dues Appellant Union, furthermore, asserted that a "closed shop
from members who, under the Act, are relieved from the provision" in a collective bargaining agreement cannot be
obligation to continue as such members. 7 considered violative of religious freedom, as to call for the
amendment introduced by Republic Act No. 3350; 12and that
Thirdly, the Union contended that Republic Act No. 3350 unless Republic Act No. 3350 is declared unconstitutional,
discriminatorily favors those religious sects which ban their trade unionism in this country would be wiped out as
members from joining labor unions, in violation of Article Ill, employers would prefer to hire or employ members of the
Section 1 (7) of the 1935 Constitution; and while said Act Iglesia ni Cristo in order to do away with labor
unduly protects certain religious sects, it leaves no rights or organizations. 13
protection to labor organizations. 8
Appellee, assailing appellant's arguments, contended that
Fourthly, Republic Act No. 3350, asserted the Union, violates Republic Act No. 3350 does not violate the right to form
the constitutional provision that "no religious test shall be lawful associations, for the right to join associations includes
required for the exercise of a civil right," in that the laborer's the right not to join or to resign from a labor organization, if
exercise of his civil right to join associations for purposes not one's conscience does not allow his membership therein, and
contrary to law has to be determined under the Act by his the Act has given substance to such right by prohibiting the
affiliation with a religious sect; that conversely, if a worker compulsion of workers to join labor organizations; 14 that said
has to sever his religious connection with a sect that Act does not impair the obligation of contracts for said law
prohibits membership in a labor organization in order to be formed part of, and was incorporated into, the terms of the
able to join a labor organization, said Act would violate closed shop agreement; 15 that the Act does not violate the
religious freedom. 9 establishment of religion clause or separation of Church and
State, for Congress, in enacting said law, merely
Fifthly, the Union contended that Republic Act No. 3350, accommodated the religious needs of those workers whose
violates the "equal protection of laws" clause of the
religion prohibits its members from joining labor unions, and necessary implication therefrom. It is not surprising,
balanced the collective rights of organized labor with the therefore, that appellant, having thus misread the Act,
constitutional right of an individual to freely exercise his committed the error of contending that said Act is obnoxious
chosen religion; that the constitutional right to the free to the constitutional provision on freedom of association.
exercise of one's religion has primacy and preference over
union security measures which are merely contractual 16 ; Both the Constitution and Republic Act No. 875 recognize
that said Act does not violate the constitutional provision of freedom of association. Section 1 (6) of Article III of the
equal protection, for the classification of workers under the Constitution of 1935, as well as Section 7 of Article IV of the
Act depending on their religious tenets is based on Constitution of 1973, provide that the right to form
substantial distinction, is germane to the purpose of the law, associations or societies for purposes not contrary to law
and applies to all the members of a given class; 17 that said shall not be abridged. Section 3 of Republic Act No. 875
Act, finally, does not violate the social justice policy of the provides that employees shall have the right to self-
Constitution, for said Act was enacted precisely to equalize organization and to form, join of assist labor organizations of
employment opportunities for all citizens in the midst of the their own choosing for the purpose of collective bargaining
diversities of their religious beliefs." 18 and to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or protection.
I. Before We proceed to the discussion of the first assigned What the Constitution and the Industrial Peace Act recognize
error, it is necessary to premise that there are some and guarantee is the "right" to form or join associations.
thoroughly established principles which must be followed in Notwithstanding the different theories propounded by the
all cases where questions of constitutionality as obtains in different schools of jurisprudence regarding the nature and
the instant case are involved. All presumptions are indulged contents of a "right", it can be safely said that whatever
in favor of constitutionality; one who attacks a statute, theory one subscribes to, a right comprehends at least two
alleging unconstitutionality must prove its invalidity beyond a broad notions, namely: first, liberty or freedom, i.e., the
reasonable doubt, that a law may work hardship does not absence of legal restraint, whereby an employee may act for
render it unconstitutional; that if any reasonable basis may himself without being prevented by law; and second, power,
be conceived which supports the statute, it will be upheld, whereby an employee may, as he pleases, join or refrain
and the challenger must negate all possible bases; that the from Joining an association. It is, therefore, the employee
courts are not concerned with the wisdom, justice, policy, or who should decide for himself whether he should join or not
expediency of a statute; and that a liberal interpretation of an association; and should he choose to join, he himself
the constitution in favor of the constitutionality of legislation makes up his mind as to which association he would join; and
should be adopted. 19 even after he has joined, he still retains the liberty and the
power to leave and cancel his membership with said
1. Appellant Union's contention that Republic Act No. organization at any time. 20 It is clear, therefore, that the
3350 prohibits and bans the members of such religious sects right to join a union includes the right to abstain from joining
that forbid affiliation of their members with labor unions from any union. 21 Inasmuch as what both the Constitution and the
joining labor unions appears nowhere in the wording of Industrial Peace Act have recognized, and guaranteed to the
Republic Act No. 3350; neither can the same be deduced by employee, is the "right" to join associations of his choice, it
would be absurd to say that the law also imposes, in the No. 3350 merely excludes ipso jure from the application and
same breath, upon the employee the duty to join coverage of the closed shop agreement the employees
associations. The law does not enjoin an employee to sign up belonging to any religious sects which prohibit affiliation of
with any association. their members with any labor organization. What the
exception provides, therefore, is that members of said
The right to refrain from joining labor organizations religious sects cannot be compelled or coerced to join labor
recognized by Section 3 of the Industrial Peace Act is, unions even when said unions have closed shop agreements
however, limited. The legal protection granted to such right with the employers; that in spite of any closed shop
to refrain from joining is withdrawn by operation of law, agreement, members of said religious sects cannot be
where a labor union and an employer have agreed on a refused employment or dismissed from their jobs on the sole
closed shop, by virtue of which the employer may employ ground that they are not members of the collective
only member of the collective bargaining union, and the bargaining union. It is clear, therefore, that the assailed Act,
employees must continue to be members of the union for the far from infringing the constitutional provision on freedom of
duration of the contract in order to keep their jobs. Thus association, upholds and reinforces it. It does not prohibit the
Section 4 (a) (4) of the Industrial Peace Act, before its members of said religious sects from affiliating with labor
amendment by Republic Act No. 3350, provides that although unions. It still leaves to said members the liberty and the
it would be an unfair labor practice for an employer "to power to affiliate, or not to affiliate, with labor unions. If,
discriminate in regard to hire or tenure of employment or any notwithstanding their religious beliefs, the members of said
term or condition of employment to encourage or discourage religious sects prefer to sign up with the labor union, they
membership in any labor organization" the employer is, can do so. If in deference and fealty to their religious faith,
however, not precluded "from making an agreement with a they refuse to sign up, they can do so; the law does not
labor organization to require as a condition of employment coerce them to join; neither does the law prohibit them from
membership therein, if such labor organization is the joining; and neither may the employer or labor union compel
representative of the employees". By virtue, therefore, of a them to join. Republic Act No. 3350, therefore, does not
closed shop agreement, before the enactment of Republic Act violate the constitutional provision on freedom of association.
No. 3350, if any person, regardless of his religious beliefs,
wishes to be employed or to keep his employment, he must 2. Appellant Union also contends that the Act is
become a member of the collective bargaining union. Hence, unconstitutional for impairing the obligation of its contract,
the right of said employee not to join the labor union is specifically, the "union security clause" embodied in its
curtailed and withdrawn. Collective Bargaining Agreement with the Company, by virtue
of which "membership in the union was required as a
To that all-embracing coverage of the closed shop condition for employment for all permanent employees
arrangement, Republic Act No. 3350 introduced an exception, workers". This agreement was already in existence at the
when it added to Section 4 (a) (4) of the Industrial Peace Act time Republic Act No. 3350 was enacted on June 18, 1961,
the following proviso: "but such agreement shall not cover and it cannot, therefore, be deemed to have been
members of any religious sects which prohibit affiliation of incorporated into the agreement. But by reason of this
their members in any such labor organization". Republic Act amendment, Appellee, as well as others similarly situated,
could no longer be dismissed from his job even if he should the legal order. All contracts made with reference to any
cease to be a member, or disaffiliate from the Union, and the matter that is subject to regulation under the police power
Company could continue employing him notwithstanding his must be understood as made in reference to the possible
disaffiliation from the Union. The Act, therefore, introduced a exercise of that power. 26 Otherwise, important and valuable
change into the express terms of the union security clause; reforms may be precluded by the simple device of entering
the Company was partly absolved by law from the into contracts for the purpose of doing that which otherwise
contractual obligation it had with the Union of employing only may be prohibited. The policy of protecting contracts against
Union members in permanent positions, It cannot be denied, impairment presupposes the maintenance of a government
therefore, that there was indeed an impairment of said union by virtue of which contractual relations are worthwhile a
security clause. government which retains adequate authority to secure the
peace and good order of society. The contract clause of the
According to Black, any statute which introduces a change Constitution must, therefore, be not only in harmony with,
into the express terms of the contract, or its legal but also in subordination to, in appropriate instances, the
construction, or its validity, or its discharge, or the remedy reserved power of the state to safeguard the vital interests of
for its enforcement, impairs the contract. The extent of the the people. It follows that not all legislations, which have the
change is not material. It is not a question of degree or effect of impairing a contract, are obnoxious to the
manner or cause, but of encroaching in any respect on its constitutional prohibition as to impairment, and a statute
obligation or dispensing with any part of its force. There is an passed in the legitimate exercise of police power, although it
impairment of the contract if either party is absolved by law incidentally destroys existing contract rights, must be upheld
from its performance. 22 Impairment has also been predicated by the courts. This has special application to contracts
on laws which, without destroying contracts, derogate from regulating relations between capital and labor which are not
substantial contractual rights. 23 merely contractual, and said labor contracts, for being
It should not be overlooked, however, that the prohibition to impressed with public interest, must yield to the common
impair the obligation of contracts is not absolute and good. 27
unqualified. The prohibition is general, affording a broad In several occasions this Court declared that the prohibition
outline and requiring construction to fill in the details. The against impairing the obligations of contracts has no
prohibition is not to be read with literal exactness like a application to statutes relating to public subjects within the
mathematical formula, for it prohibits unreasonable domain of the general legislative powers of the state
impairment only. 24 In spite of the constitutional prohibition, involving public welfare. 28 Thus, this Court also held that the
the State continues to possess authority to safeguard the Blue Sunday Law was not an infringement of the obligation of
vital interests of its people. Legislation appropriate to a contract that required the employer to furnish work on
safeguarding said interests may modify or abrogate contracts Sundays to his employees, the law having been enacted to
already in effect. 25 For not only are existing laws read into secure the well-being and happiness of the laboring class,
contracts in order to fix the obligations as between the and being, furthermore, a legitimate exercise of the police
parties, but the reservation of essential attributes of power. 29
sovereign power is also read into contracts as a postulate of
In order to determine whether legislation unconstitutionally strength from which the individual also needs protection
impairs contract obligations, no unchanging yardstick, the collective bargaining relationship. 31
applicable at all times and under all circumstances, by which
the validity of each statute may be measured or determined, The aforementioned purpose of the amendatory law is clearly
has been fashioned, but every case must be determined seen in the Explanatory Note to House Bill No. 5859, which
upon its own circumstances. Legislation impairing the later became Republic Act No. 3350, as follows:
obligation of contracts can be sustained when it is enacted It would be unthinkable indeed to refuse employing a person
for the promotion of the general good of the people, and who, on account of his religious beliefs and convictions,
when the means adopted to secure that end are reasonable. cannot accept membership in a labor organization although
Both the end sought and the means adopted must be he possesses all the qualifications for the job. This is
legitimate, i.e., within the scope of the reserved power of the tantamount to punishing such person for believing in a
state construed in harmony with the constitutional limitation doctrine he has a right under the law to believe in. The law
of that power. 30 would not allow discrimination to flourish to the detriment of
What then was the purpose sought to be achieved by those whose religion discards membership in any labor
Republic Act No. 3350? Its purpose was to insure freedom of organization. Likewise, the law would not commend the
belief and religion, and to promote the general welfare by deprivation of their right to work and pursue a modest means
preventing discrimination against those members of religious of livelihood, without in any manner violating their religious
sects which prohibit their members from joining labor unions, faith and/or belief.32
confirming thereby their natural, statutory and constitutional It cannot be denied, furthermore, that the means adopted by
right to work, the fruits of which work are usually the only the Act to achieve that purpose exempting the members
means whereby they can maintain their own life and the life of said religious sects from coverage of union security
of their dependents. It cannot be gainsaid that said purpose agreements is reasonable.
is legitimate.
It may not be amiss to point out here that the free exercise of
The questioned Act also provides protection to members of religious profession or belief is superior to contract rights. In
said religious sects against two aggregates of group strength case of conflict, the latter must, therefore, yield to the
from which the individual needs protection. The individual former. The Supreme Court of the United States has also
employee, at various times in his working life, is confronted declared on several occasions that the rights in the First
by two aggregates of power collective labor, directed by a Amendment, which include freedom of religion, enjoy a
union, and collective capital, directed by management. The preferred position in the constitutional system. 33 Religious
union, an institution developed to organize labor into a freedom, although not unlimited, is a fundamental personal
collective force and thus protect the individual employee right and liberty, 34 and has a preferred position in the
from the power of collective capital, is, paradoxically, both hierarchy of values. Contractual rights, therefore, must yield
the champion of employee rights, and a new source of their to freedom of religion. It is only where unavoidably necessary
frustration. Moreover, when the Union interacts with to prevent an immediate and grave danger to the security
management, it produces yet a third aggregate of group and welfare of the community that infringement of religious
freedom may be justified, and only to the smallest extent unless the state can accomplish its purpose without imposing
necessary to avoid the danger. such burden. 38

3. In further support of its contention that Republic Act No. In Aglipay v. Ruiz 39 , this Court had occasion to state that the
3350 is unconstitutional, appellant Union averred that said government should not be precluded from pursuing valid
Act discriminates in favor of members of said religious sects objectives secular in character even if the incidental result
in violation of Section 1 (7) of Article Ill of the 1935 would be favorable to a religion or sect. It has likewise been
Constitution, and which is now Section 8 of Article IV of the held that the statute, in order to withstand the strictures of
1973 Constitution, which provides: constitutional prohibition, must have a secular legislative
purpose and a primary effect that neither advances nor
No law shall be made respecting an establishment of religion, inhibits religion. 40 Assessed by these criteria, Republic Act
or prohibiting the free exercise thereof, and the free exercise No. 3350 cannot be said to violate the constitutional
and enjoyment of religious profession and worship, without inhibition of the "no-establishment" (of religion) clause of the
discrimination and preference, shall forever be allowed. No Constitution.
religious test shall be required for the exercise of civil or
political rights. The purpose of Republic Act No. 3350 is secular, worldly, and
temporal, not spiritual or religious or holy and eternal. It was
The constitutional provision into only prohibits legislation for intended to serve the secular purpose of advancing the
the support of any religious tenets or the modes of worship of constitutional right to the free exercise of religion, by
any sect, thus forestalling compulsion by law of the averting that certain persons be refused work, or be
acceptance of any creed or the practice of any form of dismissed from work, or be dispossessed of their right to
worship, 35 but also assures the free exercise of one's chosen work and of being impeded to pursue a modest means of
form of religion within limits of utmost amplitude. It has been livelihood, by reason of union security agreements. To help its
said that the religion clauses of the Constitution are all citizens to find gainful employment whereby they can make a
designed to protect the broadest possible liberty of living to support themselves and their families is a valid
conscience, to allow each man to believe as his conscience objective of the state. In fact, the state is enjoined, in the
directs, to profess his beliefs, and to live as he believes he 1935 Constitution, to afford protection to labor, and regulate
ought to live, consistent with the liberty of others and with the relations between labor and capital and industry. 41 More
the common good. 36 Any legislation whose effect or purpose so now in the 1973 Constitution where it is mandated that
is to impede the observance of one or all religions, or to "the State shall afford protection to labor, promote full
discriminate invidiously between the religions, is invalid, employment and equality in employment, ensure equal work
even though the burden may be characterized as being only opportunities regardless of sex, race or creed and regulate
indirect. 37 But if the stage regulates conduct by enacting, the relation between workers and employers. 42
within its power, a general law which has for its purpose and
effect to advance the state's secular goals, the statute is The primary effects of the exemption from closed shop
valid despite its indirect burden on religious observance, agreements in favor of members of religious sects that
prohibit their members from affiliating with a labor
organization, is the protection of said employees against the purpose of Republic Act No. 3350 was not to grant rights to
aggregate force of the collective bargaining agreement, and labor unions. The rights of labor unions are amply provided
relieving certain citizens of a burden on their religious beliefs; for in Republic Act No. 875 and the new Labor Code. As to the
and by eliminating to a certain extent economic insecurity lamented silence of the Act regarding the rights and
due to unemployment, which is a serious menace to the protection of labor unions, suffice it to say, first, that the
health, morals, and welfare of the people of the State, the validity of a statute is determined by its provisions, not by its
Act also promotes the well-being of society. It is our view that silence 46 ; and, second, the fact that the law may work
the exemption from the effects of closed shop agreement hardship does not render it unconstitutional. 47
does not directly advance, or diminish, the interests of any
particular religion. Although the exemption may benefit those It would not be amiss to state, regarding this matter, that to
who are members of religious sects that prohibit their compel persons to join and remain members of a union to
members from joining labor unions, the benefit upon the keep their jobs in violation of their religious scrupples, would
religious sects is merely incidental and indirect. The hurt, rather than help, labor unions, Congress has seen it fit
"establishment clause" (of religion) does not ban regulation to exempt religious objectors lest their resistance spread to
on conduct whose reason or effect merely happens to other workers, for religious objections have contagious
coincide or harmonize with the tenets of some or all potentialities more than political and philosophic objections.
religions. 43 The free exercise clause of the Constitution has Furthermore, let it be noted that coerced unity and loyalty
been interpreted to require that religious exercise be even to the country, and a fortiori to a labor union
preferentially aided. 44 assuming that such unity and loyalty can be attained through
We believe that in enacting Republic Act No. 3350, Congress coercion is not a goal that is constitutionally obtainable at
acted consistently with the spirit of the constitutional the expense of religious liberty. 48 A desirable end cannot be
provision. It acted merely to relieve the exercise of religion, promoted by prohibited means.
by certain persons, of a burden that is imposed by union 4. Appellants' fourth contention, that Republic Act No. 3350
security agreements. It was Congress itself that imposed that violates the constitutional prohibition against requiring a
burden when it enacted the Industrial Peace Act (Republic Act religious test for the exercise of a civil right or a political
875), and, certainly, Congress, if it so deems advisable, could right, is not well taken. The Act does not require as a
take away the same burden. It is certain that not every qualification, or condition, for joining any lawful association
conscience can be accommodated by all the laws of the land; membership in any particular religion or in any religious sect;
but when general laws conflict with scrupples of conscience, neither does the Act require affiliation with a religious sect
exemptions ought to be granted unless some "compelling that prohibits its members from joining a labor union as a
state interest" intervenes.45 In the instant case, We see no condition or qualification for withdrawing from a labor union.
such compelling state interest to withhold exemption. Joining or withdrawing from a labor union requires a positive
Appellant bewails that while Republic Act No. 3350 protects act. Republic Act No. 3350 only exempts members with such
members of certain religious sects, it leaves no right to, and religious affiliation from the coverage of closed shop
is silent as to the protection of, labor organizations. The agreements. So, under this Act, a religious objector is not
required to do a positive act to exercise the right to join or prohibit legislation which is limited either in the object to
to resign from the union. He is exempted ipso jure without which it is directed or by the territory within which it is to
need of any positive act on his part. A conscientious religious operate.
objector need not perform a positive act or exercise the right
of resigning from the labor union he is exempted from the The equal protection of the laws clause of the Constitution
coverage of any closed shop agreement that a labor union allows classification. Classification in law, as in the other
may have entered into. How then can there be a religious departments of knowledge or practice, is the grouping of
test required for the exercise of a right when no right need be things in speculation or practice because they agree with one
exercised? another in certain particulars. A law is not invalid because of
simple inequality. 52 The very idea of classification is that of
We have said that it was within the police power of the State inequality, so that it goes without saying that the mere fact
to enact Republic Act No. 3350, and that its purpose was of inequality in no manner determines the matter of
legal and in consonance with the Constitution. It is never an constitutionality. 53 All that is required of a valid classification
illegal evasion of a constitutional provision or prohibition to is that it be reasonable, which means that the classification
accomplish a desired result, which is lawful in itself, by should be based on substantial distinctions which make for
discovering or following a legal way to do it. 49 real differences; that it must be germane to the purpose of
the law; that it must not be limited to existing conditions
5. Appellant avers as its fifth ground that Republic Act No. only; and that it must apply equally to each member of the
3350 is a discriminatory legislation, inasmuch as it grants to class. 54 This Court has held that the standard is satisfied if
the members of certain religious sects undue advantages the classification or distinction is based on a reasonable
over other workers, thus violating Section 1 of Article III of foundation or rational basis and is not palpably arbitrary. 55
the 1935 Constitution which forbids the denial to any person
of the equal protection of the laws. 50 In the exercise of its power to make classifications for the
purpose of enacting laws over matters within its jurisdiction,
The guaranty of equal protection of the laws is not a the state is recognized as enjoying a wide range of
guaranty of equality in the application of the laws upon all discretion. 56 It is not necessary that the classification be
citizens of the state. It is not, therefore, a requirement, in based on scientific or marked differences of things or in their
order to avoid the constitutional prohibition against relation. 57 Neither is it necessary that the classification be
inequality, that every man, woman and child should be made with mathematical nicety. 58 Hence legislative
affected alike by a statute. Equality of operation of statutes classification may in many cases properly rest on narrow
does not mean indiscriminate operation on persons merely distinctions, 59 for the equal protection guaranty does not
as such, but on persons according to the circumstances preclude the legislature from recognizing degrees of evil or
surrounding them. It guarantees equality, not identity of harm, and legislation is addressed to evils as they may
rights. The Constitution does not require that things which appear.
are different in fact be treated in law as though they were the
same. The equal protection clause does not forbid We believe that Republic Act No. 3350 satisfies the
discrimination as to things that are different. 51 It does not aforementioned requirements. The Act classifies employees
and workers, as to the effect and coverage of union shop beliefs people, like the martyrs, became resigned to the
security agreements, into those who by reason of their inevitable and accepted cheerfully even the most painful and
religious beliefs and convictions cannot sign up with a labor excruciating pains. Because of differences in religious beliefs,
union, and those whose religion does not prohibit the world has witnessed turmoil, civil strife, persecution,
membership in labor unions. Tile classification rests on real or hatred, bloodshed and war, generated to a large extent by
substantial, not merely imaginary or whimsical, distinctions. members of sects who were intolerant of other religious
There is such real distinction in the beliefs, feelings and beliefs. The classification, introduced by Republic Act No.
sentiments of employees. Employees do not believe in the 3350, therefore, rests on substantial distinctions.
same religious faith and different religions differ in their
dogmas and cannons. Religious beliefs, manifestations and The classification introduced by said Act is also germane to
practices, though they are found in all places, and in all its purpose. The purpose of the law is precisely to avoid
times, take so many varied forms as to be almost beyond those who cannot, because of their religious belief, join labor
imagination. There are many views that comprise the broad unions, from being deprived of their right to work and from
spectrum of religious beliefs among the people. There are being dismissed from their work because of union shop
diverse manners in which beliefs, equally paramount in the security agreements.
lives of their possessors, may be articulated. Today the Republic Act No. 3350, furthermore, is not limited in its
country is far more heterogenous in religion than before, application to conditions existing at the time of its
differences in religion do exist, and these differences are enactment. The law does not provide that it is to be effective
important and should not be ignored. for a certain period of time only. It is intended to apply for all
Even from the phychological point of view, the classification times as long as the conditions to which the law is applicable
is based on real and important differences. Religious beliefs exist. As long as there are closed shop agreements between
are not mere beliefs, mere ideas existing only in the mind, for an employer and a labor union, and there are employees who
they carry with them practical consequences and are the are prohibited by their religion from affiliating with labor
motives of certain rules. of human conduct and the unions, their exemption from the coverage of said
justification of certain acts. 60 Religious sentiment makes a agreements continues.
man view things and events in their relation to his God. It Finally, the Act applies equally to all members of said
gives to human life its distinctive character, its tone, its religious sects; this is evident from its provision. The fact that
happiness or unhappiness its enjoyment or irksomeness. the law grants a privilege to members of said religious sects
Usually, a strong and passionate desire is involved in a cannot by itself render the Act unconstitutional, for as We
religious belief. To certain persons, no single factor of their have adverted to, the Act only restores to them their freedom
experience is more important to them than their religion, or of association which closed shop agreements have taken
their not having any religion. Because of differences in away, and puts them in the same plane as the other workers
religious belief and sentiments, a very poor person may who are not prohibited by their religion from joining labor
consider himself better than the rich, and the man who even unions. The circumstance, that the other employees, because
lacks the necessities of life may be more cheerful than the they are differently situated, are not granted the same
one who has all possible luxuries. Due to their religious
privilege, does not render the law unconstitutional, for every component elements of society, for it insures security in their
classification allowed by the Constitution by its nature employment, notwithstanding their failure to join a labor
involves inequality. union having a closed shop agreement with the employer.
The Act also advances the proper economic and social
The mere fact that the legislative classification may result in equilibrium between labor unions and employees who cannot
actual inequality is not violative of the right to equal join labor unions, for it exempts the latter from the
protection, for every classification of persons or things for compelling necessity of joining labor unions that have closed
regulation by law produces inequality in some degree, but shop agreements and equalizes, in so far as opportunity to
the law is not thereby rendered invalid. A classification work is concerned, those whose religion prohibits
otherwise reasonable does not offend the constitution simply membership in labor unions with those whose religion does
because in practice it results in some inequality. 61 Anent this not prohibit said membership. Social justice does not imply
matter, it has been said that whenever it is apparent from social equality, because social inequality will always exist as
the scope of the law that its object is for the benefit of the long as social relations depend on personal or subjective
public and the means by which the benefit is to be obtained proclivities. Social justice does not require legal equality
are of public character, the law will be upheld even though because legal equality, being a relative term, is necessarily
incidental advantage may occur to individuals beyond those premised on differentiations based on personal or natural
enjoyed by the general public. 62 conditions. 65 Social justice guarantees equality of
66
6. Appellant's further contention that Republic Act No. 3350 opportunity , and this is precisely what Republic Act No.
violates the constitutional provision on social justice is also 3350 proposes to accomplish it gives laborers, irrespective
baseless. Social justice is intended to promote the welfare of of their religious scrupples, equal opportunity for work.
all the people. 63 Republic Act No. 3350 promotes that welfare 7. As its last ground, appellant contends that the amendment
insofar as it looks after the welfare of those who, because of introduced by Republic Act No. 3350 is not called for in
their religious belief, cannot join labor unions; the Act other words, the Act is not proper, necessary or desirable.
prevents their being deprived of work and of the means of Anent this matter, it has been held that a statute which is not
livelihood. In determining whether any particular measure is necessary is not, for that reason, unconstitutional; that in
for public advantage, it is not necessary that the entire state determining the constitutional validity of legislation, the
be directly benefited it is sufficient that a portion of the courts are unconcerned with issues as to the necessity for
state be benefited thereby. the enactment of the legislation in question. 67 Courts do
Social justice also means the adoption by the Government of inquire into the wisdom of laws. 68 Moreover, legislatures,
measures calculated to insure economic stability of all being chosen by the people, are presumed to understand and
component elements of society, through the maintenance of correctly appreciate the needs of the people, and it may
a proper economic and social equilibrium in the inter- change the laws accordingly. 69 The fear is entertained by
relations of the members of the community. 64 Republic Act appellant that unless the Act is declared unconstitutional,
No. 3350 insures economic stability to the members of a employers will prefer employing members of religious sects
religious sect, like the Iglesia ni Cristo, who are also that prohibit their members from joining labor unions, and
thus be a fatal blow to unionism. We do not agree. The threat
to unionism will depend on the number of employees who are No suit, action or other proceedings shall be maintainable in
members of the religious sects that control the demands of any court against a labor organization or any officer or
the labor market. But there is really no occasion now to go member thereof for any act done by or on behalf of such
further and anticipate problems We cannot judge with the organization in furtherance of an industrial dispute to which it
material now before Us. At any rate, the validity of a statute is a party, on the ground only that such act induces some
is to be determined from its general purpose and its efficacy other person to break a contract of employment or that it is
to accomplish the end desired, not from its effects on a in restraint of trade or interferes with the trade, business or
particular case. 70 The essential basis for the exercise of employment of some other person or with the right of some
power, and not a mere incidental result arising from its other person to dispose of his capital or labor. (Emphasis
exertion, is the criterion by which the validity of a statute is supplied)
to be measured. 71
That there was a labor dispute in the instant case cannot be
II. We now pass on the second assignment of error, in support disputed for appellant sought the discharge of respondent by
of which the Union argued that the decision of the trial court virtue of the closed shop agreement and under Section 2 (j)
ordering the Union to pay P500 for attorney's fees directly of Republic Act No. 875 a question involving tenure of
contravenes Section 24 of Republic Act No. 875, for the employment is included in the term "labor dispute". 74 The
instant action involves an industrial dispute wherein the discharge or the act of seeking it is the labor dispute itself. It
Union was a party, and said Union merely acted in the being the labor dispute itself, that very same act of the Union
exercise of its rights under the union shop provision of its in asking the employer to dismiss Appellee cannot be "an act
existing collective bargaining contract with the Company; done ... in furtherance of an industrial dispute". The mere
that said order also contravenes Article 2208 of the Civil fact that appellant is a labor union does not necessarily mean
Code; that, furthermore, Appellee was never actually that all its acts are in furtherance of an industrial
dismissed by the defendant Company and did not therefore dispute. 75 Appellant Union, therefore, cannot invoke in its
suffer any damage at all . 72 favor Section 24 of Republic Act No. 875. This case is not
intertwined with any unfair labor practice case existing at the
In refuting appellant Union's arguments, Appellee claimed time when Appellee filed his complaint before the lower
that in the instant case there was really no industrial dispute court.
involved in the attempt to compel Appellee to maintain its
membership in the union under pain of dismissal, and that Neither does Article 2208 of the Civil Code, invoked by the
the Union, by its act, inflicted intentional harm on Appellee; Union, serve as its shield. The article provides that attorney's
that since Appellee was compelled to institute an action to fees and expenses of litigation may be awarded "when the
protect his right to work, appellant could legally be ordered defendant's act or omission has compelled the plaintiff ... to
to pay attorney's fees under Articles 1704 and 2208 of the incur expenses to protect his interest"; and "in any other
Civil Code. 73 case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be
The second paragraph of Section 24 of Republic Act No. 875 recovered". In the instant case, it cannot be gainsaid that
which is relied upon by appellant provides that: appellant Union's act in demanding Appellee's dismissal
caused Appellee to incur expenses to prevent his being 1. Religious freedom is identified with the liberty every
dismissed from his job. Costs according to Section 1, Rule individual possesses to worship or not a Supreme Being, and
142, of the Rules of Court, shall be allowed as a matter of if a devotee of any sect, to act in accordance with its creed.
course to the prevailing party. Thus is constitutionally safeguarded, according to Justice
Laurel, that "profession of faith to an active power that binds
WHEREFORE, the instant appeal is dismissed, and the and elevates man to his Creator ...." 3 The choice of what a
decision, dated August 26, 1965, of the Court of First man wishes to believe in is his and his alone. That is a
Instance of Manila, in its Civil Case No. 58894, appealed from domain left untouched, where intrusion is not allowed, a
is affirmed, with costs against appellant Union. It is so citadel to which the law is denied entry, whatever be his
ordered. thoughts or hopes. In that sphere, what he wills reigns
Makalintal, C.J, Castro, Teehankee, Barredo, Makasiar, supreme. The doctrine to which he pays fealty may for some
Antonio, Esguerra, Muoz Palma and Aquino, JJ., concur. be unsupported by evidence, devoid of rational foundation.
No matter. There is no requirement as to its conformity to
what has found acceptance. It suffices that for him such a
concept holds undisputed sway. That is a recognition of
Separate Opinions man's freedom. That for him is one of the ways of self-
realization. It would be to disregard the dignity that attaches
to every human being to deprive him of such an attribute.
FERNANDO, J, concurring: The "fixed star on our constitutional constellation," to borrow
the felicitous phrase of Justice Jackson, is that no official, not
The decision arrived at unanimously by this Court that excluding the highest, has it in his power to prescribe what
Republic Act No. 3350 is free from the constitutional shall be orthodox in matters of conscience or to mundane
infirmities imputed to it was demonstrated in a manner affairs, for that matter.
wellnigh conclusive in the learned, scholarly, and
comprehensive opinion so typical of the efforts of Gerona v. Secretary of Education 4 speaks similarly. In the
the ponente, Justice Zaldivar. Like the rest of my brethren, I language of its ponente, Justice Montemayor: "The realm of
concur fully. Considering moreover, the detailed attention belief and creed is infinite and limitless bounded only by
paid to each and every objection raised as to its validity and one's imagination and thought. So is the freedom of belief,
the clarity and persuasiveness with which it was shown to be including religious belief, limitless and without bounds. One
devoid of support in authoritative doctrines, it would appear may believe in most anything, however strange, bizarre and
that the last word has been written on this particular subject. unreasonable the same may appear to others, even heretical
Nonetheless, I deem it proper to submit this brief expression when weighed in the scales of orthodoxy or doctrinal
of my views on the transcendent character of religious standards." 5 There was this qualification though: "But
freedom 1 and its primacy even as against the claims of between the freedom of belief and the exercise of said belief,
protection to labor, 2 also one of the fundamental principles there is quite a stretch of road to travel. If the exercise of
of the Constitution. said religious belief clashes with the established institutions
of society and with the law, then the former must yield and
give way to the latter. The Government steps in and either belief collides with the power of the state, the latter is
restrains said exercise or even prosecutes the one exercising supreme within its sphere and submission or punishment
it." 6 It was on that basis that the daily compulsory flag follows. But, in the forum of conscience, duty to a moral
ceremony in accordance with a statute 7 was found free from power higher than the state has always been maintained.
the constitutional objection on the part of a religious sect, the The reservation of that supreme obligation, as a matter of
Jehovah's Witnesses, whose members alleged that their principle, would unquestionably be made by many of our
participation would be offensive to their religious beliefs. In a conscientious and law-abiding citizens. The essence of
case not dissimilar, West Virginia State Board of Education v. religion is belief in a relation to God involving duties superior
Barnette, 8 the American Supreme Court reached a contrary to those arising from any human relation." 10 The American
conclusion. Justice Jackson's eloquent opinion is, for this Chief Justice spoke in dissent, it is true, but with him in
writer, highly persuasive. Thus: "The case is made difficult agreement were three of the foremost jurists who ever sat in
not because the principles of its decision are obscure but that Tribunal, Justices Holmes, Brandeis, and Stone.
because the flag involved is our own. Nevertheless, we apply
the limitations of the Constitution with no fear that freedom 2. As I view Justice Zaldivar's opinion in that light, my
to be intellectually and spiritually diverse or even contrary concurrence, as set forth earlier, is wholehearted and entire.
will disintegrate the social organization. To believe that With such a cardinal postulate as the basis of our polity, it
patriotism will not flourish if patriotic ceremonies are has a message that cannot be misread. Thus is intoned with
voluntary and spontaneous instead of a compulsory routine is a reverberating clang, to paraphrase Cardozo, a fundamental
to make an unflattering estimate of the appeal of our principle that drowns all weaker sounds. The labored effort to
institutions to free minds. We can have intellectual cast doubt on the validity of the statutory provision in
individualism and the rich cultural diversities that we owe to question is far from persuasive. It is attended by futility. It is
exceptional minds only at the price of occasional eccentricity not for this Court, as I conceive of the judicial function, to
and abnormal attitudes. When they are so harmless to others restrict the scope of a preferred freedom.
or to the State as those we deal with here, the price is not 3. There is, however, the question of whether such an
too great. But freedom to differ is not limited to things that exception possesses an implication that lessens the
do not matter much. That would be a mere shadow of effectiveness of state efforts to protect labor, likewise, as
freedom. The test of its substance is the right to differ as to noted, constitutionally ordained. Such a view, on the surface,
things that touch the heart of the existing order." 9 may not be lacking in plausibility, but upon closer analysis, it
There is moreover this ringing affirmation by Chief Justice cannot stand scrutiny. Thought must be given to the freedom
Hughes of the primacy of religious freedom in the forum of of association, likewise an aspect of intellectual liberty. For
conscience even as against the command of the State itself: the late Professor Howe a constitutionalist and in his lifetime
"Much has been said of the paramount duty to the state, a the biographer of the great Holmes, it even partakes of the
duty to be recognized, it is urged, even though it conflicts political theory of pluralistic sovereignty. So great is the
with convictions of duty to God. Undoubtedly that duty to the respect for the autonomy accorded voluntary
state exists within the domain of power, for government may societies. 11 Such a right implies at the very least that one
enforce obedience to laws regardless of scruples. When one's can determine for himself whether or not he should join or
refrain from joining a labor organization, an institutional Laurel, that "profession of faith to an active power that binds
device for promoting the welfare of the working man. A and elevates man to his Creator ...." 3 The choice of what a
closed shop, on the other hand, is inherently coercive. That is man wishes to believe in is his and his alone. That is a
why, as is unmistakably reflected in our decisions, the latest domain left untouched, where intrusion is not allowed, a
of which isGuijarno v. Court of Industrial Relations, 12 it is far citadel to which the law is denied entry, whatever be his
from being a favorite of the law. For a statutory provision thoughts or hopes. In that sphere, what he wills reigns
then to further curtail its operation, is precisely to follow the supreme. The doctrine to which he pays fealty may for some
dictates of sound public policy. be unsupported by evidence, devoid of rational foundation.
No matter. There is no requirement as to its conformity to
The exhaustive and well-researched opinion of Justice what has found acceptance. It suffices that for him such a
Zaldivar thus is in the mainstream of constitutional tradition. concept holds undisputed sway. That is a recognition of
That, for me, is the channel to follow. man's freedom. That for him is one of the ways of self-
Separate Opinions realization. It would be to disregard the dignity that attaches
to every human being to deprive him of such an attribute.
FERNANDO, J, concurring: The "fixed star on our constitutional constellation," to borrow
the felicitous phrase of Justice Jackson, is that no official, not
The decision arrived at unanimously by this Court that excluding the highest, has it in his power to prescribe what
Republic Act No. 3350 is free from the constitutional shall be orthodox in matters of conscience or to mundane
infirmities imputed to it was demonstrated in a manner affairs, for that matter.
wellnigh conclusive in the learned, scholarly, and
comprehensive opinion so typical of the efforts of Gerona v. Secretary of Education 4 speaks similarly. In the
the ponente, Justice Zaldivar. Like the rest of my brethren, I language of its ponente, Justice Montemayor: "The realm of
concur fully. Considering moreover, the detailed attention belief and creed is infinite and limitless bounded only by
paid to each and every objection raised as to its validity and one's imagination and thought. So is the freedom of belief,
the clarity and persuasiveness with which it was shown to be including religious belief, limitless and without bounds. One
devoid of support in authoritative doctrines, it would appear may believe in most anything, however strange, bizarre and
that the last word has been written on this particular subject. unreasonable the same may appear to others, even heretical
Nonetheless, I deem it proper to submit this brief expression when weighed in the scales of orthodoxy or doctrinal
of my views on the transcendent character of religious standards." 5 There was this qualification though: "But
freedom 1 and its primacy even as against the claims of between the freedom of belief and the exercise of said belief,
protection to labor, 2 also one of the fundamental principles there is quite a stretch of road to travel. If the exercise of
of the Constitution. said religious belief clashes with the established institutions
of society and with the law, then the former must yield and
1. Religious freedom is identified with the liberty every give way to the latter. The Government steps in and either
individual possesses to worship or not a Supreme Being, and restrains said exercise or even prosecutes the one exercising
if a devotee of any sect, to act in accordance with its creed. it." 6 It was on that basis that the daily compulsory flag
Thus is constitutionally safeguarded, according to Justice ceremony in accordance with a statute 7 was found free from
the constitutional objection on the part of a religious sect, the The reservation of that supreme obligation, as a matter of
Jehovah's Witnesses, whose members alleged that their principle, would unquestionably be made by many of our
participation would be offensive to their religious beliefs. In a conscientious and law-abiding citizens. The essence of
case not dissimilar, West Virginia State Board of Education v. religion is belief in a relation to God involving duties superior
Barnette, 8 the American Supreme Court reached a contrary to those arising from any human relation." 10 The American
conclusion. Justice Jackson's eloquent opinion is, for this Chief Justice spoke in dissent, it is true, but with him in
writer, highly persuasive. Thus: "The case is made difficult agreement were three of the foremost jurists who ever sat in
not because the principles of its decision are obscure but that Tribunal, Justices Holmes, Brandeis, and Stone.
because the flag involved is our own. Nevertheless, we apply
the limitations of the Constitution with no fear that freedom 2. As I view Justice Zaldivar's opinion in that light, my
to be intellectually and spiritually diverse or even contrary concurrence, as set forth earlier, is wholehearted and entire.
will disintegrate the social organization. To believe that With such a cardinal postulate as the basis of our polity, it
patriotism will not flourish if patriotic ceremonies are has a message that cannot be misread. Thus is intoned with
voluntary and spontaneous instead of a compulsory routine is a reverberating clang, to paraphrase Cardozo, a fundamental
to make an unflattering estimate of the appeal of our principle that drowns all weaker sounds. The labored effort to
institutions to free minds. We can have intellectual cast doubt on the validity of the statutory provision in
individualism and the rich cultural diversities that we owe to question is far from persuasive. It is attended by futility. It is
exceptional minds only at the price of occasional eccentricity not for this Court, as I conceive of the judicial function, to
and abnormal attitudes. When they are so harmless to others restrict the scope of a preferred freedom.
or to the State as those we deal with here, the price is not 3. There is, however, the question of whether such an
too great. But freedom to differ is not limited to things that exception possesses an implication that lessens the
do not matter much. That would be a mere shadow of effectiveness of state efforts to protect labor, likewise, as
freedom. The test of its substance is the right to differ as to noted, constitutionally ordained. Such a view, on the surface,
things that touch the heart of the existing order." 9 may not be lacking in plausibility, but upon closer analysis, it
There is moreover this ringing affirmation by Chief Justice cannot stand scrutiny. Thought must be given to the freedom
Hughes of the primacy of religious freedom in the forum of of association, likewise an aspect of intellectual liberty. For
conscience even as against the command of the State itself: the late Professor Howe a constitutionalist and in his lifetime
"Much has been said of the paramount duty to the state, a the biographer of the great Holmes, it even partakes of the
duty to be recognized, it is urged, even though it conflicts political theory of pluralistic sovereignty. So great is the
with convictions of duty to God. Undoubtedly that duty to the respect for the autonomy accorded voluntary
11
state exists within the domain of power, for government may societies. Such a right implies at the very least that one
enforce obedience to laws regardless of scruples. When one's can determine for himself whether or not he should join or
belief collides with the power of the state, the latter is refrain from joining a labor organization, an institutional
supreme within its sphere and submission or punishment device for promoting the welfare of the working man. A
follows. But, in the forum of conscience, duty to a moral closed shop, on the other hand, is inherently coercive. That is
power higher than the state has always been maintained. why, as is unmistakably reflected in our decisions, the latest
of which isGuijarno v. Court of Industrial Relations, 12 it is far
from being a favorite of the law. For a statutory provision
then to further curtail its operation, is precisely to follow the
dictates of sound public policy.

The exhaustive and well-researched opinion of Justice


Zaldivar thus is in the mainstream of constitutional tradition.
That, for me, is the channel to follow.

G.R. Nos. 43633-34 September 14, 1990

PABLO ARIZALA, SERGIO MARIBAO, LEONARDO JOVEN,


and FELINO BULANDUS, petitioners,
vs.
THE COURT OF APPEALS and THE PEOPLE OF THE Chief of the Field Service and Non-Life Insurance Division
PHILIPPINES, respondents. (and Acting Division Chief in the absence of the Chief), of the
same Central Visayas Regional Office of the GSIS. Demands
Januario T. Seno for petitioners. were made on all four of them to resign from the GSIS
Employees Association, in view of their supervisory positions.
They refused to do so. Consequently, two (2) criminal cases
NARVASA, J.: for violation of the Industrial Peace Act were lodged against
them in the City Court of Cebu: one involving Arizala and
Under the Industrial Peace Act, 1 government-owned or Maribao 6 and the other, Joven and Bulandus. 7
controlled corporations had the duty to bargain collectively
and were otherwise subject to the obligations and duties of Both criminal actions resulted in the conviction of the
employers in the private sector. 2 The Act also prohibited accused in separate decisions. 8 They were each sentenced
supervisors to become, or continue to be, members of labor "to pay a fine of P 500.00 or to suffer subsidiary
organizations composed of rank-and-file employees, 3 and imprisonment in case of insolvency." They appealed to the
prescribed criminal sanctions for breach of the prohibition. 4 Court of Appeals. 9 Arizala's and Maribao's appeal was
docketed as CA-G.R. No. 14724-CR; that of Joven and
It was under the regime of said Industrial Peace Act that the Bulandus, as CA-G.R. No. 14856-CR.
Government Service Insurance System (GSIS, for short)
became bound by a collective bargaining agreement The appeals were consolidated on motion of the appellants,
executed between it and the labor organization representing and eventuated in a judgment promulgated on January 29,
the majority of its employees, the GSIS Employees 1976 affirming the convictions of all four appellants. The
Association. The agreement contained a "maintenance-of- appellants moved for reconsideration. They argued that when
membership" clause, 5 i.e., that all employees who, at the the so called "1973 Constitution" took effect on January 17,
time of the execution of said agreement, were members of 1973 pursuant to Proclamation No. 1104, the case of Arizala
the union or became members thereafter, were obliged to and Maribao was still pending in the Court of Appeals and
maintain their union membership in good standing for the that of Joven and Bulandus, pending decision in the City
duration of the agreement as a condition for their continued Court of Cebu; that since the provisions of that constitution
employment in the GSIS. and of the Labor Code subsequently promulgated (eff.,
November 1, 1974), repealing the Industrial Peace Act-placed
There appears to be no dispute that at that time, the employees of all categories in government-owned or
petitioners occupied supervisory positions in the GSIS. Pablo controlled corporations without distinction within the Civil
Arizala and Sergio Maribao were, respectively, the Chief of Service, and provided that the terms and conditions of their
the Accounting Division, and the Chief of the Billing Section employment were to be "governed by the Civil Service Law,
of said Division, in the Central Visayas Regional Office of the rules and regulations" and hence, no longer subject of
GSIS. Leonardo Joven and Felino Bulandus were, respectively, collective bargaining, the appellants ceased to fall within the
the Assistant Chief of the Accounting Division (sometimes coverage of the Industrial Peace Act and should thus no
Acting Chief in the absence of the Chief) and the Assistant longer continue to be prosecuted and exposed to punishment
for a violation thereof. They pointed out further that the 3. The specific penalty for violation of the prohibition on
criminal sanction in the Industrial Peace Act no longer supervisors being members in a labor organization of
appeared in the Labor Code. The Appellate Court denied their employees under their supervision has disappeared.
plea for reconsideration.
4. The Code also modified the concept of unfair labor
Hence, the present petition for review on certiorari. practice, decreeing that thenceforth, "it shall be considered
merely as an administrative offense rather than a criminal
The crucial issue obviously is whether or not the petitioners' offense (and that) (u)nfair labor practice complaints shall x x
criminal liability for a violation of the Industrial Peace Act be processed like any ordinary labor disputes." 11
may be deemed to have been obliterated in virtue of
subsequent legislation and the provisions of the 1973 and On the other hand, in justification of the Appellate Tribunal's
1987 Constitutions. affirmance of the petitioners' convictions of violations of the
Industrial Peace Act, the People-
The petitioners' contention that their liability had been
erased is made to rest upon the following premises: 1) advert to the fact that said Labor Code also states that "all
actions or claims accruing prior to ... (its) effectivity ... shall
1. Section 1, Article XII-B of the 1973 Constitution does be determined in accordance with the laws in force at the
indeed provide that the "Civil Service embraces every time of their accrual;" and
branch, agency, subdivision and instrumentality of the
government, including government-owned or controlled 2) argue that the legislature cannot generally intervene and
corporations, .. administered by an independent Civil Service vacate the judgment of the courts, either directly or
Commission. indirectly, by the repeal of the statute under which said
judgment has been rendered.
2. Article 292 of the Labor Code repealed such parts and
provisions of the Industrial Peace Act as were "not adopted as The legal principles governing the rights of self-organization
part" of said Code "either directly or by reference." The Code and collective bargaining of rank-and-file employees in the
did not adopt the provision of the Industrial Peace Act government- particularly as regards supervisory, and high
conferring on employees of government-owned or controlled level or managerial employees have undergone alterations
corporations the right of self-organization and collective through the years.
bargaining; in fact it made known that the "terms and
conditions of employment of all government employees, Republic Act No. 875
including employees of government-owned and controlled As already intimated, under RA 875 (the Industry Peace
corporations," would thenceforth no longer be fixed by Act), 12 persons "employed in proprietary functions of the
collective bargaining but "be governed by the Civil Service Government, including but not limited to governmental
Law, rules and regulations." 10 corporations," had the right of self-organization and collective
bargaining, including the right to engage in concerted
activities to attain their objectives, e.g. strikes.
But those "employed in governmental functions" were Not so prohibited, however, were those "employed in
forbidden to "strike for the purpose of securing changes or proprietary functions of the Government including, but not
modification in their terms and conditions of employment" or limited to, governmental corporations." 16 The Act also
join labor organizations which imposed on their members the penalized any person who "violates, refuses or neglects to
duty to strike. The reason obviously was that the terms and comply with any ... provisions (of the Act) or rules
conditions of their employment were "governed by law" and (thereunder promulgated) ... by a fine not exceeding one
hence could not be fixed, altered or otherwise modified by thousand pesos or by imprisonment not exceeding six
collective bargaining. months or both such fine and imprisonment in the discretion
of the court." 17
Supervisory employees were forbidden to join labor
organizations composed of employees under them, but could The 1973 Constitution
form their own unions. Considered "supervisors' were those
'having authority in the interest of an employer to hire, The 1973 Constitution laid down the broad principle that
transfer, suspend, lay-off, recall, discharge, assign, "(t)he State shall assure the rights of workers to self-
recommend, or discipline other employees, or responsibly to organization, collective bargaining, security of tenure, and
direct them, and to adjust their grievance or effectively to just and humane conditions of work," 18 and directed that the
recommend such acts if, in connection with the foregoing, "National Assembly shall provide for the standardization of
the exercise of such authority is not merely routinary or compensation of government officials and
clerical in nature but requires the use of independent employees, including those in government-owned or
judgment." 13 controlled corporations, taking into account the nature of the
responsibilities pertaining to, and the qualifications required
Republic Act No. 2260 for, the positions concerned." 19

Similar provisions were found in R.A. No. 2260, the Civil PD 442, The Labor Code
Service Act of 1959. This Act declared that the "Philippine
Civil Service ... (embraced) all branches, subdivisions and The Labor Code of the Philippines, Presidential Decree No.
instrumentalities of the government including government- 442, enacted within a year from effectivity of the 1973
owned and controlled corporations." 14 Constitution, 20 incorporated the proposition that the "terms
and conditions of employment of all government employees,
It prohibited such civil service employees who were including employees of government-owned and controlled
"employed in governmental functions" to belong to any labor corporations ... (are) governed by the Civil Service Law, rules
organization which imposed on their members "the obligation and regulations." 21 It incorporated, too, the constitutional
to strike or to join strikes." And one of the first issuances of mandate that the salaries of said employees "shall be
the President after the proclamation of martial law in standardized by the National Assembly."
September, 1972, was General Order No. 5
which inter alia banned strikes in vital industries," as well as The Labor Code, 22 however "exempted" government
'all rallies, demonstrations and other forms of group employees from the right to self-organization for purposes of
actions." 15 collective bargaining. While the Code contained provisions
acknowledging the right of "all persons employed in engage in strikes and other concerted activities in an attempt
commercial, industrial and agricultural enterprises, including to bring about changes in the conditions of their work. They
religious, medical or educational institutions operating for could not however do so under the Labor Code and its
profit" to "self-organization and to form, join or assist labor Implementing Rules and Regulations; these provided that
organizations for purposes of collective bargaining," they "government employees, including employees of
"exempted from the foregoing provisions: government-owned and/or controlled corporations," without
distinction as to function, were "exempted" (excluded is the
a) security guards; better term) from "the right to self-organization and to form,
b) government employees, including employees of join or assist labor organizations for purposes of collective
government government-owned and/ or controlled bargaining," and by implication, excluded as well from the
corporations; right to engage in concerted activities, such as strikes, as
coercive measures against their employers.
c) managerial employees; and
Members of supervisory unions who were not managerial
d) employees of religious, charitable, medical and employees, were declared by the Labor Code to be "eligible
educational institutions not operating for profit, provided the to join or assist the rank and file labor organization, and if
latter do not have existing collective agreements or none exists, to form or assist in the forming of such rank and
recognized unions at the time of the effectivity of the code or file organization " 24 Managerial employees, on the other
have voluntarily waived their exemption." 23 hand, were pronounced as 'not eligible to join, assist or form
any labor organization." 25 A "managerial employee" was
The reason for denying to government employees the right to defined as one vested with power or prerogatives to lay down
"self-organization and to form, join or assist labor and execute management policies and/or to hire, transfer,
organizations for purposes of collective bargaining" is suspend, lay-off, recall, discharge, assign or discipline
presumably the same as that under the Industrial Peace Act, employees, or to effectively recommend such managerial
i.e., that the terms and conditions of government actions." 26
employment are fixed by law and not by collective
bargaining. Presidential Decree No. 807

Some inconsistency appears to have arisen between the Clarification of the matter seems to have been very shortly
Labor Code and the Civil Service Act of 1959. Under the Civil attempted by the Civil Service Decree of the Philippines,
Service Act, persons "employed in proprietary functions of Presidential Decree No. 807 (eff., Oct. 6,1975) which
the government including, but not limited to, governmental superseded the Civil Service Law of 1959 (RA 2260) 27 and
corporations'-not being within "the policy of the Government repealed or modified "all laws, rules and regulations or parts
that the employees therein shall not strike for the purpose of thereof inconsistent with the provisions" thereof. The Decree
securing changes in their terms and conditions of categorically described the scope and coverage of the "Civil
employment"-could legitimately bargain with their respective Service" as embracing 44 every branch, agency, subdivision,
employers through their labor organizations, and corollarily and instrumentality of the government, including every
government owned or controlled corporation whether bargaining and negotiations, and peaceful concerted
performing governmental or propriety function. 28 The effect activities, including the right to strike in accordance with
was seemingly to prohibit government employees (including law;" and that said workers "shall be entitled to security of
those "employed in proprietary functions of the tenure, humane conditions of work, and a living wage, ...
Government") to "strike for the purpose of securing changes (and) also participate in policy and decision-making
of their terms and conditions of employment," 29 something processes affecting their rights and benefits as may be
which, as aforestated, they were allowed to do under the Civil provided by law. 34
Service Act of 1959. 30
CSC Memorandum Circular No. 6
Be this as it may it seems clear that PD 807 (the Civil Service
Decree) did not modify the declared ineligibility of Memorandum Circular No. 6 of the Civil Service Commission,
"managerial employees" from joining, assisting or issued on April 21, 1987 enjoined strikes by government
forming any labor organization. officials and employees, to wit: 35

Executive Order No. 111 ... Prior to the enactment by Congress of applicable laws
concerning strike by government employees, and considering
Executive Order No. 111, issued by President Corazon C. that there are existing laws which prohibit government
Aquino on December 24, 1986 in the exercise of legislative officials and employees from resorting to strike, the
powers under the Freedom Constitution, modified the general Commission enjoins, under pain of administrative sanctions,
disqualification above mentioned of 'government employees, all government officers and employees from staging strikes,
including employees of government-owned and/or controlled demonstrations, mass leaves, walk-outs and other forms of
corporations" from "the right to self-organization and to form, mass action which will result in temporary stoppage or
join or assist labor organizations for purposes of collective disruption of public services. To allow otherwise is to
bargaining.' It granted to employees "of government undermine or prejudice the government system.
corporations established under the Corporation Code x x the
right to organize and to bargain collectively with their Executive Order No. 180
respective employers." 31 To all 'other employees in the civil The scope of the constitutional right to self-organization of
service, ... (it granted merely) the right to form associations "government employees" above mentioned, was defined and
for purposes not contrary to law," 32 not for "purposes of delineated in Executive Order No. 180 (eff. June 1, 1987).
collective bargaining." According to this Executive Order, the right of self-
The 1987 Constitution organization does indeed pertain to all "employees of all
branches, subdi