G.R. No.

130866 September 16, 1998 increasing number of labor disputes that find their way to this Court and the legislative changes
introduced over the years into the provisions of Presidential Decree (P.D.) No. 442 (The Labor
Code of the Philippines and Batas Pambansa Blg. (B.P. No.) 129 (The Judiciary Reorganization
ST. MARTIN FUNERAL HOME, petitioner,
Act of 1980) now stridently call for and warrant a reassessment of that procedural aspect.
vs.
NATIONAL LABOR RELATIONS COMMISSION and BIENVENIDO ARICAYOS, respondents.
We prefatorily delve into the legal history of the NLRC. It was first established in the Department
of Labor by P.D. No. 21 on October 14, 1972, and its decisions were expressly declared to be
appealable to the Secretary of Labor and, ultimately, to the President of the Philippines.

REGALADO, J.:
The present petition for certiorari stemmed from a complaint for illegal dismissal filed by herein
private respondent before the National Labor Relations Commission (NLRC), Regional
Arbitration Branch No. III, in San Fernando, Pampanga. Private respondent alleges that he
started working as Operations Manager of petitioner St. Martin Funeral Home on February 6,
1995. However, there was no contract of employment executed between him and petitioner nor
was his name included in the semi-monthly payroll. On January 22, 1996, he was dismissed
from his employment for allegedly misappropriating P38,000.00 which was intended for payment
by petitioner of its value added tax (VAT) to the Bureau of Internal Revenue (BIR). 1
Petitioner on the other hand claims that private respondent was not its employee but only the
uncle of Amelita Malabed, the owner of petitioner St. Martin's Funeral Home. Sometime in 1995,
private respondent, who was formerly working as an overseas contract worker, asked for
financial assistance from the mother of Amelita. Since then, as an indication of gratitude, private
respondent voluntarily helped the mother of Amelita in overseeing the business.
In January 1996, the mother of Amelita passed away, so the latter then took over the
management of the business. She then discovered that there were arrears in the payment of
taxes and other government fees, although the records purported to show that the same were
already paid. Amelita then made some changes in the business operation and private
respondent and his wife were no longer allowed to participate in the management thereof. As a
consequence, the latter filed a complaint charging that petitioner had illegally terminated his
employment.2
Based on the position papers of the parties, the labor arbiter rendered a decision in favor of
petitioner on October 25, 1996 declaring that no employer-employee relationship existed
between the parties and, therefore, his office had no jurisdiction over the case. 3
Not satisfied with the said decision, private respondent appealed to the NLRC contending that
the labor arbiter erred (1) in not giving credence to the evidence submitted by him; (2) in holding
that he worked as a "volunteer" and not as an employee of St. Martin Funeral Home from
February 6, 1995 to January 23, 1996, or a period of about one year; and (3) in ruling that there
was no employer-employee relationship between him and petitioner.4
On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and
remanding the case to the labor arbiter for immediate appropriate proceedings. 5 Petitioner then
filed a motion for reconsideration which was denied by the NLRC in its resolution dated August
18, 1997 for lack of merit,6 hence the present petition alleging that the NLRC committed grave
abuse of discretion.7
Before proceeding further into the merits of the case at bar, the Court feels that it is now exigent
and opportune to reexamine the functional validity and systemic practicability of the mode of
judicial review it has long adopted and still follows with respect to decisions of the NLRC. The
On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same to take
effect six months after its promulgation. 8 Created and regulated therein is the present NLRC
which was attached to the Department of Labor and Employment for program and policy
coordination only.9 Initially, Article 302 (now, Article 223) thereof also granted an aggrieved party
the remedy of appeal from the decision of the NLRC to the Secretary of Labor, but P.D. No.
1391 subsequently amended said provision and abolished such appeals. No appellate review
has since then been provided for.
Thus, to repeat, under the present state of the law, there is no provision for appeals from the
decision of the NLRC. 10 The present Section 223, as last amended by Section 12 of R.A. No.
6715, instead merely provides that the Commission shall decide all cases within twenty days
from receipt of the answer of the appellee, and that such decision shall be final and executory
after ten calendar days from receipt thereof by the parties.
When the issue was raised in an early case on the argument that this Court has no jurisdiction to
review the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal
provision for appellate review thereof, the Court nevertheless rejected that thesis. It held that
there is an underlying power of the courts to scrutinize the acts of such agencies on questions of
law and jurisdiction even though no right of review is given by statute; that the purpose of judicial
review is to keep the administrative agency within its jurisdiction and protect the substantial
rights of the parties; and that it is that part of the checks and balances which restricts the
separation of powers and forestalls arbitrary and unjust adjudications. 11
Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of
the aggrieved party is to timely file a motion for reconsideration as a precondition for any further
or subsequent remedy, 12 and then seasonably avail of the special civil action of certiorari under
Rule 65, 13 for which said Rule has now fixed the reglementary period of sixty days from notice of
the decision. Curiously, although the 10-day period for finality of the decision of the NLRC may
already have lapsed as contemplated in Section 223 of the Labor Code, it has been held that
this Court may still take cognizance of the petition for certiorari on jurisdictional and due process
considerations if filed within the reglementary period under Rule 65. 14
Turning now to the matter of judicial review of NLRC decisions, B.P. No. 129 originally provided
as follows:
Sec. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:
(1) Original jurisdiction to issue writs of mandamus,
prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs
or processes, whether or not in aid of its appellate jurisdiction;
(2) Exclusive original jurisdiction over actions for annulment of judgments of
Regional Trial Courts; and
 (3) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders, or awards of Regional Trial Courts and quasi-judicial
agencies, instrumentalities, boards, or commissions, except those falling
within the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of
the Judiciary Act of 1948.
The Intermediate Appellate Court shall have the power to try cases and
conduct hearings, receive evidence and perform any and all acts necessary
to resolve factual issues raised in cases falling within its original and
appellate jurisdiction, including the power to grant and conduct new trials or
further proceedings.
These provisions shall not apply to decisions and interlocutory orders issued
under the Labor Code of the Philippines and by the Central Board of
Assessment Appeals. 15
Subsequently, and as it presently reads, this provision was amended by R.A. No. 7902 effective
March 18, 1995, to wit:
Sec. 9. Jurisdiction. — The Court of Appeals shall exercise:
(1) Original jurisdiction to issue writs of mandamus,
prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs
or processes, whether or not in aid of its appellate jurisdiction;
(2) Exclusive original jurisdiction over actions for annulment of judgments of
Regional Trial Courts; and
(3) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-judicial
agencies, instrumentalities, boards or commissions, including the Securities
and Exchange Commission, the Social Security Commission, the
Employees Compensation Commission and the Civil Service Commission,
except those falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.
The Court of Appeals shall have the power to try cases and conduct
hearings, receive evidence and perform any and all acts necessary to
resolve factual issues raised in cases falling within its original and appellate
jurisdiction, including the power to grant and conduct new trials or further
proceedings. Trials or hearings in the Court of Appeals must be continuous
and must be completed within, three (3) months, unless extended by the
Chief Justice.
It will readily be observed that, aside from the change in the name of the lower appellate
court, 16 the following amendments of the original provisions of Section 9 of B.P. No. 129 were
effected by R.A. No. 7902, viz.:
1. The last paragraph which excluded its application to the Labor Code of the Philippines and the
Central Board of Assessment Appeals was deleted and replaced by a new paragraph granting
the Court of Appeals limited powers to conduct trials and hearings in cases within its jurisdiction.
2. The reference to the Labor Code in that last paragraph was transposed to paragraph (3) of
the section, such that the original exclusionary clause therein now provides "except those falling
within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of
this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948." (Emphasis supplied).
3. Contrarily, however, specifically added to and included among the quasi-judicial agencies
over which the Court of Appeals shall have exclusive appellate jurisdiction are the Securities and
Exchange Commission, the Social Security Commission, the Employees Compensation
Commission and the Civil Service Commission.
This, then, brings us to a somewhat perplexing impassè, both in point of purpose and
terminology. As earlier explained, our mode of judicial review over decisions of the NLRC has for
some time now been understood to be by a petition for certiorari under Rule 65 of the Rules of
Court. This is, of course, a special original action limited to the resolution of jurisdictional issues,
that is, lack or excess of jurisdiction and, in almost all cases that have been brought to us, grave
abuse of discretion amounting to lack of jurisdiction.
It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants
exclusive appellate jurisdiction to the Court of Appeals over all final adjudications of the Regional
Trial Courts and the quasi-judicial agencies generally or specifically referred to therein except,
among others, "those falling within the appellate jurisdiction of the Supreme Court in accordance
with . . . the Labor Code of the Philippines under Presidential Decree No. 442, as
amended, . . . ." This would necessarily contradict what has been ruled and said all along that
appeal does not lie from decisions of the NLRC. 17 Yet, under such excepting clause literally
construed, the appeal from the NLRC cannot be brought to the Court of Appeals, but to this
Court by necessary implication.
The same exceptive clause further confuses the situation by declaring that the Court of Appeals
has no appellate jurisdiction over decisions falling within the appellate jurisdiction of the
Supreme Court in accordance with the Constitution, the provisions of B.P. No. 129, and those
specified cases in Section 17 of the Judiciary Act of 1948. These cases can, of course, be
properly excluded from the exclusive appellate jurisdiction of the Court of Appeals. However,
because of the aforementioned amendment by transposition, also supposedly excluded are
cases falling within the appellate jurisdiction of the Supreme Court in accordance with the Labor
Code. This is illogical and impracticable, and Congress could not have intended that procedural
gaffe, since there are no cases in the Labor Code the decisions, resolutions, orders or awards
wherein are within the appellate jurisdiction of the Supreme Court or of any other court for that
matter.
A review of the legislative records on the antecedents of R.A. No. 7902 persuades us that there
may have been an oversight in the course of the deliberations on the said Act or an imprecision
in the terminology used therein. In fine, Congress did intend to provide for judicial review of the
adjudications of the NLRC in labor cases by the Supreme Court, but there was an inaccuracy in
the term used for the intended mode of review. This conclusion which we have reluctantly but
prudently arrived at has been drawn from the considerations extant in the records of Congress,
more particularly on Senate Bill No. 1495 and the Reference Committee Report on S. No.
1495/H. No. 10452. 18
In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his sponsorship
speech 19 from which we reproduce the following excerpts:
The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129,
reorganized the Court of Appeals and at the same time expanded its
jurisdiction and powers. Among others, its appellate jurisdiction was
expanded to cover not only final judgment of Regional Trial Courts, but also
all final judgment(s), decisions, resolutions, orders or awards of quasi-
judicial agencies, instrumentalities, boards and commissions, except those
falling within the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the provisions of BP Blg. 129 and of subparagraph 1
of the third paragraph and subparagraph 4 of Section 17 of the Judiciary Act
of 1948.
Mr. President, the purpose of the law is to ease the workload of the
Supreme Court by the transfer of some of its burden of review of factual
issues to the Court of Appeals. However, whatever benefits that can be
derived from the expansion of the appellate jurisdiction of the Court of
Appeals was cut short by the last paragraph of Section 9 of Batas
Pambansa Blg. 129 which excludes from its coverage the "decisions and
interlocutory orders issued under the Labor Code of the Philippines and by
the Central Board of Assessment Appeals.
Among the highest number of cases that are brought up to the Supreme
Court are labor cases. Hence, Senate Bill No. 1495 seeks to eliminate the
exceptions enumerated in Section 9 and, additionally, extends the coverage
of appellate review of the Court of Appeals in the decision(s) of the
Securities and Exchange Commission, the Social Security Commission, and
the Employees Compensation Commission to reduce the number of cases
elevated to the Supreme Court. (Emphases and corrections ours)
x x x           x x x          x x x
Senate Bill No. 1495 authored by our distinguished Colleague from Laguna
provides the ideal situation of drastically reducing the workload of the
Supreme Court without depriving the litigants of the privilege of review by an
appellate tribunal.
In closing, allow me to quote the observations of former Chief Justice
Teehankee in 1986 in the Annual Report of the Supreme Court:
. . . Amendatory legislation is suggested so as to relieve
the Supreme Court of the burden of reviewing these
cases which present no important issues involved
beyond the particular fact and the parties involved, so
that the Supreme Court may wholly devote its time to
cases of public interest in the discharge of its mandated
task as the guardian of the Constitution and the
guarantor of the people's basic rights and additional
task expressly vested on it now "to determine whether
or not there has been a grave abuse of discretion
amounting to lack of jurisdiction on the part of any
branch or instrumentality of the Government.
We used to have 500,000 cases pending all over the land, Mr. President. It
has been cut down to 300,000 cases some five years ago. I understand we
are now back to 400,000 cases. Unless we distribute the work of the
appellate courts, we shall continue to mount and add to the number of
cases pending.
In view of the foregoing, Mr. President, and by virtue of all the reasons we
have submitted, the Committee on Justice and Human Rights requests the
support and collegial approval of our Chamber.
x x x           x x x          x x x
Surprisingly, however, in a subsequent session, the following Committee Amendment was
introduced by the said sponsor and the following proceedings transpired: 20
Senator Roco. On page 2, line 5, after the line "Supreme Court in
accordance with the Constitution," add the phrase "THE LABOR CODE OF
THE PHILIPPINES UNDER P.D. 442, AS AMENDED." So that it becomes
clear, Mr. President, that issues arising from the Labor Code will still be
appealable to the Supreme Court.
The President. Is there any objection? (Silence) Hearing none, the
amendment is approved.
Senator Roco. On the same page, we move that lines 25 to 30 be deleted.
This was also discussed with our Colleagues in the House of
Representatives and as we understand it, as approved in the House, this
was also deleted, Mr. President.
The President. Is there any objection? (Silence) Hearing none, the
amendment is approved.
Senator Roco. There are no further Committee amendments, Mr. President.
Senator Romulo. Mr. President, I move that we close the period of
Committee amendments.
The President. Is there any objection? (Silence) Hearing none, the
amendment is approved. (Emphasis supplied).
x x x           x x x          x x x
Thereafter, since there were no individual amendments, Senate Bill No. 1495 was passed on
second reading and being a certified bill, its unanimous approval on third reading
followed. 21 The Conference Committee Report on Senate Bill No. 1495 and House Bill No.
10452, having theretofore been approved by the House of Representatives, the same was
likewise approved by the Senate on February 20, 1995, 22 inclusive of the dubious formulation on
appeals to the Supreme Court earlier discussed.
The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the
Supreme Court were eliminated, the legislative intendment was that the special civil action
of certiorari was and still is the proper vehicle for judicial review of decisions of the NLRC. The
use of the word "appeal" in relation thereto and in the instances we have noted could have been
a lapsus plumae because appeals by certiorari and the original action for certiorari are both
modes of judicial review addressed to the appellate courts. The important distinction between
them, however, and with which the Court is particularly concerned here is that the special civil
action of certiorari is within the concurrent original jurisdiction of this Court and the Court of
Appeals; 23 whereas to indulge in the assumption that appeals by certiorari to the Supreme Court
are allowed would not subserve, but would subvert, the intention of Congress as expressed in
the sponsorship speech on Senate Bill No. 1495.
Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from
the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to
petitions for certiorari under Rule 65. Consequently, all such petitions should hence forth be
initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts
as the appropriate forum for the relief desired.
Apropos to this directive that resort to the higher courts should be made in accordance with their
hierarchical order, this pronouncement in Santiago vs. Vasquez, et al. 25 should be taken into
account:

Incidentally, it was noted by the sponsor therein that some quarters were of the opinion that
One final observation. We discern in the proceedings in this case a
recourse from the NLRC to the Court of Appeals as an initial step in the process of judicial
propensity on the part of petitioner, and, for that matter, the same may be
review would be circuitous and would prolong the proceedings. On the contrary, as he
said of a number of litigants who initiate recourses before us, to disregard
commendably and realistically emphasized, that procedure would be advantageous to the
the hierarchy of courts in our judicial system by seeking relief directly from
aggrieved party on this reasoning:
this Court despite the fact that the same is available in the lower courts in
the exercise of their original or concurrent jurisdiction, or is even mandated
On the other hand, Mr. President, to allow these cases to be appealed to by law to be sought therein. This practice must be stopped, not only
the Court of Appeals would give litigants the advantage to have all the because of the imposition upon the precious time of this Court but also
evidence on record be reexamined and reweighed after which the findings because of the inevitable and resultant delay, intended or otherwise, in the
of facts and conclusions of said bodies are correspondingly affirmed, adjudication of the case which often has to be remanded or referred to the
modified or reversed. lower court as the proper forum under the rules of procedure, or as better
equipped to resolve the issues since this Court is not a trier of facts. We,
therefore, reiterate the judicial policy that this Court will not entertain direct
Under such guarantee, the Supreme Court can then apply strictly the axiom
resort to it unless the redress desired cannot be obtained in the appropriate
that factual findings of the Court of Appeals are final and may not be
courts or where exceptional and compelling circumstances justify availment
reversed on appeal to the Supreme Court. A perusal of the records will
of a remedy within and calling for the exercise of our primary jurisdiction.
reveal appeals which are factual in nature and may, therefore, be dismissed
outright by minute resolutions. 24
WHEREFORE, under the foregoing premises, the instant petition for certiorari is hereby
REMANDED, and all pertinent records thereof ordered to be FORWARDED, to the Court of
While we do not wish to intrude into the Congressional sphere on the matter of the wisdom of a
Appeals for appropriate action and disposition consistent with the views and ruling herein set
law, on this score we add the further observations that there is a growing number of labor cases
forth, without pronouncement as to costs.
being elevated to this Court which, not being a trier of fact, has at times been constrained to
remand the case to the NLRC for resolution of unclear or ambiguous factual findings; that the
Court of Appeals is procedurally equipped for that purpose, aside from the increased number of SO ORDERED.
its component divisions; and that there is undeniably an imperative need for expeditious action
on labor cases as a major aspect of constitutional protection to labor.
G.R. No. 120319 October 6, 1995
LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S.
GARCIA in her capacity as VOLUNTARY ARBITRATOR, respondents.
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB) and the Association of
Luzon Development Bank Employees (ALDBE) arose an arbitration case to resolve the following
issue:
Whether or not the company has violated the Collective Bargaining
Agreement provision and the Memorandum of Agreement dated April 1994,
on promotion.
At a conference, the parties agreed on the submission of their respective Position Papers on
December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received
ALDBE's Position Paper on January 18, 1995. LDB, on the other hand, failed to submit its
Position Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May
23, 1995 no Position Paper had been filed by LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision
disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the
Collective Bargaining Agreement provision nor the Memorandum of
Agreement on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the
Voluntary Arbitrator and to prohibit her from enforcing the same.
In labor law context, arbitration is the reference of a labor dispute to an impartial third person for
determination on the basis of evidence and arguments presented by such parties who have
bound themselves to accept the decision of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is based, as either
compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled by the
government to forego their right to strike and are compelled to accept the resolution of their
dispute through arbitration by a third party.1 The essence of arbitration remains since a
resolution of a dispute is arrived at by resort to a disinterested third party whose decision is final
and binding on the parties, but in compulsory arbitration, such a third party is normally appointed
by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made,
pursuant to a voluntary arbitration clause in their collective agreement, to an impartial third
person for a final and binding resolution. 2 Ideally, arbitration awards are supposed to be
complied with by both parties without delay, such that once an award has been rendered by an
arbitrator, nothing is left to be done by both parties but to comply with the same. After all, they
are presumed to have freely chosen arbitration as the mode of settlement for that particular
dispute. Pursuant thereto, they have chosen a mutually acceptable arbitrator who shall hear and
decide their case. Above all, they have mutually agreed to de bound by said arbitrator's decision.
In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to
include therein provisions for a machinery for the resolution of grievances arising from the
interpretation or implementation of the CBA or company personnel policies. 3 For this purpose,
parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators,
or include a procedure for their selection, preferably from those accredited by the National
Conciliation and Mediation Board (NCMB). Article 261 of the Labor Code accordingly provides
for exclusive original jurisdiction of such voluntary arbitrator or panel of arbitrators over (1) the
interpretation or implementation of the CBA and (2) the interpretation or enforcement of
company personnel policies. Article 262 authorizes them, but only upon agreement of the
parties, to exercise jurisdiction over other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the
following enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide, within thirty
(30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-
agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms and
conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising
from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare
and maternity benefits, all other claims, arising from employer-employee
relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless
of whether accompanied with a claim for reinstatement.
 xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of
such arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the
appellate jurisdiction of the National Labor Relations Commission (NLRC) for that matter. 4 The
state of our present law relating to voluntary arbitration provides that "(t)he award or decision of
the Voluntary Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt
of the copy of the award or decision by the parties," 5 while the "(d)ecision, awards, or orders of
the Labor Arbiter are final and executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such decisions, awards, or orders." 6 Hence,
while there is an express mode of appeal from the decision of a labor arbiter, Republic Act No.
6715 is silent with respect to an appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than
not, elevated to the Supreme Court itself on a petition for certiorari,7 in effect equating the
voluntary arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is
illogical and imposes an unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al.,8 on the settled premise that the judgments of
courts and awards of quasi-judicial agencies must become final at some definite time, this Court
ruled that the awards of voluntary arbitrators determine the rights of parties; hence, their
decisions have the same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et
al. v. Romero, et al.,9 this Court ruled that "a voluntary arbitrator by the nature of her functions
acts in a quasi-judicial capacity." Under these rulings, it follows that the voluntary arbitrator,
whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency but
independent of, and apart from, the NLRC since his decisions are not appealable to the latter. 10
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of
Appeals shall exercise:
xxx xxx xxx
(B) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-judicial
agencies, instrumentalities, boards or commissions, including the Securities
and Exchange Commission, the Employees Compensation Commission
and the Civil Service Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as
amended, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of
the Judiciary Act of 1948.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not
strictly be considered as a quasi-judicial agency, board or commission, still both he and the
panel are comprehended within the concept of a "quasi-judicial instrumentality." It may even be
stated that it was to meet the very situation presented by the quasi-judicial functions of the
voluntary arbitrators here, as well as the subsequent arbitrator/arbitral tribunal operating under
the Construction Industry Arbitration Commission,11 that the broader term "instrumentalities" was
purposely included in the above-quoted provision.
An "instrumentality" is anything used as a means or agency.12 Thus, the terms governmental
"agency" or "instrumentality" are synonymous in the sense that either of them is a means by
which a government acts, or by which a certain government act or function is performed. 13 The
word "instrumentality," with respect to a state, contemplates an authority to which the state
delegates governmental power for the performance of a state function.14 An individual person,
like an administrator or executor, is a judicial instrumentality in the settling of an estate, 15 in the
same manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the
court,16 and a trustee in bankruptcy of a defunct corporation is an instrumentality of the state. 17
The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within
the contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact
that his functions and powers are provided for in the Labor Code does not place him within the
exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It
will be noted that, although the Employees Compensation Commission is also provided for in the
Labor Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative
Circular No. 1-95, laid down the procedure for the appealability of its decisions to the Court of
Appeals under the foregoing rationalization, and this was later adopted by Republic Act No.
7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise
be appealable to the Court of Appeals, in line with the procedure outlined in Revised
Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and
commissions enumerated therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to
provide a uniform procedure for the appellate review of adjudications of all quasi-judicial
entities18 not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the
Constitution or another statute. Nor will it run counter to the legislative intendment that decisions
of the NLRC be reviewable directly by the Supreme Court since, precisely, the cases within the
adjudicative competence of the voluntary arbitrator are excluded from the jurisdiction of the
NLRC or the labor arbiter.
In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also
known as the Arbitration Law, arbitration is deemed a special proceeding of which the court
specified in the contract or submission, or if none be specified, the Regional Trial Court for the
province or city in which one of the parties resides or is doing business, or in which the
arbitration is held, shall have jurisdiction. A party to the controversy may, at any time within one
(1) month after an award is made, apply to the court having jurisdiction for an order confirming
the award and the court must grant such order unless the award is vacated, modified or
corrected.19
In effect, this equates the award or decision of the voluntary arbitrator with that of the regional
trial court. Consequently, in a petition for certiorari from that award or decision, the Court of
Appeals must be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of
policy, this Court shall henceforth remand to the Court of Appeals petitions of this nature for
proper disposition.
ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.
SO ORDERED.
G.R. No. 123426 March 10, 1999
NATIONAL FEDERATION OF LABOR (NFL), petitioner,
vs.
HON. BIENVENIDO E. LAGUESMA, UNDERSECRETARY OF THE DEPARTMENT OF
LABOR AND EMPLOYMENT, AND ALLIANCE OF NATIONALIST GENUINE LABOR
ORGANIZATION-KILUSANG MAYO UNO (ANGLO-KMU), respondents.
KAPUNAN, J.:
Before us is a petition for certiorari under Rule 65 assailing the Resolution in OS-A-7-142-93
(RO700-9412-RU-037) dated August 8, 1995 of Undersecretary Bienvenido E. Laguesma, by
authority of the Secretary of Labor and Employment, setting aside the Resolution of the Med-
Arbiter dated March 13, 1995.
The antecedents are summarized in the assailed Resolution of Undersecretary Laguesma as
follows:
Records show that on 27 December 1994, a petition for certification election
among the rank and file employees of Cebu Shipyard and Engineering
Work, Inc. was filed by the Alliance of Nationalist and Genuine Labor
Organization (ANGLO-KMU), alleging among others, that it is a legitimate
labor organization; that respondent Cebu Shipyard and Engineering Work,
Inc. is a company engaged in the business of shipbuilding and repair with
more or less, four hundred (400) rank and file employees; that the
Nagkahiusang Mamumuo sa Baradero — National Federation of Labor is
the incumbent bargaining agent of the rank and file employees of the
respondent company; that the petition is supported by more than twenty-five
percent (25%) of all the employees in the bargaining unit; that the petition is
filed within the sixty (60) day period prior to the expiry date of the collective
bargaining agreement (CBA) entered into by and between the
Nagkahiusang Mamumuo sa Baradero-NFL and Cebu Shipyard
Engineering Work, Inc. which is due to expire on 31 December 1994; and,
that there is no bar to its bid to be certified as the sole and exclusive
bargaining agent of all the rank and file employees of the respondent
company.
On 2 January 1995, the Med-Arbiter issued an Order, the pertinent portion of which reads as
follows:
The petitioner is given five days from receipt of this Order to present proofs
that it has created a local in the appropriate bargaining unit where it seeks
to operate as the bargaining agent and that, relative thereto, it has
submitted to the Bureau of Labor Relations or the Industrial Relations
Division of this Office the following: 1) A charter certificate; 2) the
constitution and by-laws, a statement on the set of officers, and the books of
accounts all of which are certified under oath by the Secretary or Treasurer,
as the case may be, of such local or chapter and attested to by its
President, OTHERWISE, this case will be dismissed.
SO ORDERED.
On 9 January 1995, forced-intervenor National Federation of Labor (NFL)
moved for the dismissal of the petition on grounds that petitioner has no
legal personality to file the present petition for certification election and that
it failed to comply with the twenty-five percent (25%) consent requirement. It
averred among others, that settled is the rule that when a petition for
certification election is filed by the federation which is merely an agent, the
petition is deemed to be filed by the local/chapter, the principal, which must
be a legitimate labor organization; that for a local to be vested with the
status a legitimate labor organization, it must submit to the Bureau of Labor
Relations (BLR) or the Industrial Relations Division of the Regional Office of
the Department of Labor and Employment the following: a) charter
certificate, indicating the creation or establishment of a local or chapter; b)
constitution and by-laws; c) set of officers, and d) books of accounts; that
petitioner failed to submit the aforesaid requirements necessary for its
acquisition of legal personality; that compliance with the aforesaid
requirements must be made at the time of the filing of the petition within the
freedom period; that the submission of the aforesaid requirements beyond
the freedom period will not operate to allow the defective petition to prosper;
that contrary to the allegation of the petitioner, the number of workers in the
subject bargaining unit is 486, twenty-five percent (25%) of which is 122;
that the consent signatures submitted by the petitioner is 120 which is below
the required 25% consent requirement; that of the 120 employees who
allegedly supported the petition, one (1) executed a certification stating that
the signature, Margarito Cabalhug, does not belong to him, 15 retracted, 9
of which were made before the filing of the petition while 6 were made after
the filing of the petition; and, that the remaining 104 signatures are way
below the 25% consent requirement.
On 16 January 1995, forced-intervenor filed an Addendum/Supplement to
its Motion to Dismiss, together with the certification issued by the Regional
Office No. VII, this Department, attesting to the fact that the mandatory
requirements necessary for the petitioner to acquire the requisite legal
personality were submitted only on 6 January 1995 and the certification
issued by the BLR, this Department, stating that as of 11 January 1995, the
ANGLO-Cebu Shipyard and Engineering Work has not been reported as
one of the affiliates of the Alliance of Nationalist and Genuine Labor
Organization (ANGLO). Forced intervenor alleged that it is clear from the
said certification that when the present petition was filed on 27 December
1994, petitioner and its alleged local/chapter have no legal personality to file
the same. It claimed that the fatal defect in the instant petition cannot be
cured with the submission of the requirements in question as the
local/chapter may be accorded the status of a legitimate labor organization
only on 6 January 1995 which is after the freedom period expired on 31
December 1994. Forced intervenor further claimed that the documents
submitted by the petitioner were procured thru misrepresentation, and fraud,
as there was no meeting on 13 November 1994 for the purpose of ratifying
a constitution and by-laws and there was no election of officers that actually
took place.
On 15 February 1995, petitioner filed its opposition to the respondent's
motion to dismiss. It averred among others, that in compliance with the
 order of the Med-Arbiter, it submitted to the Regional Office No. VII, this RULING IN THE CASE OF FUR V.
Department, the following documents; charter certificate, constitution and LAGUESMA, G.R. NO. 109251,
by-laws; statement on the set of officers and treasurer's affidavit in lieu of MAY 26, 1993, IN THE PRESENT
the books of accounts; that the submission of the aforesaid document, as CASE.
ordered, has cured whatever defect the petition may have at the time of the
filing of the petition, that at the time of the filing of petition, the total number
We will not rule on the merits of the petition. Instead, we will take this opportunity to lay the rules
of rank and file employees in the respondent company was about 400 and
on the procedure for review of decisions or rulings of the Secretary of Labor and Employment
that the petition was supported by 120 signatures which are more than the
under the Labor Code and its Implementing Rules. (P.D. No. 442 as amended)
25% required by law; that granting without admitting that it was not able to
secure the signatures of at least 25% of the rank and file employees in the
bargaining unit, the Med-Arbiter is still empowered to order for the conduct In St. Martin Funeral Homes v. National Labor Relations Commission and Bienvenido
of a certification election precisely for the purpose of ascertaining which of Aricayos, G.R. No. 130866, September 16, 1998, the Court re-examined the mode of judicial
the contending unions shall be the exclusive bargaining agent pursuant to review with respect to decisions of the National Labor Relations Commission.
the ruling of the Supreme Court in the case of California Manufacturing
Corporation vs. Hon. Undersecretary of Labor, et al., G.R. No. 97020, June
The course taken by decisions of the NLRC and those of the Secretary of Labor and
8, 1992.
Employment are tangent, but all are within the umbra of the Labor Code of the Philippines and
its implementing rules. On this premise, we find that the very same rationale in St. Martin
On 20 February 1995, forced-intervenor filed its reply, reiterating all its Funeral Homes v. NLRC finds application here, leading ultimately to the same disposition as in
arguments and allegations contained in its previous pleadings. It stressed that leading case.
that petitioner is not a legitimate labor organization at the time of the filing of
the petition and that the petitioner's submission of the mandatory
We have always emphatically asserted our power to pass upon the decisions and discretionary
requirements after the freedom period would not cure the defect of the
acts of the NLRC well as the Secretary of Labor in the face of the contention that no judicial
petition.
review is provided by the Labor Code. We stated in San Miguel Corporation v. Secretary of
Labor 3 thus:
On 13 March 1995, the Med-Arbiter issued the assailed Resolution
dismissing the petition, after finding that the submission of the required
. . . It is generally understood that as to a administrative agencies exercising
documents evidencing the due creation of a local was made after the lapse
quasi-judicial or legislative power there is an underlying power in the courts
of the freedom period. 1
to scrutinize the acts of such agencies on questions of law and jurisdiction
even though no right of review is given by statute (73 C.J.S. 506, note 56).
The Alliance of Nationalist Genuine Labor Organization-Kilusang Mayo Uno (ANGLO-KMU) filed
an appeal from the March 13, 1995 Med-Arbiter's resolution insisting that it is a legitimate labor
The purpose of judicial review is to keep the administrative agency within its
organization at the time of the filing of the petition for certification election, and claiming that
jurisdiction and protect substantial rights of parties affected by its decision
whatever defect the petition may have had was cured by the subsequent submission of the
(73 C.J.S. 507, Sec. 165). It is part of the system of checks and balances
mandatory requirements.
which restricts the separation of powers and forestalls arbitrary and unjust
adjudications.
In a Resolution dated August 8, 1995, respondent Undersecretary Bienvenido E. Laguesma, by
authority of the Secretary of Labor and Employment, set aside the Med-Arbiter's resolution and
Considering the above dictum and as affirmed by decisions of this Court, St. Martin Funeral
entered in lieu thereof a new order "finding petitioner [ANGLO-KMU] as having complied with the
Homes v. NLRC succinctly pointed out, the remedy of an aggrieved party is to timely file a
requirements of registration at the time of filing of the petition and remanding the records of this
motion for reconsideration as a precondition for any further or subsequent remedy, and then
case to the Regional Office of origin . . . ." 2
seasonably file a special civil action for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure.
The National Federation of Labor thus filed this special civil action for certiorari under Rule 65 of
the Rules of Court raising the following grounds:
The propriety of Rule 65 as a remedy was highlighted in St. Martin Funeral Homes v. NLRC,
where the legislative history of the pertinent statutes on judicial review of cases decided under
A. RESOLUTION OF PUBLIC the Labor Code was traced, leading to and supporting the thesis that "since appeals from the
RESPONDENT HON. NLRC to the Supreme Court were eliminated, the legislative intendment was that the special civil
BIENVENIDO E. LAGUESMA action of certiorari was and still is the proper vehicle for judicial review of decision of the
DATED 8 AUGUST 1995 AND HIS NLRC" 4 and consequently "all references in the amended Section 9 of B.P. No. 129 to
ORDER DATED 14 SEPTEMBER supposed appeals from the NLRC to the Supreme Court are interpreted and hereby declared to
1995 WERE ISSUED IN mean and refer to petitions for certiorari under Rule 65."5
DISREGARD OF EXISTING LAWS
AND JURISPRUDENCE; AND
Proceeding therefrom and particularly considering that the special civil action of certiorari under
Rule 65 is within the concurrent original jurisdiction of the Supreme Court and the Court of
B. GRAVELY ABUSED HIS Appeals, St. Martin Funeral Homes v. NLRC concluded and directed that all such petitions
DISCRETION IN APPLYING THE
should be initially filed in the Court of Appeals in strict observance of the doctrine on the
hierarchy of courts.
In the original rendering of the Labor Code, Art. 222 thereof provided that the decisions of the
NLRC are appealable to the Secretary of Labor on specified grounds. 6 The decisions of the
Secretary of Labor may be appealed to the President of the Philippines subject to such
conditions or limitations as the President may direct.
Thus under the state of the law then, this Court had ruled that original actions for certiorari and
prohibition filed with this Court against the decision of the Secretary of Labor passing upon the
decision of the NLRC were unavailing for mere error of judgment as there was a plain, speedy
and adequate remedy in the ordinary course of law, which was an appeal to the President. We
said in the 1975 case, Scott v. Inciong, 7quoting Nation Multi Service Labor Union v. Acgoaili:8 "It
is also a matter of significance that there was an appeal to the President. So it is explicitly
provided by the Decree. That was a remedy both adequate and appropriate. It was in line with
the executive determination, after the proclamation of martial law, to leave the solution of labor
disputes as much as possible to administrative agencies and correspondingly to limit judicial
participation."9
Significantly, we also asserted in Scott v. Inciong that while appeal did not lie, the corrective
power of this Court by a writ of certiorari was available whenever a jurisdictional issue was
raised or one of grave abuse of discretion amounting to a lack or excess thereof, citing San
Miguel Corporation v. Secretary of Labor.10
P.D. No. 1367 11 amending certain provisions of the Labor Code eliminated appeals to the
President, but gave the President the power to assume jurisdiction over any cases which he
considered national interest cases. The subsequent P.D. No. 1391, 12 enacted "to insure speedy
labor justice and further stabilize industrial peace", further eliminated appeals from the NLRC to
the Secretary of Labor but the President still continued to exercise his power to assume
jurisdiction over any cases which he considered national interest
cases. 13
Though appeals from the NLRC to the Secretary of Labor were eliminated, presently there are
several instances in the Labor Code and its implementing and related rules where an appeal can
be filed with the Office of the Secretary of Labor or the Secretary of Labor issues a ruling, to wit:
(1) Under the Rules and Regulations Governing Recruitment and Placement
Agencies for Local Employment 14 dated June 5, 1997 superseding certain
provisions of Book I (Pre-Employment) of the implementing rules, the
decision of the Regional Director on complaints against agencies is
appealable to the Secretary of Labor within ten (10) working days from
receipt of a copy of the order, on specified grounds, whose decision shall be
final and inappealable.
(2) Art. 128 of the Labor Code provides that an order issued by the duly
authorized representative of the Secretary of Labor in labor standards cases
pursuant to his visitorial and enforcement power under said article may be
appealed to the Secretary of Labor.
Sec. 2 in relation to Section 3 (a), Rule X, Book III (Conditions of
Employment) of the implementing rules gives the Regional Director the
power to order and administer compliance with the labor standards
provisions of the Code and other labor legislation. Section 4 gives the
Secretary the power to review the order of the Regional Director, and the
Secretary's decision shall be final and executory.
Sec. 1, Rule IV (Appeals) of the Rules on the Disposition of Labor
Standards Cases in the Regional Offices dated September 16,
1987 15 provides that the order of the Regional Director in labor standards
cases shall be final and executory unless appealed to the Secretary of
Labor.
Sec. 5, Rule V (Execution) provides that the decisions, orders or resolutions
of the Secretary of Labor and Employment shall become final and executory
after ten (10) calendar days from receipt of the case records. The filing of a
petition for certiorari before the Supreme Court shall not stay the execution
of the order or decision unless the aggrieved party secures a temporary
restraining order from the Court within fifteen (15) calendar days from the
date of finality of the order or decision or posts a supersedeas bond.
Sec. 6 of Rule VI (Health and Safety Cases) provides that the Secretary of
Labor at his own initiative or upon the request of the employer and/or
employee may review the order of the Regional Director in occupational
health and safety cases. The Secretary's order shall be final and executory.
(2) Art. 236 provides that the decision of the Labor Relations Division in the
regional office denying an applicant labor organization, association or group
of unions or workers' application for registration may be appealed by the
applicant union to the Bureau of Labor Relations within ten (10) days from
receipt of notice thereof.
Sec. 4, Rule V, Book V (Labor Relations), as amended by Department
Order No. 9 dated May 1, 1997 16 provides that the decision of the Regional
Office denying the application for registration of a workers association
whose place of operation is confined to one regional jurisdiction, or the
Bureau of Labor Relations denying the registration of a federation, national
or industry union or trade union center may be appealed to the Bureau or
the Secretary as the case may be who shall decide the appeal within twenty
(20) calendar days from receipt of the records of the case.
(3) Art. 238 provides that the certificate of registration of any legitimate
organization shall be canceled by the Bureau of Labor Relations if it has
reason to believe, after due hearing, that the said labor organization no
longer meets one or more of the requirements prescribed by law.
Sec. 4, Rule VIII, Book V provides that the decision of the Regional Office or
the Director of the Bureau of Labor Relations may be appealed within ten
(10) days from receipt thereof by the aggrieved party to the Director of the
Bureau or the Secretary of Labor, as the case may be, whose decision shall
be final and executory.
(4) Art. 259 provides that any party to a certification election may appeal the
order or results of the election as determined by the Med-Arbiter directly to
the Secretary of Labor who shall decide the same within fifteen (15)
calendar days.
 Sec. 12, Rule XI, Book V provides that the decision of the Med-Arbiter on
the petition for certification election may be appealed to the Secretary.
Sec. 15, Rule XI, Book V provides that the decision of the Secretary of
Labor on an appeal from the Med-Arbiter's decision on a petition for
certification election shall be final and executory. The implementation of the
decision of the Secretary affirming the decision to conduct a certification
election shall not be stayed unless restrained by the appropriate court.
Sec. 15, Rule XII, Book V provides that the decision of the Med-Arbiter on
the results of the certification election may be appealed to the Secretary
within ten (10) days from receipt by the parties of a copy thereof, whose
decision shall be final and executory.
Sec. 7, Rule XVIII (Administration of Trade Union Funds and Actions Arising
Therefrom), Book V provides that the decision of the Bureau in complaints
filed directly with said office pertaining to administration of trade union funds
may be appealed to the Secretary of Labor within ten (10) days from receipt
of the parties of a copy thereof.
Sec. 1, Rule XXIV (Execution of Decisions, Awards, or Orders), Book V
provides that the decision of the Secretary of Labor shall be final and
executory after ten (10) calendar days from receipt thereof by the parties
unless otherwise specifically provided for in Book V.
(5) Art. 263 provides that the Secretary of Labor shall decide or resolve the
labor dispute over which he assumed jurisdiction within thirty (30) days from
the date of the assumption of jurisdiction. His decision shall be final and
executory ten (10) calendar days after receipt thereof by the parties.
From the foregoing we see that the Labor Code and its implementing and related rules generally
do not provide for any mode for reviewing the decision of the Secretary of Labor. It is further
generally provided that the decision of the Secretary of Labor shall be final and executory after
ten (10) days from notice. Yet, like decisions of the NLRC which under Art. 223 of the Labor
Code become final after ten (10) days, 17 decisions of the Secretary of Labor come to this Court
by way of a petition for certiorari even beyond the ten-day period provided in the Labor Code
and the implementing rules but within the reglementary period set for Rule 65 petitions under the
1997 Rules of Civil Procedure. For example, in M. Ramirez Industries v. Secretary of
Labor, 18 assailed was respondent's order affirming the Regional Director's having taken
cognizance of a case filed pursuant to his visitorial powers under Art. 128 (a) of the Labor Code;
in Samahang Manggagawa sa Permex v. Secretary of
Labor, 19 assailed was respondent's order setting aside the Med-Arbiter's dismissal a petition for
certification election; Samahan ng Manggagawa sa Pacific Plastic v. Laguesma, 20 assailed was
respondent's order affirming the Med-Arbiter's decision on the results of a certification election;
in Philtread Workers Union v. Confessor, 21 assailed was respondent's order issued under Art.
263 certifying a labor dispute to the NLRC for compulsory arbitration.
In two instances, however, there is specific mention of a remedy from the decision of the
Secretary of Labor, thus:
(1) Section 15, Rule XI, Book V of the amended implementing rules provides that the decision of
the Secretary of Labor on appeal from the Med-Arbiter's decision on a petition for certification
election shall be final and executory, but that the implementation of the Secretary's decision
affirming the Med-Arbiter's decision to conduct a certification election "shall not be stayed unless
restrained by the appropriate court."
(2) Section 5, Rule V (Execution) of the Rules on the Disposition of Labor Standards Cases in
Regional Offices provides that "the filing of a petition for certiorari before the Supreme Court
shall not stay the execution of the [appealed] order or decision unless the aggrieved party
secures a temporary restraining order from the Court."
We perceive no conflict with our pronouncements on the proper remedy which is Rule 65 and
which should be initially filed in the Court of Appeals in strict observance of the doctrine on the
hierarchy of courts. Accordingly, we read "the appropriate court" in Section 15, Rule XI, Book V
of the Implementing Rules to refer to the Court of Appeals.
Sec. 5, Rule V of the Rules on the Disposition of Labor Standards Cases in Regional Offices
specifying the Supreme Court as the forum for filing the petition for certiorari is not infirm in like
manner or similarly as is the statute involved in Fabian v. Desierto.22 And Section 5 cannot be
read to mean that the petition for certiorari can only be filed exclusively and solely with this
Court, as the provision must invariably be read in relation to the pertinent laws on the concurrent
original jurisdiction of this Court and the Court of Appeals in Rule 65 petitions.
In fine, we find that it is procedurally feasible as well as practicable that petitions
for certiorari under Rule 65 against the decision of the Secretary of Labor rendered under the
Labor Code and its implementing and related rules be filed initially in the Court of Appeals.
Paramount consideration is strict observance of the doctrine on the hierarchy of the courts,
emphasized in St. Martin Funeral Homes v. NLRC, on "the judicial policy that this Court will not
entertain direct resort to it unless the redress desired cannot be obtained in the appropriate
courts or where exceptional and compelling circumstances justify availment of a remedy within
and calling for the exercise of our preliminary jurisdiction." 23
WHEREFORE, in view of the foregoing, certiorari, together with all pertinent records
REFERRED to the Court of Appeals for disposition.
SO ORDERED.
G.R. No. 111651 March 15, 1996
OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN, FERNANDO L. BUSTAMANTE,
MARIO D. SUMONOD, and SABU J. LAMARAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION and EVERGREEN FARMS,
INC., respondents.
 
PADILLA, J.:p
This petition for certiorari seeks to reverse the 3 May 1993 resolution of the National Labor
Relations Commission (NLRC) which set aside its earlier resolution dated 8 March 1993 and
deleted the award of backwages in favor of petitioners.
The focal issue therefore in this case is whether or not petitioners are entitled to backwages after
a finding by the NLRC itself that they had become regular employees after serving for more than
one (1) year of broken or non-continuous service as probationary employees.
The facts are not in dispute. Respondent company is engaged in the business of producing high
grade bananas in its plantation in Davao del Norte. Petitioners Paulino Bantayan, Fernando
Bustamante, Mario Sumonod and Osmalik Bustamante were employed as laborers and
harvesters while petitioner Sabu Lamaran was employed as a laborer and sprayer in respondent
company's plantation. All the petitioners signed contracts of employment for a period of six (6)
months from 2 January 1990 to 2 July 1990, but they had started working sometime in
September 1989. Previously, they were hired to do the same work for periods lasting a month or
more, from 1985 to 1989. Before the contracts of employment expired on 2 July 1990,
petitioners' employments were terminated on 25 June 1990 on the ground of poor performance
on account of age, as not one of them was allegedly below forty (40) years old.
Petitioners filed a complaint for illegal dismissal before the Regional Arbitration Branch, Branch
XI of the NLRC in Davao City. On 26 April 1991, the labor arbiter rendered judgment in favor of
petitioners, thus —
WHEREFORE, judgment is hereby rendered:
1. Declaring the dismissal of the complainants as illegal;
2. Ordering respondent Evergreen Farms, Inc. to immediately reinstate
complainants to their former position with six (6) months backwages
computed as follows (26.17 x P79.00 per day equals P2,067.43 x 6 months
equals P12,404.58 times 5 complainants equals Sixty Two Thousand Four
Hundred Four & 58/100 (P62,404.58) PESOS. However, if reinstatement is
no longer feasible an additional one (1) month salary shall be awarded as a
form of separation pay;
3. The claims for underpayment of wages is hereby dismissed for lack of
merit.
SO ORDERED.1
On 8 March 1993, public respondent dismissed the appeal of private respondent company for
lack of merit Private respondent filed a motion for reconsideration dated 1 April 1993. Acting on
said motion, public respondent issued a second resolution on 3 May 1993 affirming its earlier
resolution on illegal dismissal but deleting the award of backwages on the ground that the
termination of petitioners' employments "was the result of the latter's (private respondent)
mistaken interpretation of the law and that the same was therefore not necessarily attended by
bad faith, nor arbitrariness, . . .".2
In their present petition, petitioners argue that the public respondent gravely abused its
discretion in rendering the second resolution which removed the award of backwages in their
favor.
We rule in favor of petitioners.
It is undisputed that petitioners were illegally dismissed from employment. Article 280 of the
Labor Code states:
Art. 280. Regular and Casual Employment. — The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fired for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, that, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity exists.
This provision draws a line between regular and casual employment, a distinction however often
abused by employers. The provision enumerates two (2) kinds of employees, the regular
employees and the casual employees. The regular employees consist of the following:
1) those engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; and
2) those who have rendered at least one year of service whether such service is continuous or
broken.
The law distinguishes between the two (2) kinds of employees to protect the interests of labor.
Thus, in the case of Baguio Country Club Corporation vs. NLRC,3 the Court declared: "Its
language evidently manifests the intent to safeguard the tenurial interest of the worker who may
be denied the rights and benefits due a regular employee by virtue of lopsided agreements with
the economically powerful employer who can maneuver to keep an employee on a casual status
for as long as convenient . . . ".
In the case at bar, petitioners were employed at various periods from 1985 to 1989 for the same
kind of work they were hired to perform in September 1989. Both the labor arbiter and the
respondent NLRC agree that petitioners were employees engaged to perform activities
necessary in the usual business of the employer. As laborers, harvesters or sprayers in an
agricultural establishment which produces high grade bananas, petitioners' tasks are
indispensable to the year-round operations of respondent company. This belies the theory of
respondent company that the employment of petitioners was terminated due to the expiration of
their probationary period in June 1990. If at all significant, the contract for probationary
employment was utilized by respondent company as a chicanery to deny petitioners their status
as regular employees and to evade paying them the benefits attached to such status. Some of
the petitioners were hired as far back as 1985, although the hiring was not continuous. They
were hired and re-hired in a span of from two to four years to do the same type of work which
conclusively shows the necessity of petitioners' service to the respondent company's business.
Petitioners have, therefore, become regular employees after performing activities which are
necessary in the usual business of their employer. But, even assuming that the activities of
petitioners in respondent company's plantation were not necessary or desirable to its business,
we affirm the public respondent's finding that all of the complainants (petitioners) have rendered
non-continuous or broken service for more than one (1) year and are consequently considered
regular employees.4
We do not sustain public respondent's theory that private respondent should not be made to
compensate petitioners for backwages because its termination of their employment was not
made in bad faith. The act of hiring and re-hiring the petitioners over a period of time without
considering them as regular employees evidences bad faith on the part of private respondent.
The public respondent made a finding to this effect when it stated that the subsequent rehiring of
petitioners on a probationary status "clearly appears to be a convenient subterfuge on the part of
management to prevent complainants (petitioners) from becoming regular employees." 5
Reliance by public respondent on the case of Manila Electric Company vs. NLRC6 is misplaced.
In that case, the Court ordered the reinstatement of an employee, without backwages because,
although there was a valid cause for dismissal, the penalty was too severe for an employee who
had rendered service for an uninterrupted period of twenty (20) years with two commendations
for honesty. In the case at bar, there is no valid cause for dismissal. The employees (petitioners)
have not performed any act to warrant termination of their employment. Consequently,
petitioners are entitled to their full backwages and other benefits from the time their
compensation was withheld from them up to the time of their actual reinstatement.
WHEREFORE, the Resolution of the National Labor Relations Commission dated 3 May 1993 is
modified in that its deletion of the award for backwages in favor of petitioners, is SET ASIDE.
The decision of the Labor Arbiter dated 26 April 1991 is AFFIRMED with the modification that
backwages shall be paid to petitioners from the time of their illegal dismissal on 25 June 1990 up
to the date of their reinstatement. If reinstatement is no longer feasible, a one-month salary shall
be paid the petitioners as ordered in the labor arbiter's decision; in addition to the adjudged
backwages.
SO ORDERED.
G.R. No. 158693             November 17, 2004
JENNY M. AGABON and VIRGILIO C. AGABON, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS,
INC. and VICENTE ANGELES, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review seeks to reverse the decision1 of the Court of Appeals dated January 23,
2003, in CA-G.R. SP No. 63017, modifying the decision of National Labor Relations Commission
(NLRC) in NLRC-NCR Case No. 023442-00.
Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and
installing ornamental and construction materials. It employed petitioners Virgilio Agabon and
Jenny Agabon as gypsum board and cornice installers on January 2, 19922 until February 23,
1999 when they were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money claims3 and on
December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and
ordered private respondent to pay the monetary claims. The dispositive portion of the decision
states:
WHEREFORE, premises considered, We find the termination of the complainants
illegal. Accordingly, respondent is hereby ordered to pay them their backwages up to
November 29, 1999 in the sum of:
1. Jenny M. Agabon - P56, 231.93
2. Virgilio C. Agabon - 56, 231.93
and, in lieu of reinstatement to pay them their separation pay of one (1) month for
every year of service from date of hiring up to November 29, 1999.
Respondent is further ordered to pay the complainants their holiday pay and service
incentive leave pay for the years 1996, 1997 and 1998 as well as their premium pay
for holidays and rest days and Virgilio Agabon's 13th month pay differential amounting
to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate
amount of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY
EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED
TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100
(P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C.
Nicolas, OIC, Research and Computation Unit, NCR.
SO ORDERED.4
On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had
abandoned their work, and were not entitled to backwages and separation pay. The other money
claims awarded by the Labor Arbiter were also denied for lack of evidence. 5
Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the
Court of Appeals.
The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because
they had abandoned their employment but ordered the payment of money claims. The
dispositive portion of the decision reads:
WHEREFORE, the decision of the National Labor Relations Commission is
REVERSED only insofar as it dismissed petitioner's money claims. Private
respondents are ordered to pay petitioners holiday pay for four (4) regular holidays in
1996, 1997, and 1998, as well as their service incentive leave pay for said years, and
to pay the balance of petitioner Virgilio Agabon's 13th month pay for 1998 in the
amount of P2,150.00.
SO ORDERED.6
Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed. 7
Petitioners assert that they were dismissed because the private respondent refused to give them
assignments unless they agreed to work on a "pakyaw" basis when they reported for duty on
February 23, 1999. They did not agree on this arrangement because it would mean losing
benefits as Social Security System (SSS) members. Petitioners also claim that private
respondent did not comply with the twin requirements of notice and hearing. 8
Private respondent, on the other hand, maintained that petitioners were not dismissed but had
abandoned their work.9 In fact, private respondent sent two letters to the last known addresses of
the petitioners advising them to report for work. Private respondent's manager even talked to
petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him about the new
assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation work.
However, petitioners did not report for work because they had subcontracted to perform
installation work for another company. Petitioners also demanded for an increase in their wage
to P280.00 per day. When this was not granted, petitioners stopped reporting for work and filed
the illegal dismissal case.10
It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of
only respect but even finality if the findings are supported by substantial evidence. This is the Omnibus Rules Implementing the Labor Code:
especially so when such findings were affirmed by the Court of Appeals. 11 However, if the factual
findings of the NLRC and the Labor Arbiter are conflicting, as in this case, the reviewing court
Standards of due process: requirements of notice. – In all cases of termination of
may delve into the records and examine for itself the questioned findings.12
employment, the following standards of due process shall be substantially observed:

Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners'
I. For termination of employment based on just causes as defined in Article 282 of the
dismissal was for a just cause. They had abandoned their employment and were already
Code:
working for another employer.

To dismiss an employee, the law requires not only the existence of a just and valid cause but
also enjoins the employer to give the employee the opportunity to be heard and to defend
himself.13 Article 282 of the Labor Code enumerates the just causes for termination by the
employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or the latter's representative in connection with the employee's work; (b) gross and
habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the
trust reposed in him by his employer or his duly authorized representative; (d) commission of a
crime or offense by the employee against the person of his employer or any immediate member
of his family or his duly authorized representative; and (e) other causes analogous to the
foregoing.
Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment.14 It is a form of neglect of duty, hence, a just cause for termination of employment
by the employer.15 For a valid finding of abandonment, these two factors should be present: (1)
the failure to report for work or absence without valid or justifiable reason; and (2) a clear
intention to sever employer-employee relationship, with the second as the more determinative
factor which is manifested by overt acts from which it may be deduced that the employees has
no more intention to work. The intent to discontinue the employment must be shown by clear
proof that it was deliberate and unjustified.16
In February 1999, petitioners were frequently absent having subcontracted for an installation
work for another company. Subcontracting for another company clearly showed the intention to
sever the employer-employee relationship with private respondent. This was not the first time
they did this. In January 1996, they did not report for work because they were working for
another company. Private respondent at that time warned petitioners that they would be
dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear
intention to sever their employer-employee relationship. The record of an employee is a relevant
consideration in determining the penalty that should be meted out to him.17
In Sandoval Shipyard v. Clave,18 we held that an employee who deliberately absented from work
without leave or permission from his employer, for the purpose of looking for a job elsewhere, is
considered to have abandoned his job. We should apply that rule with more reason here where
petitioners were absent because they were already working in another company.
The law imposes many obligations on the employer such as providing just compensation to
workers, observance of the procedural requirements of notice and hearing in the termination of
employment. On the other hand, the law also recognizes the right of the employer to expect from
its workers not only good performance, adequate work and diligence, but also good
conduct19 and loyalty. The employer may not be compelled to continue to employ such persons
whose continuance in the service will patently be inimical to his interests. 20
(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;
(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to respond to
the charge, present his evidence or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.
In case of termination, the foregoing notices shall be served on the employee's last
known address.
Dismissals based on just causes contemplate acts or omissions attributable to the employee
while dismissals based on authorized causes involve grounds under the Labor Code which allow
the employer to terminate employees. A termination for an authorized cause requires payment of
separation pay. When the termination of employment is declared illegal, reinstatement and full
backwages are mandated under Article 279. If reinstatement is no longer possible where the
dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must
give the employee two written notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes
under Articles 283 and 284, the employer must give the employee and the Department of Labor
and Employment written notices 30 days prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just
cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for
health reasons under Article 284, and due process was observed; (2) the dismissal is without
just or authorized cause but due process was observed; (3) the dismissal is without just or
authorized cause and there was no due process; and (4) the dismissal is for just or authorized
cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any
liability.

After establishing that the terminations were for a just and valid cause, we now determine if the In the second and third situations where the dismissals are illegal, Article 279 mandates that the
procedures for dismissal were observed. employee is entitled to reinstatement without loss of seniority rights and other privileges and full
backwages, inclusive of allowances, and other benefits or their monetary equivalent computed
from the time the compensation was not paid up to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be
cured, it should not invalidate the dismissal. However, the employer should be held liable for
non-compliance with the procedural requirements of due process.
The present case squarely falls under the fourth situation. The dismissal should be upheld
because it was established that the petitioners abandoned their jobs to work for another
company. Private respondent, however, did not follow the notice requirements and instead
argued that sending notices to the last known addresses would have been useless because they
did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse
because the law mandates the twin notice requirements to the employee's last known
address.21 Thus, it should be held liable for non-compliance with the procedural requirements of
due process.
A review and re-examination of the relevant legal principles is appropriate and timely to clarify
the various rulings on employment termination in the light of Serrano v. National Labor Relations
Commission.22
The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant
number of cases involving dismissals without requisite notices. We concluded that the imposition
of penalty by way of damages for violation of the notice requirement was not serving as a
deterrent. Hence, we now required payment of full backwages from the time of dismissal until
the time the Court finds the dismissal was for a just or authorized cause.
Serrano was confronting the practice of employers to "dismiss now and pay later" by imposing
full backwages.
We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of
the Labor Code which states:
ART. 279. Security of Tenure. – In cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.

Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given This means that the termination is illegal only if it is not for any of the justified or authorized
any notice. In the 1989 case of Wenphil Corp. v. National Labor Relations Commission,23 we causes provided by law. Payment of backwages and other benefits, including reinstatement, is
reversed this long-standing rule and held that the dismissed employee, although not given any justified only if the employee was unjustly dismissed.
notice and hearing, was not entitled to reinstatement and backwages because the dismissal was
for grave misconduct and insubordination, a just ground for termination under Article 282. The
The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent
employee had a violent temper and caused trouble during office hours, defying superiors who
has prompted us to revisit the doctrine.
tried to pacify him. We concluded that reinstating the employee and awarding backwages "may
encourage him to do even worse and will render a mockery of the rules of discipline that
employees are required to observe."24 We further held that: To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a
system of rights based on moral principles so deeply imbedded in the traditions and feelings of
our people as to be deemed fundamental to a civilized society as conceived by our entire
Under the circumstances, the dismissal of the private respondent for just cause should
history. Due process is that which comports with the deepest notions of what is fair and right and
be maintained. He has no right to return to his former employment.
just.26 It is a constitutional restraint on the legislative as well as on the executive and judicial
powers of the government provided by the Bill of Rights.
However, the petitioner must nevertheless be held to account for failure to extend to
private respondent his right to an investigation before causing his dismissal. The rule
Due process under the Labor Code, like Constitutional due process, has two aspects:
is explicit as above discussed. The dismissal of an employee must be for just or
substantive, i.e., the valid and authorized causes of employment termination under the Labor
authorized cause and after due process. Petitioner committed an infraction of the
Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for
second requirement. Thus, it must be imposed a sanction for its failure to give a formal
dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise known as
notice and conduct an investigation as required by law before dismissing petitioner
the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order
from employment. Considering the circumstances of this case petitioner must
Nos. 9 and 10.27 Breaches of these due process requirements violate the Labor Code.
indemnify the private respondent the amount of P1,000.00. The measure of this award
Therefore statutory due process should be differentiated from failure to comply
depends on the facts of each case and the gravity of the omission committed by the
with constitutional due process.
employer.25

Constitutional due process protects the individual from the government and assures him of his
The rule thus evolved: where the employer had a valid reason to dismiss an employee but did
rights in criminal, civil or administrative proceedings; while statutory due process found in the
not follow the due process requirement, the dismissal may be upheld but the employer will be
Labor Code and Implementing Rules protects employees from being unjustly terminated without
penalized to pay an indemnity to the employee. This became known as the Wenphil or Belated
just cause after notice and hearing.
Due Process Rule.

In Sebuguero v. National Labor Relations Commission,28 the dismissal was for a just and valid
On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held
cause but the employee was not accorded due process. The dismissal was upheld by the Court
that the violation by the employer of the notice requirement in termination for just or authorized
but the employer was sanctioned. The sanction should be in the nature of indemnification or
causes was not a denial of due process that will nullify the termination. However, the dismissal is
penalty, and depends on the facts of each case and the gravity of the omission committed by the
ineffectual and the employer must pay full backwages from the time of termination until it is
employer.
judicially declared that the dismissal was for a just or authorized cause.
In Nath v. National Labor Relations Commission,29 it was ruled that even if the employee was not
given due process, the failure did not operate to eradicate the just causes for dismissal. The
dismissal being for just cause, albeit without due process, did not entitle the employee to
reinstatement, backwages, damages and attorney's fees.
Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National
Labor Relations Commission,30 which opinion he reiterated in Serrano, stated:
C. Where there is just cause for dismissal but due process has not been properly
observed by an employer, it would not be right to order either the reinstatement of the
dismissed employee or the payment of backwages to him. In failing, however, to
comply with the procedure prescribed by law in terminating the services of the
employee, the employer must be deemed to have opted or, in any case, should be
made liable, for the payment of separation pay. It might be pointed out that the notice
to be given and the hearing to be conducted generally constitute the two-part due
process requirement of law to be accorded to the employee by the employer.
Nevertheless, peculiar circumstances might obtain in certain situations where to
undertake the above steps would be no more than a useless formality and where,
accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in
lieu of separation pay, nominal damages to the employee. x x x.31
After carefully analyzing the consequences of the divergent doctrines in the law on employment
termination, we believe that in cases involving dismissals for cause but without observance of
the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine
and to follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on
the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing
so, this Court would be able to achieve a fair result by dispensing justice not just to employees,
but to employers as well.
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not
complying with statutory due process may have far-reaching consequences.
This would encourage frivolous suits, where even the most notorious violators of company policy
are rewarded by invoking due process. This also creates absurd situations where there is a just
or authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us
take for example a case where the employee is caught stealing or threatens the lives of his co-
employees or has become a criminal, who has fled and cannot be found, or where serious
business losses demand that operations be ceased in less than a month. Invalidating the
dismissal would not serve public interest. It could also discourage investments that can generate
employment in the local economy.
The constitutional policy to provide full protection to labor is not meant to be a sword to oppress
employers. The commitment of this Court to the cause of labor does not prevent us from
sustaining the employer when it is in the right, as in this case.32 Certainly, an employer should
not be compelled to pay employees for work not actually performed and in fact abandoned.
The employer should not be compelled to continue employing a person who is admittedly guilty
of misfeasance or malfeasance and whose continued employment is patently inimical to the
employer. The law protecting the rights of the laborer authorizes neither oppression nor self-
destruction of the employer.33
It must be stressed that in the present case, the petitioners committed a grave offense, i.e.,
abandonment, which, if the requirements of due process were complied with, would undoubtedly
result in a valid dismissal.
An employee who is clearly guilty of conduct violative of Article 282 should not be protected by
the Social Justice Clause of the Constitution. Social justice, as the term suggests, should be
used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice
must be founded on the recognition of the necessity of interdependence among diverse units of
a society and of the protection that should be equally and evenly extended to all groups as a
combined force in our social and economic life, consistent with the fundamental and paramount
objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing
about "the greatest good to the greatest number."34
This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and
related cases. Social justice is not based on rigid formulas set in stone. It has to allow for
changing times and circumstances.
Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-
management relations and dispense justice with an even hand in every case:
We have repeatedly stressed that social justice – or any justice for that matter – is for
the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is
true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to
whom the Constitution fittingly extends its sympathy and compassion. But never is it
justified to give preference to the poor simply because they are poor, or reject the rich
simply because they are rich, for justice must always be served for the poor and the
rich alike, according to the mandate of the law.35
Justice in every case should only be for the deserving party. It should not be presumed that
every case of illegal dismissal would automatically be decided in favor of labor, as management
has rights that should be fully respected and enforced by this Court. As interdependent and
indispensable partners in nation-building, labor and management need each other to foster
productivity and economic growth; hence, the need to weigh and balance the rights and welfare
of both the employee and employer.
Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process
should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should
indemnify the employee for the violation of his statutory rights, as ruled in Reta v. National Labor
Relations Commission.36 The indemnity to be imposed should be stiffer to discourage the
abhorrent practice of "dismiss now, pay later," which we sought to deter in the Serrano ruling.
The sanction should be in the nature of indemnification or penalty and should depend on the
facts of each case, taking into special consideration the gravity of the due process violation of
the employer.
Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which
has been violated or invaded by the defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by him.37
As enunciated by this Court in Viernes v. National Labor Relations Commissions,38 an employer
is liable to pay indemnity in the form of nominal damages to an employee who has been
dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of
due process. The Court, after considering the circumstances therein, fixed the indemnity at
P2,590.50, which was equivalent to the employee's one month salary. This indemnity is intended
not to penalize the employer but to vindicate or recognize the employee's right to statutory due
process which was violated by the employer. 39
The violation of the petitioners' right to statutory due process by the private respondent warrants
the payment of indemnity in the form of nominal damages. The amount of such damages is
addressed to the sound discretion of the court, taking into account the relevant
circumstances.40 Considering the prevailing circumstances in the case at bar, we deem it proper
to fix it at P30,000.00. We believe this form of damages would serve to deter employers from
future violations of the statutory due process rights of employees. At the very least, it provides a
vindication or recognition of this fundamental right granted to the latter under the Labor Code
and its Implementing Rules.
Private respondent claims that the Court of Appeals erred in holding that it failed to pay
petitioners' holiday pay, service incentive leave pay and 13th month pay.
We are not persuaded.
ravages of world-wide inflation."44 Clearly, as additional income, the 13th month pay is included
in the definition of wage under Article 97(f) of the Labor Code, to wit:
(f) "Wage" paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money whether fixed or
ascertained on a time, task, piece , or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a written
or unwritten contract of employment for work done or to be done, or for services
rendered or to be rendered and includes the fair and reasonable value, as determined
by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by
the employer to the employee…"

from which an employer is prohibited under Article 113 45 of the same Code from making any
We affirm the ruling of the appellate court on petitioners' money claims. Private respondent is
deductions without the employee's knowledge and consent. In the instant case, private
liable for petitioners' holiday pay, service incentive leave pay and 13th month pay without
respondent failed to show that the deduction of the SSS loan and the value of the shoes from
deductions.
petitioner Virgilio Agabon's 13th month pay was authorized by the latter. The lack of authority to
deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as one of
As a general rule, one who pleads payment has the burden of proving it. Even where the his money claims against private respondent.
employee must allege non-payment, the general rule is that the burden rests on the employer to
prove payment, rather than on the employee to prove non-payment. The reason for the rule is
The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter
that the pertinent personnel files, payrolls, records, remittances and other similar documents –
ordering the private respondent to pay each of the petitioners holiday pay for four regular
which will show that overtime, differentials, service incentive leave and other claims of workers
holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the
have been paid – are not in the possession of the worker but in the custody and absolute control
same period in the amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth month
of the employer.41
pay for 1998 in the amount of P2,150.00.

In the case at bar, if private respondent indeed paid petitioners' holiday pay and service
WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of
incentive leave pay, it could have easily presented documentary proofs of such monetary
Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners' Jenny and
benefits to disprove the claims of the petitioners. But it did not, except with respect to the 13th
Virgilio Agabon abandoned their work, and ordering private respondent to pay each of the
month pay wherein it presented cash vouchers showing payments of the benefit in the years
petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00,
disputed.42 Allegations by private respondent that it does not operate during holidays and that it
service incentive leave pay for the same period in the amount of P3,255.00 and the balance of
allows its employees 10 days leave with pay, other than being self-serving, do not constitute
Virgilio Agabon's thirteenth month pay for 1998 in the amount of P2,150.00 is AFFIRMED with
proof of payment. Consequently, it failed to discharge the onus probandi thereby making it liable
the MODIFICATION that private respondent Riviera Home Improvements, Inc. is
for such claims to the petitioners.
further ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal damages
for non-compliance with statutory due process.
Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabon's
13th month pay, we find the same to be unauthorized. The evident intention of Presidential
No costs.
Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees
not already receiving the same43 so as "to further protect the level of real wages from the
SO ORDERED.
G.R. No. 118651 October 16, 1997 alleged NLRC's error in holding that de Jesus is entitled to reinstatement and back salaries. On
March 6, 1996, petitioners filed its supplement to the petition amplifying further their arguments.
In a resolution dated February 20, 1995, the Court required respondents to comment thereon.
PIONEER TEXTURIZING CORP. and/or JULIANO LIM, petitioner,
Private respondent de Jesus and the Office of the Solicitor General, in behalf of public
vs.
respondent NLRC, subsequently filed their comments. Thereafter, petitioners filed two rejoinders
NATIONAL LABOR RELATIONS COMMISSION, PIONEER TEXTURIZING WORKERS
[should be replies] to respondents' respective comments. Respondents in due time filed their
UNION and LOURDES A. DE JESUS, respondents.
rejoinders.

There are two interrelated and crucial issues, namely: (1) whether or not de Jesus was illegally
dismissed, and (2) whether or not an order for reinstatement needs a writ of execution.
FRANCISCO, J.:
Petitioners insist that the NLRC gravely abused its discretion in holding that de Jesus is entitled
The facts are as follows: to reinstatement to her previous position for she was not illegally dismissed in the first place. In
support thereof, petitioners quote portions of the NLRC decision which stated that "respondents
[petitioners herein] cannot be entirely faulted for dismissing the complainant" 3 and that there was
Private respondent Lourdes A. de Jesus is petitioners' reviser/trimmer since 1980. As "no illegal dismissal to speak of in the case at bar".4 Petitioners further add that de Jesus
reviser/trimmer, de Jesus based her assigned work on a paper note posted by petitioners. The breached the trust reposed in her, hence her dismissal from service is proper on the basis of
posted paper which contains the corresponding price for the work to be accomplished by a loss of confidence, citing as authority the cases of Ocean Terminal Services, Inc. v. NLRC, 197
worker is identified by its P.O. Number. On August 15, 1992, de Jesus worked on P.O. No. 3853 SCRA 491; Coca-Cola Bottlers Phil., Inc. v. NLRC, 172 SCRA 751, and Piedad v. Lanao del
by trimming the cloths' ribs. She thereafter submitted tickets corresponding to the work done to Norte Electric Cooperative,5 154 SCRA 500.
her supervisor. Three days later, de Jesus received from petitioners' personnel manager a
memorandum requiring her to explain why no disciplinary action should be taken against her for
dishonesty and tampering of official records and documents with the intention of cheating as The arguments lack merit.
P.O. No. 3853 allegedly required no trimming. The memorandum also placed her under
preventive suspension for thirty days starting from August 19, 1992. In her handwritten
The entire paragraph which comprises the gist of the NLRC's decision from where petitioners
explanation, de Jesus maintained that she merely committed a mistake in trimming P.O. No.
derived and isolated the aforequoted portions of the NLRC's observation reads in full as follows:
3853 as it has the same style and design as P.O. No. 3824 which has an attached price list for
trimming the ribs and admitted that she may have been negligent in presuming that the same
work was to be done with P.O. No. 3853, but not for dishonesty or tampering. Petitioners' We cannot fully subscribe to the complainant's claim that she trimmed the ribs of
personnel department, nonetheless, terminated her from employment and sent her a notice of PO3853 in the light of the sworn statement of her supervisor Rebecca Madarcos
termination dated September 18, 1992. (Rollo, p. 64) that no trimming was necessary because the ribs were already of the
proper length. The complainant herself admitted in her sinumpaang salaysay (Rollo, p.
45) that "Aking napansin na hindi pantay-pantay ang lapad ng mga ribs PO3853 —
On September 22, 1992, de Jesus filed a complaint for illegal dismissal against petitioners. The
mas maigsi ang nagupit ko sa mga ribs ng PO3853 kaysa sa mga ribs ng mga
Labor Arbiter who heard the case noted that de Jesus was amply accorded procedural due
nakaraang PO's. The complainant being an experienced reviser/trimmer for almost
process in her termination from service. Nevertheless, after observing that de Jesus made some
twelve (12) years should have called the attention of her supervisor regarding her
further trimming on P.O. No. 3853 and that her dismissal was not justified, the Labor Arbiter held
observation of PO3853. It should be noted that complainant was trying to claim as
petitioners guilty of illegal dismissal. Petitioners were accordingly ordered to reinstate de Jesus
production output 447 pieces of trimmed ribs of PO3853 which respondents insists
to her previous position without loss of seniority rights and with full backwages from the time of
that complainant did not do any. She was therefore negligent in presuming that the
her suspension on August 19, 1992. Dissatisfied with the Labor Arbiter's decision, petitioners
ribs of PO3853 should likewise be trimmed for having the same style and design as
appealed to public respondent National Labor Relations Commission (NLRC). In its July 21,
PO3824. Complainant cannot pass on the blame to her supervisor whom she claimed
1994 decision, the NLRC 1 ruled that de Jesus was negligent in presuming that the ribs of P.O.
checked the said tickets prior to the submission to the Accounting Department. As
No. 3853 should likewise be trimmed for having the same style and design as P.O. No. 3824,
explained by respondent, what the supervisor does is merely not the submission of
thus petitioners cannot be entirely faulted for dismissing de Jesus. The NLRC declared that the
tickets and do some checking before forwarding the same to the Accounting
status quo between them should be maintained and affirmed the Labor Arbiter's order of
Department. It was never disputed that it is the Accounting Department who does the
reinstatement, but without backwages. The NLRC further "directed petitioner to pay de Jesus her
detailed checking and computation of the tickets as has been the company policy and
back salaries from the date she filed her motion for execution on September 21, 1993 up to the
practice. Based on the foregoing and considering that respondent cannot be entirely
date of the promulgation of [the] decision." 2 Petitioners filed their partial motion for
faulted for dismissing complainant as the complainant herself was also negligent in the
reconsideration which the NLRC denied, hence this petition anchored substantially on the
performance of her job, We hereby rule that status quo between them should be
 maintained as a matter of course. We thus affirm the decision of Labor Arbiter
reinstating the complainant but without backwages. The award of backwages in
general are granted on grounds of equity for earnings which a worker or employee has
lost due to his illegal dismissal. (Indophil Acrylic Mfg. Corporation vs. NLRC, G.R. No.
96488 September 27, 1993) There being no illegal dismissal to speak in the case at
bar, the award for backwages should necessarily be deleted. 6
We note that the NLRC's decision is quite categorical in finding that de Jesus was merely
negligent in the performance of her duty. Such negligence, the Labor Arbiter delineated, was
brought about by the petitioners' plain improvidence. Thus:
After careful assessment of the allegations and documents available on record, we are
convinced that the penalty of dismissal was not justified.
At the outset, it is remarkable that respondents did not deny nor dispute that P.O.
3853 has the same style and design as P.O. 3824; that P.O. 3824 was made as guide
for the work done on P.O. 3853; and, most importantly, that the notation correction on
P.O. 3824 was made only after the error was discovered by respondents' Accounting
Department.
Be that as it may, the factual issue in this case is whether or not complainant trimmed
the ribs of P.O. 3853?
Respondents maintained that she did not because the record in Accounting
Department allegedly indicates that no trimming is to be done on P.O. 3853. Basically,
this allegation is unsubstantiated.
It must be emphasized that in termination cases the burden of proof rests upon the
employer.
In the instant case, respondents' mere allegation that P.O. 3853 need not be trimmed
does not satisfy the proof required to warrant complainant's dismissal.
Now, granting that the Accounting record is correct, we still believe that complainant
did some further trimming on P.O. 3853 based on the following grounds:
Firstly, Supervisor Rebecca Madarcos who ought to know the work to be performed
because she was in-charged of assigning jobs, reported no anomally when the tickets
were submitted to her.
Incidentally, supervisor Madarcos testimony is suspect because if she could recall
what she ordered the complainant to do seven (7) months ago (to revise the collars
and plackets of shirts) there was no reason for her not to detect the alleged tampering
at the time complainant submitted her tickets, after all, that was part of her job, if not
her main job.
Secondly, she did not exceed her quota, otherwise she could have simply asked for
more.
That her output was remarkably big granting it is true, is well explained in that the
parts she had trimmed were lesser compared to those which she had cut before.
In this connection, respondents misinterpreted the handwritten explanation of the
complainant dated 20 August 1992, because the letter never admits that she never
trimmed P.O. 3853, on the contrary the following sentence,
Sa katunayan nakapagbawas naman talaga ako na di ko
inaasahang inalis na pala ang presyo ng Sec. 9 P.O. 3853 na ito.
is crystal clear that she did trim the ribs on P.O. 3853.7
Gleaned either from the Labor Arbiter's observations or from the NLRC's assessment, it
distinctly appears that petitioners' accusation of dishonesty and tampering of official records and
documents with intention of cheating against de Jesus was not substantiated by clear and
convincing evidence. Petitioners simply failed, both before the Labor Arbiter and the NLRC, to
discharge the burden of proof and to validly justify de Jesus' dismissal from service. The law, in
this light, directs the employers, such as herein petitioners, not to terminate the services of an
employee except for a just or authorized cause under the Label Code. 8 Lack of a just cause in
the dismissal from service of an employee, as in this case, renders the dismissal illegal, despite
the employer's observance of procedural due process. 9 And while the NLRC stated that "there
was no illegal dismissal to speak of in the case at bar" and that petitioners cannot be entirely
faulted therefor, said statements are inordinate pronouncements which did not remove the
assailed dismissal from the realm of illegality. Neither can these pronouncements preclude us
from holding otherwise.
We also find the imposition of the extreme penalty of dismissal against de Jesus as certainly
harsh and grossly disproportionate to the negligence committed, especially where said
employee holds a faithful and an untarnished twelve-year service record. While an employer has
the inherent right to discipline its employees, we have always held that this right must always be
exercised humanely, and the penalty it must impose should be commensurate to the offense
involved and to the degree of its infraction. 10 The employer should bear in mind that, in the
exercise of such right, what is at stake is not only the employee's position but her livelihood as
well.
Equally unmeritorious is petitioners' assertion that the dismissal is justified on the basis of loss of
confidence. While loss of confidence, as correctly argued by petitioners, is one of the valid
grounds for termination of employment, the same, however, cannot be used as a pretext to
vindicate each and every instance of unwarranted dismissal. To be a valid ground, it must be
shown that the employee concerned is responsible for the misconduct or infraction and that the
nature of his participation therein rendered him absolutely unworthy of the trust and confidence
demanded by his position.11 In this case, petitioners were unsuccessful in establishing their
accusations of dishonesty and tampering of records with intention of cheating. Indeed, even if
petitioners' allegations against de Jesus were true, they just the same failed to prove that her
position needs the continued and unceasing trust of her employers. The breach of trust must be
related to the performance of the employee's
functions.12 Surely, de Jesus who occupies the position of a reviser/trimmer does not require the
petitioners' perpetual and full confidence. In this regard, petitioners' reliance on the cases
of Ocean Terminal Services, Inc. v. NLRC; Coca-Cola Bottlers Phil., Inc. v. NLRC; and Piedad
v. Lanao del Norte Electric Cooperative, which when perused involve positions that require the
employers' full trust and confidence, is wholly misplaced. In Ocean Terminal Services, for
instance, the dismissed employee was designated as expediter and canvasser whose
responsibility is mainly to make emergency procurements of tools and equipments and was
entrusted with the necessary cash for buying them. The case of Coca-Cola Bottlers, on the other
hand, involves a sales agent whose job exposes him to the everyday financial transactions
involving the employer's goods and funds, while that of Piedad concerns a bill collector who
essentially handles the employer's cash collections. Undoubtedly, the position of a
reviser/trimmer could not be equated with that of a canvasser, sales agent, or a bill collector.
Besides, the involved employees in the three aforementioned cases were clearly proven guilty of
infractions unlike private respondent in the case at bar. Thus, petitioners dependence on these
cited cases is inaccurate, to say the least. More, whether or not de Jesus meets the day's quota
of work she, just the same, is paid the daily minimum wage.13
Corollary to our determination that de Jesus was illegally dismissed is her imperative entitlement
to reinstatement and backwages as mandated by
law.14 Whence, we move to the second issue, i.e., whether or not an order for reinstatement
needs a writ of execution.
Petitioners' theory is that an order for reinstatement is not self-executory. They stress that there
must be a writ of execution which may be issued by the NLRC or by the Labor Arbiter motu
proprio or on motion of an interested party. They further maintain that even if a writ of execution
was issued, a timely appeal coupled by the posting of appropriate supersedeas bond, which they
did in this case, effectively forestalled and stayed execution of the reinstatement order of the
Labor Arbiter. As supporting authority, petitioners emphatically cite and bank on the case
of Maranaw Hotel Resort Corporation (Century Park Sheraton Manila) v. NLRC, 238 SCRA 190.
Private respondent de Jesus, for her part, maintains that petitioners should have reinstated her
immediately after the decision of the Labor Arbiter ordering her reinstatement was promulgated
since the law mandates that an order for reinstatement is immediately executory. An appeal, she
says, could not stay the execution of a reinstatement order for she could either be admitted back
to work or merely reinstated in the payroll without need of a writ of execution. De Jesus argues
that a writ of execution is necessary only for the enforcement of decisions, orders, or awards
which have acquired finality. In effect, de Jesus is urging the Court to re-examine the ruling laid
down in Maranaw.
Article 223 of the Labor Code, as amended by R.A. No. 6715 which took effect on March 21,
1989, pertinently provides:
Art. 223. Appeal. — Decision, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. Such appeal may be
entertained only on any of the following grounds:
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or,
at the option of the employer, merely reinstated in the payroll. The posting of a bond
by the employer shall not stay the execution for reinstatement provided herein.
x x x           x x x          x x x
We initially interpreted the aforequoted provision in Inciong v. NLRC.15 The Court16 made this
brief comment:
The decision of the Labor Arbiter in this case was rendered on December 18, 1988, or
three (3) months before Article 223 of the Labor Code was amended by Republic Act
6715 (which became law on March 21, 1989), providing that a decision of the Labor
Arbiter ordering the reinstatement of a dismissed or separated employee shall be
immediately executory insofar as the reinstatement aspect is concerned, and the
posting of an appeal bond by the employer shall not stay such execution. Since this
new law contains no provision giving it retroactive effect (Art. 4, Civil Code), the
amendment may not be applied to this case.
which the Court adopted and applied in Callanta v. NLRC.17 In Zamboanga City Water District
v. Buat,18 the Court construed Article 223 to mean exactly what it says. We said:
Under the said provision of law, the decision of the Labor Arbiter reinstating a
dismissed or separated employee insofar as the reinstatement aspect is concerned,
shall be immediately executory, even pending appeal. The employer shall reinstate
the employee concerned either by: (a) actually admitting him back to work under the
same terms and conditions prevailing prior to his dismissal or separation; or (b) at the
option of the employer, merely reinstating him in the payroll. Immediate reinstatement
is mandated and is not stayed by the fact that the employer has appealed, or has
posted a cash or surety bond pending appeal.19
We expressed a similar view a year earlier in Medina v. Consolidated Broadcasting System
(CBS) — DZWX20 and laid down the rule that an employer who fails to comply with an order of
reinstatement makes him liable for the employee's salaries. Thus:
Petitioners construe the above paragraph to mean that the refusal of the employer to
reinstate an employee as directed in an executory order of reinstatement would make
it liable to pay the latter's salaries. This interpretation is correct. Under Article 223 of
the Labor Code, as amended, an employer has two options in order for him to comply
with an order of reinstatement, which is immediately executory, even pending appeal.
Firstly, he can admit the dismissed employee back to work under the same terms and
conditions prevailing prior to his dismissal or separation or to a substantially equivalent
position if the former position is already filled up as we have ruled in Union of
Supervisors (RB) NATU vs. Sec. of Labor, 128 SCRA 442 [1984]; and Pedroso
vs. Castro, 141 SCRA 252 [1986]. Secondly, he can reinstate the employee merely in
the payroll. Failing to exercise any of the above options, the employer can be
compelled under pain of contempt, to pay instead the salary of the employee. This
interpretation is more in consonance with the constitutional protection to labor (Section
3, Art. XIII, 1987 Constitution). The right of a person to his labor is deemed to be
property within the meaning of the constitutional guaranty that no one shall be
deprived of life, liberty, and property without due process of law. Therefore, he should
be protected against any arbitrary and unjust deprivation of his job (Bondoc vs.
People's Bank and Trust Co., Inc., 103 SCRA 599 [1981]). The employee should not
be left without any remedy in case the employer unreasonably delays reinstatement.
Therefore, we hold that the unjustified refusal of the employer to reinstate an illegally
dismissed employee entitles the employee to payment of his salaries . . . .21
The Court, however, deviated from this construction in the case of Maranaw. Reinterpreting the
import of Article 223 in Maranaw, the Court22 declared that the reinstatement aspect of the Labor
Arbiter's decision needs a writ of execution as it is not self-executory, a declaration the Court
recently reiterated and adopted in Archilles Manufacturing Corp. v. NLRC.23
We note that prior to the enactment of R.A. No. 6715, Article 22324 of the Labor Code contains
no provision dealing with the reinstatement of an illegally dismissed employee. The amendment
introduced by R.A. No. 6715 is an innovation and a far departure from the old law indicating
thereby the legislature's unequivocal intent to insert a new rule that will govern the reinstatement
aspect of a decision or resolution in any given labor dispute. In fact, the law as now worded
employs the phrase "shall immediately be executory" without qualification emphasizing the need
for prompt compliance. As a rule, "shall" in a statute commonly denotes an imperative obligation
and is inconsistent with the idea of discretion 25 and that the presumption is that the word "shall",
when used in a statute, is mandatory. 26 An appeal or posting of bond, by plain mandate of the
law, could not even forestall nor stay the executory nature of an order of reinstatement. The law,
moreover, is unambiguous and clear. Thus, it must be applied according to its plain and obvious
meaning, according to its express terms. In Globe-Mackay Cable and Radio Corporation
v. NLRC,27 we held that:
Under the principles of statutory construction, if a statute is clear, plain and free from
ambiguity, it must be given its literal meaning and applied without attempted
interpretation. This plain-meaning rule or verba legis derived from the maxim index
animi sermo est (speech is the index of intention) rests on the valid presumption that
the words employed by the legislature in a statute correctly express its intent or will
and preclude the court from construing it differently. The legislature is presumed to
know the meaning of the words, to have used words advisedly, and to have expressed
its intent by the use of such words as are found in the statute. Verba legis non est
recedendum, or from the words of a statute there should be no departure. 28
And in conformity with the executory nature of the reinstatement order, Rule V, Section 16 (3) of
the New Rules of Procedure of the NLRC strictly requires the Labor Arbiter to direct the
employer to immediately reinstate the dismissed employee. Thus:
In case the decision includes an order of reinstatement, the Labor Arbiter shall direct
the employer to immediately reinstate the dismissed or separated employee even
pending appeal. The order of reinstatement shall indicate that the employee shall
either be admitted back to work under the same terms and conditions prevailing prior
to his dismissal or separation or, at the option of the employer, merely reinstated in the
payroll.
In declaring that reinstatement order is not self-executory and needs a writ of execution, the
Court, in Maranaw, adverted to the rule provided under Article 224. We said:
It must be stressed, however, that although the reinstatement aspect of the decision
is immediately executory, it does not follow that it is self-executory. There must be a
writ of execution which may be issued motu proprio or on motion of an interested
party. Article 224 of the Labor Code provides:
Art. 224. Execution of decision, orders or awards. — (a) The Secretary of Labor and
Employment or any Regional Director, the Commission or any Labor Arbiter, or med-
arbitter or voluntary arbitrator may, motu proprio or on motion of any interested party,
issue a writ of execution on a judgment within five (5) years from the date it becomes
final and executory . . . (emphasis supplied)
The second paragraph of Section 1, Rule VIII of the New Rules of Procedure of the
NLRC also provides:
The Labor Arbiter, POEA Administrator, or the Regional Director, or his duly
authorized hearing officer of origin shall, motu proprio or on motion of any interested
party, issue a writ of execution on a judgment only within five (5) years from the date it
becomes final and executory . . . . No motion for execution shall be entertained nor a
writ he issued unless the Labor Arbiter is in possession of the records of the case
which shall include an entry of judgment. (emphasis supplied)
xxx xxx xxx
In the absence then of an order for the issuance of a writ of execution on the
reinstatement aspect of the decision of the Labor Arbiter, the petitioner was under no
legal obligation to admit back to work the private respondent under the terms and
conditions prevailing prior to her dismissal or, at the petitioner's option, to merely
reinstate her in the payroll. An option is a right of election to exercise a privilege, and
the option in Article 223 of the Labor Code is exclusively granted to the employer. The
event that gives rise for its exercise is not the reinstatement decree of a Labor Arbiter,
but the writ for its execution commanding the employer to reinstate the employee,
while the final act which compels the employer to exercise the option is the service
upon it of the writ of execution when, instead of admitting the employee back to his
work, the employer chooses to reinstate the employee in the payroll only. If the
employer does not exercise this option, it must forthwith admit the employee back to
work, otherwise it may be punished for contempt.29
A closer examination, however, shows that the necessity for a writ of execution under Article 224
applies only to final and executory decisions which are not within the coverage of Article 223.
For comparison, we quote the material portions of the subject articles:
Art. 223. Appeal. . . .
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or,
at the option of the employer, merely reinstated in the payroll. The posting of a bond
by the employer shall not stay the execution for reinstatement provided herein.
xxx xxx xxx
Art. 224. Execution of decisions, orders, or awards. — (a) The Secretary of Labor and
Employment or any Regional Director, the Commission or any Labor Arbiter, or med-
arbiter or voluntary arbitrator may, motu propio or on motion of any interested
party, issue a writ of execution on a judgment within five (5) years from the date it
becomes final and executory, requiring a sheriff or a duly deputized officer to execute
or enforce final decisions, orders or awards of the Secretary of Labor and Employment
or regional director, the Commission, the Labor Arbiter or med-arbiter, or voluntary
arbitrators. In any case, it shall be the duty of the responsible officer to separately
furnish immediately the counsels of record and the parties with copies of said
decisions, orders or awards. Failure to comply with the duty prescribed herein shall
subject such responsible officer to appropriate administrative sanctions.
Article 224 states that the need for a writ of execution applies only within five (5) years from the
date a decision, an order or award becomes final and executory. It can not relate to an award or
order of reinstatement still to be appealed or pending appeal which Article 223 contemplates.
The provision of Article 223 is clear that an award for reinstatement shall be immediately
executory even pending appeal and the posting of a bond by the employer shall not stay the
execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of
reinstatement immediately enforceable, even pending appeal. To require the application for and
issuance of a writ of execution as prerequisites for the execution of a reinstatement award would
certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate
execution of a reinstatement order. The reason is simple. An application for a writ of execution
and its issuance could be delayed for numerous reasons. A mere continuance or postponement
of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC
could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble
purpose envisioned by Article 223. In other words, if the requirements of Article 224 were to
govern, as we so declared in Maranaw, then the executory nature of a reinstatement order or
award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In
enacting the law, the legislature is presumed to have ordained a valid and sensible law, one
which operates no further than may be necessary to achieve its specific purpose. Statutes, as a
rule, are to be construed in the light of the purpose to be achieved and the evil sought to be
remedied.30 And where the statute is fairly susceptible of two or more constructions, that
construction should be adopted which will most tend to give effect to the manifest intent of the
lawmaker and promote the object for which the statute was enacted, and a construction should
be rejected which would tend to render abortive other provisions of the statute and to defeat the
object which the legislator sought to attain by its enactment.31 In introducing a new rule on the
reinstatement aspect of a labor decision under R.A. No. 6715, Congress should not be
considered to be indulging in mere semantic exercise. On appeal, however, the appellate
tribunal concerned may enjoin or suspend the reinstatement order in the exercise of its sound
discretion.
Furthermore, the rule is that all doubts in the interpretation and implementation of labor laws
should be resolved in favor of labor.32 In ruling that an order or award for reinstatement does not
require a writ of execution the Court is simply adhering and giving meaning to this rule.
Henceforth, we rule that an award or order for reinstatement is self-executory. After receipt of
the decision or resolution ordering the employee's reinstatement, the employer has the right to
choose whether to re-admit the employee to work under the same terms and conditions
prevailing prior to his dismissal or to reinstate the employee in the payroll. In either instance, the
employer has to inform the employee of his choice. The notification is based on practical
considerations for without notice, the employee has no way of knowing if he has to report for
work or not.
WHEREFORE, the petition is DENIED and the decision of the Labor Arbiter is hereby
REINSTATED.
Costs against petitioner.
SO ORDERED.
 EN BANC
G.R. No. 188492, August 28, 2018
GUAGUA NATIONAL COLLEGES, Petitioner, v. COURT OF APPEALS, GNC FACULTY AND
LABOR UNION AND GNC NON-TEACHING MAINTENANCE LABOR UNION, Respondents.
DECISION
BERSAMIN, J.:
This case focuses on the correct period for appealing the decision or award of the Voluntary
Arbitrator or Panel of Arbitrators. The issue arises because the decision or award of the
Voluntary Arbitrator or Panel of Arbitrators is appealable to the Court of Appeals (CA) by petition
for review under Rule 43 of the Rules of Court, which provides a period of 15 days from notice of
the decision or award within which to file the petition for review. On the other hand, Article 262-A
(now Article 276) 1 of the Labor Code sets 10 days as the period within which the appeal is to be
made.
The Case
Petitioner Guagua National Colleges (GNC) hereby assails by petition for certiorari the resolution
promulgated on December 15, 2008, 2 whereby the Court of Appeals (CA) denied its Motion to
Dismiss filed vis-à-vis the respondents' petition for certiorari in the following manner:
This Court resolves:
1. x x x
2. To Deny:
a) respondent's Motion to Dismiss dated 22 July 2008. While it is true that Coca-Cola Bottlers
Philippines, Inc., Sales Force Union-PTGWO-Balais vs. Coca-Cola Bottlers Philippines,
Inc. held in part:
"x x x [U]nder Section 6, Rule VII of the same guidelines implementing Article 262-A of the Labor
Code, this Decision, as a matter of course, would become final and executory after ten (10)
calendar days from receipt of copies of the decision by the parties x xx unless, in the meantime,
a motion for reconsideration or a petition for review to the Court of Appeals under Rule 43 of the
Rules of Court is filed within the same 10-day period. x xx;",
We, more importantly recognize the pronouncement of the Supreme Court in Manila Midtown
vs. Borromeo which reads in part:
"Upon receipt of a copy of the Voluntary Arbitrator's Decision, petitioner should have filed with
the Court of Appeals, within the 15-day reglementary period, a petition for review x xx"
Coca-Cola Bottlers is not in direct conflict with Manila Midtown as there is no categorical ruling
in the former that the petition for review under Rule 43 of the Rules of Court assailing the
decision of the Voluntary Arbitrator should be filed within ten (10) days from receipt thereof and
not the customary reglementary period of fifteen (15) days. Likewise, Leyte IV Electric
Cooperative, Inc. vs. LEYECO IV Employees Unio-ALU, reiterating the landmark Case of
Luzon Development Bank vs. Association of Luzon Development Bank Employees,
declared that the proper remedy from the award of a voluntary arbitrator is a petition for review
to the CA, following Revised Administrative Circular No. 1-95, which in turn provides for a
reglementary period of fifteen (15) days within which to appeal.
Keeping in mind Article 4 of the Labor Code which mandates that all doubts in the
implementation and interpretation of its provisions, including its implementing rules and
regulations, should be resolved in favor of labor and considering that technicalities are not
supposed to stand in the way of equitably and completely resolving the rights and obligations of
labor arid capital, We rule that the Petition for Review was seasonably filed. Moreso that We
have already granted petitioners' Urgent Motion for Extension.
3. x x x
SO ORDERED.
Antecedents
Under Section 5(2)3 of Republic Act No. 6728 (Government Assistance To Students and
Teachers In Private Education Act), 70% of the increase in tuition fees shall go to the payment of
salaries, wages, allowances and other benefits of the teaching and non-teaching personnel.
Pursuant to this provision, the petitioner imposed a 7% increase of its tuition fees for school year
2006-2007.4
Shortly thereafter, and in order to save the depleting funds of the petitioner's Retirement Plan, its
Board of Trustees approved the funding of the retirement program out of the 70% net
incremental proceeds arising from the tuition fee increases.5 Respondents GNC-Faculty Labor
Union and GNC Non-Teaching Maintenance Labor Union challenged the petitioner's unilateral
decision by claiming that the increase violated Section 5(2) of R.A. No. 6728.
The parties referred the matter to voluntary arbitration after failing to settle the controversy by
themselves.6
Decision of the Voluntary Arbitrator
After hearing the parties, Voluntary Arbitrator Froilan M. Bacungan rendered his decision dated
June 16, 2008 in favor of GNC,7 holding that retirement benefits fell within the category of "other
benefits" that could be charged against the 70% net incremental proceeds pursuant to Section
5(2) of R.A. No. 6728.
After receiving a copy of the decision on June 16, 2008, the respondents filed an Urgent Motion
for Extension praying that the CA grant them an extension of 15 days from July 1, 2008, or until
July 16, 2008, within which to file their petition for review.8
Ruling of the CA
On July 2, 2008, the CA issued a resolution granting the Urgent Motion for Extension.9 The
respondents filed the petition for review10 on July 16, 2008.11
Subsequently, the petitioner filed its Motion to Dismiss,12 asserting that the decision of the
Voluntary Arbitrator had already become final and executory pursuant to Article 276 of the Labor
Code and in accordance with the ruling in Coca-Cola Bottlers Philippines, Inc. Sales Force
Union PTGWO-Balais v. Coca-Cola Bottlers Philippines, Inc.13
The CA acted on the Motion to Dismiss on December 15, 2008 through the now assailed
resolution denying the Motion to Dismiss.14
The petitioner sought reconsideration,  but the CA denied the motion for reconsideration on
15
January 30, 2009.16
Hence, the petitioner instituted its petition for certiorari.
Issue
The petitioner submits the lone issue that—
THE COURT OF APPEALS, WITH ALL DUE RESPECT, IS ACTING WITHOUT OR IN EXCESS
OF ITS JURISDICTION IN CA-G.R. SP NO. 104109 CONSIDERING THAT THE DECISION OF
THE VOLUNTARY ARBITRATOR IN AC-025-RB3-04-01-03-2007, FOLLOWING RULE [276]
OF THE LABOR CODE AND THE DECISION OF THE HONORABLE COURT IN COCA-COLA
BOTTLERS PHILIPPINES, INC. SALES FORCE UNION-PTGWO BALAIS v. COCA-COLA
BOTTLERS PHILIPPINES, INC. XXXX, HAD ALREADY BECOME FINAL AND EXECUTORY,
HENCE UNCHALLENGEABLE SINCE THE "URGENT MOTION FOR EXTENSION" DATED 30
JUNE 2008 AND 16 JULY 2008 RESPECTIVELY, OR TEN (10) DAYS AFTER THE UNIONS
AND THEIR COUNSEL OF RECORD WERE PERSONALLY SERVED THE VOLUNTARY
ARBITRATOR'S DECISION ON 16 JUNE 2008.17
The petitioner argues that the CA went beyond its jurisdiction when it denied the Motion to
Dismiss despite the finality of the decision of the Voluntary Arbitrator pursuant to Article 276 of
the Labor Code; that following the pronouncement in Coca-Cola Bottlers Philippines, Inc. Sales
Force Union-PTGWO-Balais v. Coca-Cola Bottlers Philippines, Inc.18 the CA was no longer
authorized to exercise its appellate jurisdiction; 19 that the CA's reliance on the rulings in Manila
Midtown Hotel v. Borromeo20 and Leyte IV Electric Cooperative, Inc. v. Leyeco IV Employees
Union-ALU21 was misplaced because said rulings did not define the reglementary period to
appeal the decision or award of the Voluntary Arbitrator; 22 and that the CA misapplied the rule on
equity in the absence of strong or compelling reasons to suspend the rules of procedure. 23
The petitioner emphasizes the need to harmonize Rule 43 of the Rules of Court with Article 276
of the Labor Code in view of their conflicting provisions on the period for the appeal from the
decision of the Voluntary Arbitrator. It maintains that unless Congress amends Article 276 of
the Labor Code, the reglementary period within which to appeal the decision or award of the
Voluntary Arbitrator is 10 days following the ruling in Coca-Cola Bottlers Philippines, Inc. Sales
Force Union-PTGWO-Balais v. Coca-Cola Bottlers Philippines, Inc., instead of 15 days under
Rule 43 of the Rules of Court.
In contrast, the respondents insist that they have a meritorious case because the controversy
involves the interpretation of Section 5(2) of R.A. No. 6728 on the disposition of the tuition fee
increase;24 that the CA did not abuse its discretion given the rule on the liberal application of
rules of procedure to achieve substantial justice, and the policy on the liberal construction of
laws in favor of labor;25 that a long line of jurisprudence26 set the remedy of appeal under Rule 43
of the Rules of Court as applicable in challenging the decisions or awards of the Voluntary
Arbitrator.
Did the CA gravely abuse its discretion in denying the petitioner's Motion to Dismiss despite the
finality of the decision of the Voluntary Arbitrator pursuant to Article 276 of the Labor Code?
Ruling of the Court
We dismiss the petition for certiorari.
I
The petition for review shall be filed within 15 days
pursuant to Section 4, Rules 43 of the Rules of Court;
the 10-day period under Article 276 of the Labor Code
refers to the filing of a motion for reconsideration
vis-à-vis the Voluntary Arbitrator's decision or award
In resolving whether or not the CA committed grave abuse of discretion, the Court has first to
determine which between the two periods found in Article 276 of the Labor Code and Section 4
of Rule 43 of the Rules of Court governs the appeal from the decision or award by the Voluntary
Arbitrator or Panel of Arbitrators.
The petitioner posits that the appeal from the decision or award of the Voluntary Arbitrator
should be filed within 10 days in view of Article 276 of the Labor Code which reads in full:
Article 276. Procedures. – The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
the power to hold hearings, receive evidences and take whatever action is necessary to resolve
the issue or issues subject of the dispute, including efforts to effect a voluntary settlement
between parties.
All parties to the dispute shall be entitled to attend the arbitration proceedings. The attendance
of any third party or the exclusion of any witness from the proceedings shall be determined by
the Voluntary Arbitrator or panel of Voluntary Arbitrators. Hearings may be adjourned for cause
or upon agreement by the parties.
Unless the parties agree otherwise, it shall be mandatory for the Voluntary Arbitrator or panel of
Voluntary Arbitrators to render an award or decision within twenty (20) calendar days from the
date of submission of the dispute to voluntary arbitration.
The award or decision of the Voluntary Arbitrator or panel of Voluntary Arbitrators shall
contain the facts and the law on which it is based. It shall be final and executory after ten
(10) calendar days from receipt of the copy of the award or decision by the parties.
Upon motion of any interested party, the Voluntary Arbitrator or panel of Voluntary Arbitrators or
the Labor Arbiter in the region where the movant resides, in case of the absence or incapacity of
the Voluntary Arbitrator or panel of Voluntary Arbitrators, for any reason, may issue a writ of
execution requiring either the sheriff of the Commission or regular courts or any public official
whom the parties may designate in the submission agreement to execute the final decision,
order or award. (Bold underscoring supplied for emphasis)
Article 276 is an amendment introduced by R.A. No. 6715.27 Prior to the effectivity of the
amendment on March 21, 1989,28 Article 262 (the predecessor provision) stated that voluntary
arbitration decisions or awards would be final, unappealable and executory. Despite such
immediately executory nature of the decisions and awards of the Voluntary Arbitrators, however,
the Court pronounced in Oceanic Bic Division (FFW) v. Romero29 that the decisions or awards of
the Voluntary Arbitrators involving interpretations of law were within the scope of the Court's
power of review. The Court explained:
x x x x We agree with the petitioner that the decisions of voluntary arbitrators must be given the
highest respect and as a general rule must be accorded a certain measure of finality. This is
especially true where the arbitrator chosen by the parties [enjoys] the first rate credentials of
Professor Flerida Ruth Pineda Romero, Director of the U.P. Law Center and an academician of
unquestioned expertise in the field of Labor Law. It is not correct, however, that this respect
precludes the exercise of judicial review over their decisions. Article 262 of the Labor Code
making voluntary arbitration awards final, inappealable, and executory except where the money
claims exceed P100,000.00 or 40% of paid-up capital of the employer or where there is abuse of
discretion or gross incompetence refers to appeals to the National Labor Relations Commission
and not to judicial review.
Inspite of statutory provisions making '"final" the decisions of certain administrative agencies, we
have taken cognizance of petitions questioning these decisions where want of jurisdiction, grave
abuse of discretion, violation of due process, denial of substantial justice, or erroneous
interpretation of the law were brought to our attention. There is no provision for appeal in the
statute creating the Sandiganbayan but this has not precluded us from examining decisions of
this special court brought to us in proper petitions. Thus, we have ruled:
"Yanglay raised a jurisdictional question which was not brought up by respondent public officials.
He contends that this Court has no jurisdiction to review the decisions of the NLRC and the
Secretary of Labor 'under the principle of separation of powers' and that judicial review is not
provided for in Presidential Decree No. 21.
"That contention is a flagrant error, it is generally understood that as to administrative agencies
exercising quasi judicial or legislative power there is an underlying power in the courts to
scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of
review is given by statute' (73 C.J.S. 506, note 56).
"The purpose of judicial review is to keep the administrative agency within its jurisdiction and
protect substantial rights of parties affected by its decisions' (73 C.J.S. 507, Sec. 165). It is part
of the system of checks and balances which restricts the separation of powers and forestalls
arbitrary and unjust adjudications.
"Judicial review is proper in case of lack of jurisdiction, grave abuse of discretion, error of law,
fraud or collusion (Timbancaya vs. Vicente, 62 O.G. 9424; Macatangay vs. Secretary of Public
Works and Communications, 63 O.G. 11236; Ortua vs. Singson Encarnacion, 59 Phil. 440).
"'The courts may declare an action or resolution of an administrative authority to be illegal (1)
because it violates or fails to comply with some mandatory provision of the law or (2) because it
is corrupt, arbitrary or capricious' (Borromeo vs. City of Manila and Rodriguez Lanuza, 62 Phil.
512, 516; Villegas vs. Auditor General, L-21352, November 29, 1966, 18 SCRA 877, 891). [San
Miguel Corporation v. Secretary of Labor, 64 SCRA 60].
xxx xxx xxx
"It is now settled rule that under the present Labor Code, (Presidential Decree No. 442, as
amended [1974] if lack of power or arbitrary or improvident exercise of authority be shown, thus
giving rise to a jurisdictional question, this Court may, in appropriate certiorari proceedings, pass
upon the validity of the decisions reached by officials or administrative agencies in labor
controversies. So it was assumed in Maglasang v. Ople, (L-38813, April 29, 1975, 63 SCRA
508). It was explicitly announced in San Miguel Corporation v. Secretary of Labor, (L-39195,
May 16, 1975, 64 SCRA 56) the opinion being penned by Justice Aquino. Accordingly, cases of
that character continue to find a place in our docket. (Cf. United Employees Union of Gelmart
Industries v. Noriel, L-40810, Oct. 3, 1975, 67 SCRA 267) The present suit is of that category.
[Kapisanan ng mga Manggagawa sa La Suerte-Foitaf vs. Noriel, 77 SCRA 415-416].
A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity. There is no
reason why her decisions involving interpretation of law should be beyond this Court's review.
Administrative officials are presumed to act in accordance with law and yet we do not hesitate to
pass upon their work where a question of law is involved or where a showing of abuse of
authority or discretion in their official acts is properly raised in petitions for certiorari.30
Accordingly, the decisions and awards of Voluntary Arbitrators, albeit immediately final and
executory, remained subject to judicial review in appropriate cases through petitions
for certiorari.31
Such was the state of things until the promulgation in 1995 of the ruling in Luzon Development
Bank v. Association of Luzon Development Bank Employees.32 Therein, the Court noted the
silence of R.A. No. 6715 on the availability of appeal from the decisions or awards of the
Voluntary Arbitrators. In declaring the Voluntary Arbitrators or Panels of Voluntary Arbitrators as
quasi-judicial instrumentalities, Luzon Development Bank v. Association of Luzon Development
Bank Employees pronounced the decisions or awards of the Voluntary Arbitrators to be
appealable to the CA, viz.:
It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of
such arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the
appellate jurisdiction of the National Labor Relations Commission (NLRC) for that matter. The
state of our present law relating to voluntary arbitration provides that "(t)he award or decision of
the Voluntary Arbitrator x x x shall be final and executory after ten (10) calendar days from
receipt of the copy of the award or decision by the parties," while the "(d)ecision, awards, or
orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or
both parties within ten (10) calendar days from receipt of such decisions, awards, or orders."
Hence, while there is an express mode of appeal from the decision of a labor arbiter, Republic
Act No. 6715 is silent with respect to an appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than
not, elevated to the Supreme Court itself on a petition for certiorari, in effect equating the
voluntary arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is
illogical and imposes an unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al., on the settled premise that the judgments of
courts and awards of [quasi-judicial] agencies must become final at some definite time, this
Court ruled that the awards of voluntary arbitrators determine the rights of parties; hence, their
decisions have the same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et
al. v. Romero, et al., this Court ruled that "a voluntary arbitrator by the nature of her functions
acts in a quasi-judicial capacity." Under these rulings, it follows that the voluntary arbitrator,
whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency but
independent of, and apart from, the NLRC since his decisions are not appealable to the latter.
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of
Appeals shall exercise:
"xxx xxx xxx (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards
or commissions, including the Securities and Exchange Commission, the Employees'
Compensation Commission and the Civil Service Commission, except those falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code
of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act,
and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of
Section 17 of the Judiciary Act of 1948.
xxx xxx xxx"
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not
strictly be considered as a [quasi-judicial] agency, board or commission, still both he and the
panel are comprehended within the concept of a "quasi-judicial instrumentality." It may even be
stated that it was to meet the very situation presented by the quasi-judicial functions of the
voluntary arbitrators here, as well as the subsequent arbitrator/arbitral tribunal operating under
the Construction Industry Arbitration Commission, that the broader term "instrumentalities" was
purposely included in the above-quoted provision.
An "instrumentality" is anything used as a means or agency. Thus, the terms governmental
"agency" or "instrumentality" are synonymous in the sense that either of them is a means by
which a government acts, or by which a certain government act or function is performed. The
word "instrumentality," with respect to a state, contemplates an authority to which the state
delegates governmental power for the performance of a state function. An individual person, like
an administrator or executor, is a judicial instrumentality in the settling of an estate, in the same
manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the court, and
a trustee in bankruptcy of a defunct corporation is an instrumentality of the state.
The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within
the contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact
that his functions and powers are provided for in the Labor Code does not place him within the
exceptions to said Sec.. 9 since he is a quasi-judicial instrumentality as contemplated therein. It
will be noted that, although the Employees' Compensation Commission is also provided for in
the Labor Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative
Circular No. 1-95, laid down the procedure for the appealability of its decisions to the Court of
Appeals under the foregoing rationalization, and this was later adopted by Republic Act No.
7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise
be appealable to the Court of Appeals, in line with the procedure outlined in Revised
Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and
commissions enumerated therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to
provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities
not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or
another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC
be reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative
competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the
labor arbiter.33
In other words, the remedy of appeal by petition for review under Rule 43 of the Rules of
Court became available to the parties aggrieved by the decisions or awards of the Voluntary
Arbitrators or Panels of Arbitrators.
In the 2004 ruling in Sevilla Trading Company v. Semana,34 the Court ruled that the decision of
the Voluntary Arbitrator became final and executory after the expiration of the 15-day
reglementary period within which to file the petition for review under Rule 43. Manila Midtown
Hotel v. Borromeo35 also ruled so. The 15-day period was likewise adverted to in the ruling
in Nippon Paint Employees Union-Olalia v. Court of Appeals,36 promulgated in November 2004.
In 2005, the Court promulgated the decision in Coca-Cola Bottlers Philippines, Inc., Sales Force
Union-PTGWO-Balais v. Coca-Cola Bottlers Philippines, Inc.,37 wherein it made reference for the
first time to the 10-day period for the filing of the petition for review vis-a-vis decisions or awards
of the Voluntary Arbitrator provided in Article 262-A (now Article 276). 38 Within the same
year, Philex Gold Philippines, Inc. v. Philex Bulawan Supervisors Union39 applied the period of
10 days in declaring the appeal to have been timely filed.
Thereafter, the Court has variantly applied either the 15-day or the 10- day period as the time
within which to appeal the decisions or awards of the Voluntary Arbitrators or Panels of
Arbitrators. Thus, in the 2007 ruling in Leyte IV Electric Cooperative, Inc. v. Leyeco IV
Employees Union-ALU,40 the Court recognized the 15-day reglementary period under Rule 43.
This was reiterated in AMA Computer College-Santiago City, Inc. v. Nacino (2008),41Mora v.
Avesco Marketing Corporation42 (2008), Samahan Ng Mga Manggagawa sa Hyatt-NUWHRAIN-
APL v. Bacungan (2009),43Saint Luis University, Inc. v. Cobarrubias44 (2010), Samahan ng mga
Manggagawa sa Hyatt (SAMASAH-NUWHRAIN) v. Magsalin45 (2011) and Royal Plant Workers
Union v. Coca Cola Bottlers Philippines, Inc.-Cebu Plant (2013). 46
But in Philippine Electric Corporation (PHILEC) v. Court of Appeals47 (2014), Baronda v. Court of
Appeals48 (2015), and NYK-FIL Ship Management, Inc. v. Dabu49 (2017), the Court, citing Article
276 of the Labor Code, applied the 10-day period. Notably, the Court opined in Philippine
Electric Corporation (PHILEC) v. Court of Appeals that despite the period provided in Rule 43,
the 10-day period should apply in determining the timeliness of appealing the decision or award
of the Voluntary Arbitrator or Panel of Arbitrators, to wit:
Despite Rule 43 providing for a 15-day period to appeal, we rule that the Voluntary Arbitrator's
decision must be appealed before the Court of Appeals within 10 calendar days from receipt of
the decision as provided in the Labor Code.
Appeal is a "statutory privilege," which may be exercised "only in the manner and in accordance
with the provisions of the law." "Perfection of an appeal within the reglementary period is not
only mandatory but also jurisdictional so that failure to do so rendered the decision final and
executory, and deprives the appellate court of jurisdiction to alter the final judgment much less to
entertain the appeal."
We ruled that Article 262-A of the Labor Code allows the appeal of decisions rendered by
Voluntary Arbitrators. Statute provides that the Voluntary Arbitrator's decision "shall be final and
executory after ten (10) calendar days from receipt of the copy of the award or decision by the
parties." Being provided in the statute, this 10-day period must be complied with; otherwise, no
appellate court will have jurisdiction over the appeal. This absurd situation occurs when the
decision is appealed on the 11th to 15th day from receipt as allowed under the Rules, but which
decision, under the law, has already become final and executory.
Furthermore, under Article VIII, Section 5 (5) of the Constitution, this court "shall not diminish,
increase, or modify substantive rights" in promulgating rules of procedure in courts. The 10-day
period to appeal under the Labor Code being a substantive right, this period cannot be
diminished, increased, or modified through the Rules of Court.
In Shioji v. Harvey, this Court held that the "rules of court, promulgated by authority of law, have
the force and effect of law, if not in conflict with positive law." Rules of Court are "subordinate to
the statute." In case of conflict between the law and the Rules of Court, "the statute will prevail."
The rule, therefore, is that a Voluntary Arbitrator's award or decision shall be appealed before
the Court of Appeals within 10 days from receipt of the award or decision. Should the aggrieved
party choose to file a motion for reconsideration with the Voluntary Arbitrator, the motion must be
filed within the same 10-day period since a motion for reconsideration is filed "within the period
for taking an appeal."50
The ratiocination in Philippine Electric Corporation (PHILEC) v. Court of Appeals backstopped
the ruling in NYK-FIL Ship Management, Inc. v. Dabu.
Given the variable rulings of the Court, what should now be the period to be followed in
appealing the decisions or awards of the Voluntary Arbitrators or Panel of Arbitrators?
In the 2010 ruling in Teng v. Pagahac,51 the Court clarified that the 10-day period set in Article
276 of the Labor Code gave the aggrieved parties the opportunity to file their motion for
reconsideration, which was more in keeping with the principle of exhaustion of administrative
remedies, holding thusly:
In the exercise of its power to promulgate implementing rules and regulations, an implementing
agency, such as the Department of Labor, is restricted from going beyond the terms of the law it
seeks to implement; it should neither modify nor improve the law. The agency formulating the
rules and guidelines cannot exceed the statutory authority granted to it by the legislature.
By allowing a 10-day period, the obvious intent of Congress in amending Article 263 to
Article 262-A is to provide an opportunity for the party adversely affected by the VA's
decision to seek recourse via a motion for reconsideration or a petition for review under
Rule 43 of the Rules of Court filed with the CA. Indeed, a motion for reconsideration is the
more appropriate remedy in line with the doctrine of exhaustion. of administrative
remedies. For this reason, an appeal from administrative agencies to the CA via Rule 43
of the Rules of Court requires exhaustion of available remedies as a condition precedent
to a petition under that Rule.
The requirement that administrative remedies be exhausted is based on the doctrine that in
providing for a remedy before an administrative agency, every opportunity must be given to the
agency to resolve the matter and to exhaust all opportunities for a resolution under the given
remedy before bringing an action in, or resorting to, the courts of justice. Where Congress has
not clearly required exhaustion, sound judicial discretion governs, guided by congressional
intent.
By disallowing reconsideration of the VA's decision, Section 7, Rule XIX of DO 40-03 and
Section 7 of the 2005 Procedural Guidelines went directly against the legislative intent
behind Article 262-A of the Labor Code. These rules deny the VA the chance to correct
himself and compel the courts of justice to prematurely intervene with the action of an
administrative agency entrusted with the adjudication of controversies coming under its
special knowledge, training and specific field of expertise. In this era of clogged court
dockets, the need for specialized administrative agencies with the special knowledge,
experience and capability to hear and determine promptly disputes on technical matters or
intricate questions of facts, subject to judicial review, is indispensable. In Industrial Enterprises,
Inc. v. Court of Appeals, we ruled that relief must first be obtained in an administrative
proceeding before a remedy will be supplied by the courts even though the matter is within the
proper jurisdiction of a court.52 (Emphasis supplied)
Hence, the 10-day period stated in Article 276 should be understood as the period within which
the party adversely affected by the ruling of the Voluntary Arbitrators or Panel of Arbitrators may
file a motion for reconsideration. Only after the resolution of the motion for reconsideration may
the aggrieved party appeal to the CA by filing the petition for review under Rule 43 of the Rules
of Court within 15 days from notice pursuant to Section 4 of Rule 43.
The Court notes that despite the clarification made in Teng v. Pagahac, the Department of Labor
and Employment (DOLE) and the National Conciliation and Mediation Board (NCMB) have not
revised or amended the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration
Proceedings insofar as its Section 7 of Rule VII53 is concerned. This inaction has obviously sown
confusion, particularly in regard to the filing of the motion for reconsideration as a condition
precedent to the filing of the petition for review in the CA. Consequently, we need to direct the
DOLE and the NCMB to cause the revision or amendment of Section 7 of Rule VII of
the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings in order
to allow the filing of motions for reconsideration in line with Article 276 of the Labor Code.
II
Certiorari does not lie in assailing
the CA's denial of a motion to dismiss
Generally, the denial of a motion to dismiss cannot be assailed by petition for certiorari. As we
indicated in Biñan Rural Bank v. Carlos:54
The denial of a motion to dismiss generally cannot be questioned in a special civil action
for certiorari, as this remedy is designed to correct only errors of jurisdiction and not errors of
judgment. Neither can a denial of a motion to dismiss be the subject of an appeal which is
available only after a judgment or order on the merits has been rendered. Only when the denial
of the motion to dismiss is tainted with grave abuse of discretion can the grant of the
extraordinary remedy of certiorari be justified.
Although it admits being aware of this rule, the petitioner insists on the propriety of its petition
for certiorari based on its belief that the CA had gravely abused its discretion in assuming
jurisdiction over the respondents' petition. It argues that the decision rendered by Voluntary
Arbitrator Bacungan had already become final pursuant to Article 276 of the Labor Code, and,
accordingly, the CA could no longer exercise its appellate jurisdiction.
The petitioner is mistaken.
Grave abuse of discretion means either that the judicial or quasi-judicial power was exercised in
an arbitrary or despotic manner by reason of passion or personal hostility, or that the respondent
judge, tribunal or board evaded a positive duty, or virtually refused to perform the duty enjoined
or to act in contemplation of law, such as when such judge, tribunal or board exercising judicial
or quasi-judicial powers acted in a capricious or whimsical manner as to be equivalent to lack of
jurisdiction.55
Here, the CA did not act arbitrarily in denying the petitioner's Motion to Dismiss. It correctly noted
that Coca-Cola Bottlers Philippines, Inc. Sales Force Union-PTGWO-Balais v. Coca-Cola
Bottlers Philippines, Inc. did not make a definitive ruling on the correct reglementary period for
the filing of the petition for review. Given the varying applications of the periods defined in Article
276 and Section 4 of Rule 43, the CA could not be objectively held to be guilty of grave abuse of
discretion in applying the equitable rule on construction in favor of labor. To be underscored is
that the underlying aim for the requirement of strict adherence to procedural rules, particularly on
appeals, should always be the prevention of needless delays that could enable the unscrupulous
employers to wear out the efforts and meager resources of their workers to the point that the
latter would be constrained to settle for less than what were due to them.56
ACCORDINGLY, the Court DISMISSES the unmeritorious petition for certiorari; AFFIRMS the
decision promulgated on December 15, 2008 by the Court of Appeals; and DIRECTS the
Department of Labor and Employment and the National Conciliation and Mediation Board to
revise or amend the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration
Proceedings to amend the Revised Procedural Guidelines in the Conduct of Voluntary
Arbitration Proceedings to reflect the foregoing ruling herein.
No pronouncement on costs of suit.
SO ORDERED.
G.R. No. L-35120 January 31, 1984
ADAMSON & ADAMSON, INC., petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS and ADAMSON & ADAMSON SUPERVISORY
UNION (FFW), respondents.
Sycip, Salazar, Luna & Feliciano for petitioner.
Jaime D. Lauron for respondents.
GUTIERREZ, JR., J.:
Adamson and Adamson, Inc., filed this petition to set aside orders of the respondent Court of
Industrial Relations (CIR) holding that the Adamson and Adamson, Inc. supervisory Union
(FFW) can legally represent supervisors of the petitioner corporation notwithstanding the
affiliation of the lank and file union of the same company with the same labor federation, the
Federation of Free Workers.
The Adamson and Adamson, Inc. Supervisory Union (FFW) informed the petitioner about its
having organized on the same date that the Adamson and Adamson, Inc. Salesmen Association
(FFW) advised the petitioner that the rank and file salesmen had formed their own union.
The CIR dismissed the petition in CIR Case No. 3267-MC entitled "In the Matter of
Representation of the Supervisory Employees of Adamson and Adamson, Inc., Petitioner " thus
prompting the filing of this petition for review on certiorari.
Subsequently and during the pendency of the present petition, the rank and file employees
formed their own union, naming it Adamson and Adamson Independent Workers (FFW).
The petitioner made a lone assignment of error, to wit:
THE RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN SUSTAINING THE
ELIGIBILITY OF THE RESPONDENT UNION TO REPRESENT THE PETITIONER'S
SUPERVISORY EMPLOYEES NOT-WITHSTANDING THE AFFILIATION OF THE SAID UNION
WITH THE SAME NATIONAL FEDERATION WITH WHICH THE UNIONS OF NON-
SUPERVISORS IN THE PETITIONER COMPANY ARE ALSO AFFILIATED.
The petitioner argues that the affiliation of the respondent union of supervisors, the salesmen's
association, and the Adamson and Adamson independent Workers Union of rank and file
personnel with the same national federation (FFW) violates Section 3 of the Industrial Peace
Act, as amended, because — (1) it results in the indirect affiliation Of supervisors and rank-and-
file employees with one labor organization; (2) since respondent union and the unions of non-
supervisors in the same company are governed by the same constitution and by-laws of the
national federation, in practical effect, there is but one union; and (3) it would result in the
respondent union's losing its independence because it becomes the alter ego of the federation.
The petitioner also submits that should affiliation be allowed, this would violate the requirement
of separateness of bar units under Section 12 of the Act because only one union will in fact
represent both supervisors and rank-and-file employees of the petitioner.
The respondents on the other hand argue that the supervisory employees of an employer may
validly join an organization of the rank-and-file employees so long as the said rank and file
employees are not under their supervision. They submit that Adamson and Adamson
Supervisory Union (FFW) is not composed of sales supervisors and, therefore, the salesmen of
the company are not under the supervision of the supervisory employees forming the union.
Respondents also argue that even if the salesmen of the petitioner company are under the
supervision of the members of the supervisory union, the prohibition would not apply because
the salesmen and the supervisory employees of the company have their separate and distinct
labor organizations, and, as a matter of fact, their respective unions sent separate proposal for
collective bargaining agreements. They contend that their respective labor organizations, not the
FFW, will represent their members in the negotiations as well as in the signing of their respective
contracts. Respondents further argue that the Federation of Free Workers has, as its affiliates,
supervisory as well as rank-and-file employees, and should both the supervisory and the rank-
and-file employees of a certain employer who have separate certificates of registration affiliate
with the same federation, the prohibition does not apply as the federation is not the organization
of the supervisory employees contemplated in the law.
The issue presented involves the correct interpretation of Section 3 of Republic Act No. 875, the
Industrial Peace Act, as amended, which states:
Employees shall have the right to self-organization and to form join or assist labor organizations
of their own choosing for the purpose 6f collective bargaining through representatives of their
own and to engage in concerted activities for the purpose of collective bargaining and other
mutual aid or protection. Individuals employed as supervisors shall not be eligible for
membership in a labor organization of employees under their supervision but may form separate
organizations of their own.
The right of employees to self-organization and to form, join or assist labor organizations of their
own choosing for the purpose of collective bargaining and to engage in concerted activities for
mutual aid or protection is a fundamental right of labor that derives its existence from the
Constitution. It is recognized and implemented through the abovecited Section 3 of the Industrial
Peace Act as amended.
In interpreting the protection to labor and social justice provisions of the Constitution and the
labor laws or rules and regulations implementing the constitutional mandates, we have always
adopted the liberal approach which favors the exercise of labor rights.
In deciding this case, we start with the recognized rule that the right of supervisory employees to
organize under the Industrial Peace Act carries certain restrictions but the right itself may not be
denied or unduly abridged. The supervisory employees of an employer cannot join any labor
organization of employees under their supervision but may validly form a separate organization
of their own. As stated in Caltex Filipino Managers and Supervisors Association v. Court of
Industrial Relations (47 SCRA 112), it would be to attach unorthodoxy to, not to say an
emasculation of, the concept of law if managers as such were precluded from organization.
Thus, if Republic Act 875, in its Section 3, recognizes the right of supervisors to form a separate
organization of their own, albeit they cannot be members of a labor organization of employees
under their supervision, that authority of supervisors to form a separate labor union carries with it
the right to bargain collectively with the employer. (Government Service Insurance System v.
Government Service Insurance System Supervisors' Union, 68 SCRA 418).
The specific issue before us is whether or not a supervisor's union may affiliate with a federation
with which unions of rank and-file employees of the same employer are also affiliated. We find
without merit the contentions of petitioner that if affilation will be allowed, only one union will in
fact represent both supervisors and rank-and-file employees of the petitioner; that there would
be an indirect affiliation of supervisors and rank-and-file employees with one labor organization;
that there would be emerging of two bargaining units ; and that the respondent union will loose
its independence because it becomes an alter ego of the federation.
In Elisco-Elirol Labor Union (NAFLU) v. Noriel (80 SCRA 681) and Liberty Cotton Mills Workers
Union v. Liberty Cotton Mills, Inc. (66 SCRA 512), we held :
xxx xxx xxx
... the court expressly cited and affirmed the basic principle that '(T)he locals
are separate and distinct units primarily designed to secure and maintain
the equality of bargaining power between the employer and their employee-
member in the economic struggle for the fruits of the joint productive effort
of labor and capital; and the association of the locals into the national union
(as PAFLU) was in the furtherance of the same end. These association are
concensual entities capable of entering into such legal relations with their
members. The essential purpose was the affiliation of the local unions into a
common enterprise to increase by collective action the common bargaining
power in respect of the terms and conditions of labor. Yet the locals
remained the basic units of association; free to serve their own and the
common-interest of all, subject to the restraints imposed by the Constitution
and By-laws of the Association; and free also to renounce the affiliation for
mutual welfare upon the terms laid down in the agreement which brought it
into existence.
We agree with the Court of Industrial Relations when it ruled that:
xxx xxx xxx
The confusion seems to have stemmed from the prefix of FFW after the
name of the local unions in the registration of both. Nonetheless, the
inclusion of FWW in the registration is merely to stress that they are its
affiliates at the time of registrations. It does not mean that said local unions
cannot stand on their own Neither can it be construed that their personalities
are so merged with the mother federation that for one difference or another
they cannot pursue their own ways, independently of the federation. This is
borne by the fact that FFW, like other federation is a legitimate labor
organization separate and distinct from its locals and affiliates and to
construe the registration certificates of the aforecited unions, along the line
of the Company's argument. would tie up any affiliates to the shoe string of
the federation. ...
The Adamson and Adamson Supervisory Union and the Adamson and Adamson, Inc.,
Salesmen Association (FFW), have their own respective constitutions and by-laws. They are
separately and independently registered of each other. Both sent their separate proposals for
collective bar agreements with their employer. There could be no employer influence on rank-
and-file organizational activities nor their could be any rank and file influence on the supervisory
function of the supervisors because of the representation sought to be proscribed.
WHEREFORE, the instant petition is DISMISSED for lack of merit. The questioned order and the
resolution en banc of the respondent Court of Industrial Relations are AFFIRMED.
SO ORDERED.
 [ G.R. No. 217101, February 12, 2020 ]
LBC EXPRESS-VIS, INC., PETITIONER, VS. MONICA C. PALCO, RESPONDENT.
DECISION
LEONEN, J.:
An employee is considered constructively dismissed if he or she was sexually harassed by her
superior and her employer failed to act on his or her complaint with prompt and sensitivity.
This Court resolves the Petition for Review on Certiorari1 assailing the Decision2 and
Resolution3 of the Court of Appeals, which affirmed the National Labor Relations Commission's
finding that the employer company, LBC Express-Vis Inc., is liable for constructive dismissal.
On January 16, 2009, Monica C. Palco (Palco) started working for LBC Express-Vis Inc. (LBC)
as a customer associate in its Gaisano Danao Branch (LBC Danao). The Branch's Team Leader
and Officer-in-Charge, Arturo A. Batucan (Batucan), endorsed her application for the post and
acted as her immediate superior.4
While employed at LBC, Palco had initially noticed that Batucan would often flirt with her, which
made her uncomfortable. Later, Batucan started sexually harassing her. Batucan's undisputed
acts are detailed as follows:
1. As weeks passed, she noticed something in the way respondent- Arturo A. Batucan
stared and smiled at her. She also sensed some meaning in the way he talked to her,
though she initially ignored these and just tried to focus on her job.
2. At one time he offered to lend her money, which she refused, not wanting to be
indebted to him.
3. There was likewise an instance when he secretly gave her chocolate, which she felt
uncomfortable about, there being no special occasion then.
4. Respondent-Arturo A. Batucan's actions grew bolder everyday[sic]. Whenever he
approached her while working, he found ways to hold her hand or put his hand on her
lap, if not, on her shoulder.
5. Then, the time came when he started to kiss her on the cheek in a joking manner.
6. On certain occasions, he pulled the strap of her bra, which made her feel really
uncomfortable. When she tried to rebuke him on such, he would just tell her that it was
a joke.
7. There was also a time when he joked about making a baby with her. He told her
that if she will get married someday, he wants to join with her husband in making the
baby. She just laughed it off, but she knew there was something wrong with the joke.5
The final straw happened at around 8:00 a.m. on May 1, 2010. That morning, Batucan sneaked
in on Palco while she was in a corner counting money. Palco was caught by surprise and
exclaimed, "Kuyawa nako nimo sir, oy!" (You scared me, sir!). Batucan then held her on her hips
and attempted to kiss her lips. However, Palco was able to shield herself.
Batucan then tried a second time and was able to kiss Palco's lips before she could react.
Batucan told Palco that he was just happy that day and then proceeded to wipe her lips. Palco,
however, could not stop him. Thereafter, Batucan asked her if it was okay for him to go to the
LBC Camotes Branch on Monday, as though asking for her permission and treating her like a
girlfriend. She told him not to repeat what he had done and threatened to tell his wife about it.
Palco felt angry and afraid.6
On the evening of the following day, a Sunday, Batucan texted Palco asking her to report early
for work the next day to prepare for the arrival of a certain Ms. Ponce. Afraid of what Batucan
might do next, Palco excused herself and suggested that her co-employee take her place,
explaining that she might not come in for work.7
The next day, despite being repulsed by Batucan, Palco still forced herself to go to work. She
was relieved when Batucan left with Ms. Ponce at 11:00 a.m. to visit the LBC Camotes Branch.
However, on May 4, 2010, she did not come in for work because she was sick, and was still
bothered by the incident.8
On May 5, 2010, she reported the incident to the LBC Head Office in Lapu Lapu City. She had a
resignation letter prepared in case management would not act on her complaint. Acting on her
complaint, management advised her to request for a transfer to another team while they
investigated the matter.9
On May 8, 2010, Palco returned to the LBC Head Office with her mother and submitted her
formal complaint against Batucan. Later, they proceeded to the police station to report the
incident.10
On May 14, 2010, sensing that management did not immediately act on her complaint, Palco
resigned. She asserted that she was forced to quit since she no longer felt safe at work.11
On June 15, 2010, Batucan was served a copy of a Notice to Explain.12
On July 20, 2010, LBC held the administrative hearing for the incident.13 On the same day,
Palco filed a Complaint for Illegal Dismissal against the company.
On September 27, 2010, the area head of LBC Cebu sent a letter addressed to Batucan
containing a suspension with last warning:
This administrative action is taken on the account of the complaint on immoral act with you [sic]
teammate, Ms. Monica Palco of which you were required to submit a valid explanation why
sanction should not be imposed against you. This aggravated the company by facing a case
charged with illegal dismissal at NLRC Cebu.
After thorough consideration and evaluation of the case, the company finds it adequate cause to
render you answerable for the aforementioned conduct. This Office hereby sites you for the
following infraction categorized under our Code of Conduct as Major Offense to wit:
Against Persons:
a. Immoral act or any form of indecency within company premises or work
assignment.
b. Any form of sexual harassment.
Accordingly, your attention is hereby called to this instance; you are directed to serve a
SUSPENSION for a period of sixty (60) days without pay with LAST WARNING effective
immediately.
You are further admonished against a repetition of this omission.
For your information and strict compliance.
LEONARDO V. LIBRADILLA (signed)14
On October 18, 2010, Palco filed a Complaint for sexual harassment before the Danao City
Prosecutor's Office.15
The Labor Arbiter, in its Decision dated June 29, 2011, ruled in favor of Palco:
WHEREFORE, co-respondents LBC Express-VIS, Inc. and Arturo Batucan are hereby
ORDERED solidarily to immediately pay complainant Monica C. Palco the following:
Backwages............................... Php 91,000.00
Separation pay......................... 14,000
Moral Damages........................ 200,000
Exemplary 50,000
Damages.................
Total....................................... Php 355,000.00
Attorney's fees (10%) ............. 35,000
Grand Total............................. 390,500
SO ORDERED.16
The National Labor Relations Commission, in its May 31, 2012 Decision17 affirmed with
modification the Labor Arbiter's decision but reduced the amount of moral damages to
P50,000.00.18
The Court of Appeals, in its March 13, 2014 Decision19 affirmed the National Labor Relations
Commission. It denied LBC's Motion for Reconsideration.20
LBC thus filed this Petition21 maintaining that: (1) "the findings are grounded entirely on
speculation [;]" (2) "the inference made is manifestly mistaken [;]" (3) "the judgment is based on
misapprehension of facts [;]" and (4) "the Court of Appeals manifestly overlooked certain
relevant facts not disputed but the parties, which... would justify a different
conclusion."22 Furthermore, it raised that "a period of four (4) months does not even constitute
an unreasonable period to resolve a case of such nature and gravity as one for sexual
harassment."23
Subsequently, Palco filed a Comment,24 and LBC filed its Reply.25
Petitioner mainly argues that it should not be held liable for constructive dismissal. It insists that
it did not commit any act of discrimination, insensibility, or disdain towards respondent. Neither
did it establish a harsh, hostile or unfavorable work environment for her.26
Citing Verdadero v. Barney Autolines Group of Companies Transport, Inc.,27 petitioner argues
that it cannot be held liable for the hostile work environment that respondent experienced
because it was Batucan, who committed the acts subject of her complaint. It points out that
Batucan was a mere team leader, a co-employee, who had no power to dismiss, suspend, or
discipline respondent.28 Petitioner did not know of, participate, or consent to Batucan's acts and
only learned of his acts after respondent reported it.29
Petitioner also insists that it acted with sensitivity and consideration for respondent's welfare and
made efforts to address her concerns while it was investigating the incident. It points out that
when respondent expressed her intention to resign, it suggested respondent's transfer to
another team and did not require her to report back to the LBC Danao where Batucan was
stationed. When respondent accepted the offer, LBC granted her vacation leave requests while
awaiting her reassignment.30
Petitioner maintains that it immediately acted on the incident but still had to accord Batucan due
process given the seriousness of the charge. It argues that the delay in the investigation was
caused by respondent's sudden resignation. In any case, they proceeded with the investigation
and suspended Batucan for 60 days with a final warning.31 It asserts that four (4) months is not
an unreasonable period to resolve a sexual harassment complaint.32
Petitioner contends that respondent's resignation was deliberate and voluntary, and was by way environment harsh, hostile and unfavorable, such that the employee feels obliged to resign from
of reprisal for petitioner's failure to heed her ultimatum that Batucan be immediately removed his or her employment. Common examples are when the employee is demoted, or when his or
from his post.33 her pay or benefits are reduced. However, constructive dismissal is not limited to these
instances. The gauge to determine whether there is constructive dismissal, is whether a
reasonable person would feel constrained to resign from his or her employment because of the
As such, petitioner contests the awards granted to respondent, arguing those who voluntarily
circumstances, conditions, and environment created by the employer for the employee:50
resigned are not entitled to backwages, and reinstatement or separation pay. It also argues that
respondent is not entitled to damages since petitioner acted in good faith in all its dealings and
that respondent should bear the litigation expenses for filing an unfounded and baseless case. It [C]onstructive dismissal does not always involve forthright dismissal or diminution in rank,
further asserts that there is no basis for the award of attorney's fees because there was no compensation, benefit and privileges. There may be constructive dismissal if an act of clear
unlawful withholding of wages.34 discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the
employee that it could foreclose any choice by him except to forego his continued
employment.51
In her Comment,35 respondent, maintains that she was constructively dismissed.36 She argues
that Batucan's acts towards her "created a hostile, intimidating and offensive environment,
rendering her continued employment in the company impossible, unreasonable or In Saudi Arabian Airlines (Saudia) v. Rebesencio,52 this Court differentiated between voluntary
unlikely."37 She points out that Batucan's acts constitute sexual harassment under Section 3(a) resignation and constructive dismissal:
(3) of Republic Act No. 7877. The hostile work environment could be clearly seen from her
intense fear and anger and her subsequent acts after the incident: (1) she did not want to report
In Bilbao v. Saudi Arabian Airlines, this court defined voluntary resignation as "the voluntary act
to work; (2) she travelled four (4) hours away from her home to personally file a letter-complaint
of an employee who is in a situation where one believes that personal reasons cannot be
to the LBC Head Office; and (3) she reported the incident to the Danao City Police and filed a
sacrificed in favor of the exigency of the service, and one has no other choice but to dissociate
criminal case before the City Prosecutor's Office.38
oneself from employment. It is a formal pronouncement or relinquishment of an office, with the
intention of relinquishing the office accompanied by the act of relinquishment." Thus, essential to
Respondent further points out that in the administrative hearing, Batucan did not deny the the act of resignation is voluntariness. It must be the result of an employee's exercise of his or
kissing incident. She claims that his version did not vary much from her allegations39 as he her own will.
simply argued that his acts did not constitute sexual harassment.40
In the same case of Bilbao, this court advanced a means for determining whether an employee
Respondent maintains that petitioner failed to protect its employees from sexual harassment as resigned voluntarily:
required under Republic Act No. 7877.41 It did not have the required rules and regulations to
investigate sexual harassment reports, any administrative sanctions for sexual harassment acts,
As the intent to relinquish must concur with the overt act of relinquishment, the acts of the
or any committee on decorum and investigation for these cases.42
employee before and after the alleged resignation must be considered in determining whether
he or she, in fact, intended to sever his or her employment. (Emphasis supplied)
She contends that petitioner was insensible and acted in bad faith in failing to immediately act on
her complaint.43 She points out the following: (1) the investigation only started 78 days after she
On the other hand, constructive dismissal has been defined as "cessation of work because
reported the incident; (2) it took 43 days for petitioner to serve Batucan a Notice to Explain; and
'continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a
(3) it took petitioner 78 days to call him for an administrative hearing, and only after she had
demotion in rank or a diminution in pay' and other benefits."
already been dismissed.44 It took management four (4) months and three (3) weeks to resolve
the matter, when a constructive dismissal case had already been filed.45
In Penaflor v. Outdoor Clothing Manufacturing Corporation, constructive dismissal has been
described as tantamount to "involuntarily [sic] resignation due to the harsh, hostile, and
She likewise alleges that management pointed that there were no witnesses or any showing of
unfavorable conditions set by the employer." In the same case, it was noted that "[t]he gauge for
bruises. It even suggested that perhaps Batucan's kiss was merely a "beso."46
constructive dismissal is whether a reasonable person in the employee's position would feel
compelled to give up his employment under the prevailing circumstances."53
Respondent also posits that her resignation was not voluntary47 but was borne out of the hostile
work environment brought about by Batucan's sexual harassment, and the failure of
One of the ways by which a hostile or offensive work environment is created is through the
management to accord her redress, protection, and sensitivity.48 She thus insists she is entitled
sexual harassment of an employee.
to backwages, separation pay, reinstatement, moral and exemplary damages, and attorney's
fees, with petitioner solidarity liable for damages with Batucan.49
Workplace sexual harassment occurs when a supervisor, or agent of an employer, or any other
person who has authority over another in a work environment, imposes sexual favors on
The issue for this Court's resolution is whether or not LBC should be held liable for constructive
another, which creates in an intimidating, hostile, or offensive environment for the latter. Section
dismissal.
3 of Republic Act No. 7877, otherwise known as the Anti-Sexual Harassment Act, states:

This Court rules that LBC is liable for constructive dismissal.

SECTION 3. Work, Education or Training-related Sexual Harassment Defined.
— Work, education or training-related sexual harassment is committed by an employer,
Constructive dismissal occurs when an employer makes an employee's continued employment employee, manager, supervisor, agent of the employer, teacher, instructor, professor, coach,
impossible, unreasonable or unlikely, or has made an employee's working conditions or trainor, or any other person who, having authority, influence or moral ascendancy over another
in a work or training or education environment, demands, requests or otherwise requires any
sexual favor from the other, regardless of whether the demand, request or requirement for
submission is accepted by the object of said act.
(a) In a work-related or employment environment, sexual harassment is committed
when:
(1) The sexual favor is made as a condition in the hiring or in the
employment, re-employment or continued employment of said individual, or
in granting said individual favorable compensation, terms, conditions,
promotions, or privileges; or the refusal to grant the sexual favor results in
limiting, segregating or classifying the employee which in any way would
discriminate, deprive or diminish employment opportunities or otherwise
adversely affect said employee;
(2) The above acts would impair the employee's rights or privileges under
existing labor laws; or
(3) The above acts would result in an intimidating, hostile, or offensive
environment for the employee. (Emphasis supplied)
This Court has held that "[t]he gravamen of the offense in sexual harassment is not the violation
of the employee's sexuality but the abuse of power by the employer."54
In this case, Batucan's acts are undisputed. He filed no pleading in the labor tribunals to deny
respondent's allegations.55 During the administrative hearing, he simply explained that his acts
were misinterpreted and did not constitute sexual harassment.56
However, it is clear that Batucan's acts were sexually suggestive. He held respondent's hand,
put his hand on her lap and shoulder, pulled her bra strap, joked about making a baby with her,
attempted to kiss her, and eventually scored one.57 These acts are not only inappropriate, but
are offensive and invasive enough to result in an unsafe work environment for respondent.
Petitioner emphasizes that it was not the company, but Batucan, that created the hostile work
environment. It argues that Batucan is a mere co-employee, not part of its management who
may dismiss other employees.58
This argument, however, fails to persuade. Batucan cannot be deemed a mere co-employee of
respondent. The determination of whether an employee is part of the managerial staff depends
on the employee's duties and responsibilities:59
Managerial employees are defined as those vested with the powers or prerogatives to lay down
management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees or effectively recommend such managerial actions. They refer to those
whose primary duty consists of the management of the establishment in which they are
employed or of a department or a subdivision thereof, and to other officers or members of the
managerial staff. Officers and members of the managerial staff perform work directly related to
management policies of their employer and customarily and regularly exercise discretion and
independent judgment.60
At the very least, Batucan held a supervisory position, which made him part of the managerial
staff. Batucan was petitioner's team leader and officer-in-charge in LBC Danao.61 He was
tasked to: (1) "manage and oversee the day to day operation[s] of the branch[;]" (2) keep in
custody LBC Danao's daily cash sales; and (3) to deposit it in the company
account.62 Furthermore, respondent was hired under Batucan's endorsement of.63 He acted as
her immediate superior.64 Respondent had also referred to him as "Sir."65 There is also no
showing that Batucan answered to anyone in LBC Danao. Respondent had to travel to the LBC
Head Office to submit her complaint as she had no other superior within LBC Danao to whom
she could report Batucan's acts. Thus, Batucan cannot be deemed to be respondent's mere co-
employee.
Nonetheless, although Batucan holds a supervisory position, he cannot be deemed to have
acted on petitioner's behalf in committing the acts of sexual harassment. It cannot be assumed
that all the illegal acts of managerial staff are authorized or sanctioned by the company,
especially when it is committed in the manager's personal capacity.
In Verdadero v. Barney Autolines Group of Companies Transport, Inc.,66 this Court ruled that
constructive dismissal cannot be assumed if an officer of the company wronged an employee,
but the employer did not authorize the act:
It is to be emphasized that the abovementioned acts should have been committed by the
employer against the employee.1âшphi1 Unlawful acts committed by a co-employee will not
bring the matter within the ambit of constructive dismissal.
Assuming arguendo that, Gimenez did commit the alleged unlawful acts, still, this fact will not
suffice to conclude that constructive dismissal was proper. Contrary to the arguments of
Verdadero, Gimenez is not the employer. He may be the "disciplinary officer," but his functions
as such, as can be gleaned from the BALGCO Rules and Regulations, do not involve the power
or authority to dismiss or even suspend an employee. Such power is exclusively lodged in the
BALGCO management. Gimenez remains to be a mere employee of BALGCO and, thus, cannot
cause the dismissal or even the constructive dismissal of Verdadero. The employers are
BALGCO and its owners, Barney and Rosela. As correctly put by the CA:
Petitioner BALGCO, however, cannot be blamed for the existing hostile conditions that beset
private respondent. The repulsive behavior of the disciplinary officer against another employee
cannot be imputed upon petitioner BALGCO in the absence of any evidence that it promotes
such ill-treatment of its lowly employees or has itself committed an overt act of illegality. . . If
private respondent had felt that his continued employment with petitioner BALGCO had been
rendered "impossible, unreasonable or unlikely" this could only have resulted from the hostile
treatment by the disciplinary officer and not by any action attributable to petitioner BALGCO nor
to its owners Barney Chito and Rosela Chito.67 (Citations omitted, emphasis supplied)
This is consistent with the established rule in labor law that the complainant must first establish
the employer-employee relationship to be able to claim that he or she was illegally dismissed.68
The distinction between the employer and an erring managerial officer is likewise present in
sexual harassment cases. Under Section 5 of the Anti-Sexual Harassment Act, the employer is
only solidarity liable for damages with the perpetrator in case an act of sexual harassment was
reported and it did not take immediate action on the matter:
SECTION 5. Liability of the Employer, Head of Office, Educational or Training Institution. — The
employer or head of office, educational or training institution shall be solidarily liable for
damages arising from the acts of sexual harassment committed in the employment, education or
training environment if the employer or head of office, educational or training institution is
informed of such acts by the offended party and no immediate action is taken thereon.
(Emphasis supplied)
This provision thus illustrates that the employer must first be informed of the acts of the erring
managerial officer before it can be held liable for the latter's acts. Conversely, if the employer
has been informed of the acts of its managerial staff, and does not contest or question it, it is
deemed to have authorized or be complicit to the acts of its erring employee.
In this case, Batucan cannot be considered to have been acting on petitioner's behalf when he
sexually harassed respondent. Thus, respondent cannot base her illegal dismissal complaint
against petitioner solely on Batucan's acts. However, even if petitioner had no participation in the
sexual harassment, it had been informed of the incident. Despite this, it failed to take immediate
action on respondent's complaint. Its lack of prompt action reinforced the hostile work
environment created by Batucan.
The delay on petitioner's part is clear. The following are the undisputed sequence of events:
(1) On May 1, 2010, the kissing incident occurred.69
(2) On May 5, 2010, respondent reported the incident to management in the LBC
Head Office.70 Management suggested that instead of resigning, perhaps she could
transfer to another branch. Respondent conceded.
(3) On May 8, 2010, she went back to the LBC Head Office with her mother, Araceli
Palco, to submit her formal complaint. She also reported the incident to the police.71
(4) While respondent was waiting to be transferred to another branch, Araceli Palco
noted that Batucan resumed his duties as usual.72
(5) On May 14, 2010, Palco tendered her resignation after sensing that management
did not act on her complaint.73 In her resignation letter, she stated that she wanted to
look for a more secure workplace.74 In her exit interview, she ranked the following
factors as having caused a strong influence for her to leave: (1) relations with co-
workers; (2) job security; (3) how her supervisor relates to her; and (4) her overall
perception of the company's ability to deal fairly with its associates.75
(6) On June 18, 2010,76 Batucan received a Notice to Explain—41 days after
respondent reported the incident, and one (1) month after she felt constrained to leave
her employment.
(7) On June 19, 2010, Batucan submitted his written explanation.77 It took another
month before the administrative hearing for the complaint was conducted.78 They
heard Batucan only on July 20, 2010, the same date respondent filed her illegal
dismissal complaint.79
(8) On September 27, 2010, Batucan was suspended for 60 days with last warning—
two (2) months after his administrative hearing, and over four (4) months from the time
the complaint was filed.80 During the span of the investigation, there was no showing
that Batucan was preventively suspended.
Clearly, there was unreasonable delay on petitioner's part in acting on respondent's complaint.
Despite its allegations, there is no showing that petitioner acted on respondent's report before
they issued Batucan a Notice to Explain. Thus, the formal investigation is deemed to have
commenced only 41 days after the incident was reported. Petitioner likewise offered no
explanation as to why it took another month before it held an administrative hearing for the case.
Worse, it took petitioner another two (2) months to resolve the matter, even if Batucan's answers
in his administrative hearing did not substantially differ from respondent's allegations. In his
administrative hearing, Batucan had reasoned that he was simply trying to give respondent a
"beso[,]" yet he likewise admitted that he does not usually do that with his team or in the office:
Q: Sabi mo sa inyong written explanation noong June 19, 2010, na kayo po ay masaya lamang
kaya mo siya hinawakan ang kanyang pisngi [sic] at sabay halik, tama po ba ito?
A: Tama po, kasi sa unang pagkakataon nakapunta ako ng opisina ng maaga.
Q: Bakit mo naman hinawakan ang kanyang pisngi at halikan mo sana [sic] iyon noong May 01,
2010?
A: Gusto ko lang sana batiin si Ms. Monica sa pamamagitan ng biso biso.
Q: Kagawian na ba sa team ninyo or sa office na mag biso biso?
A: Hindi, pero sa bahay namin, kaming mag asawa at mga anak ko kahit malaki na sila, mag
biso biso pa rin sa pag-alis at pag dating.
Q: Ibig sabihin nito hindi rin kagawian ninyo ni Ms. Monica Palco na magbiso biso?
A: Hindi talaga, pero malambing ako sa kanila, sa lahat ng mga associates.
Q: Ganun ka ba talaga pag masaya ka, hahalikan mo ang inyong mga kasamahan sa trabaho
kahit walang pahintulot sa kanila, lalo na ang mga babae?
A: Hindi naman, isa lang akong masayahing tao at malambing.
Q: Hindi mo ba naisip na ang inyong ginawa ay isang uri ng sexual harassment?
A: Hindi kasi wala akong intention na halikan ang kanyang labi, at alam ko naman na hindi kami
magkasintahan at may tao din. (Emphasis supplied)81
Given these circumstances, the delay in acting on respondent's case showed petitioner's
insensibility, indifference, and disregard for its employees' security and welfare. In failing to act
on respondent's complaint with prompt and in choosing to let the resolution of the complaint
hang in the air for a long period of time, it had shown that it did not accord her claims the
necessary degree of importance, and at best considered it a minor infraction that could wait.
Petitioner, it appears, belittled her allegations.
Furthermore, during the investigation, Batucan resumed his duties as usual. In the meantime,
respondent consumed her vacation leaves just trying to avoid him while waiting for her transfer
to another branch. Petitioner's acts showed that it was respondent who had to change and
adjust, and even transfer from her place of work, instead of Batucan. Petitioner thus cannot
claim that it did not create a hostile, unfavorable, unreasonable work atmosphere for respondent.
This Court also notes respondent's assertion that petitioner had stated how difficult her
allegations were to prove because there were no witnesses or evidence of bruises.
Respondent's mother, Araceli, stated in her August 5, 2010 Affidavit:82
12. So again, I accompanied her to the main office to submit her resignation letter. At first I told
the HR and the legal staff that we arrived to this decision because we have not found any
development in our complaint against Mr. Batucan. I told them why I said so, because after the
scheduled day of investigation of Mr. Batucan, still he reported for work. "Isnt it that if somebody
is under investigation, he or she will no longer report for work?" That if there is a complaint on
that employee, there should be preventive suspension? I said to the legal staff and he nod his
head, which means yes. And I added, "Did you know how much money we spend for our
transportation every time we come here? We will spend P400.00 for two persons and if only one
will come, P300.00." At least the HR and the legal staff know the reasons why Monica file a
resignation;
13. Then I proceeded to the office of the Area Head and listen to his opinion about the
resignation of Monica. At first, I told him the things I said to the HR and Legal staff. He said to
me that it's not easy to decide about the case of Monica and Mr. Batucan because there is no
evidence such as bruises. So I answered, "Ngano man diay, kon gakson ka ug hagkan,
manlagom diay ka? Ngano man gikulata diay ka? (Translation: "Why would that matter, if you
are kissed, would you have bruises?") No answer from him and he proceeded to another
statement, "We have no witness so it[']s hard to prove the case." Again I answered him, "kon
magbuhat ka ug binastos sa usa ka babaye, nagkinahanglan diay nga naay magtan-aw?
Kanang mga buhata himoon na nimo sa tumang ka pribado nga kanarang kamong duha. Unya
mangita ka ug witness? ["] (Translation: "If you are doing lascivious acts to a woman, would you
need somebody to see you do it? If you are going to do those acts, you will do it where it is
secluded as possible, where there are only two of you. And now, you are looking for a witness?"
[)] He will not answer me. He said that even though Monica resigned, he will pursue the case but
it will take time. He will investigate the co-workers of Monica if it is true that they have beso-
beso. I told him "Unsay beso-beso? (Translation: 'What [sic] beso-beso') between man and
woman while they are alone? Beso-beso is only acceptable when there is an occasion, for
example birthdays, Christmas and New Year, not when no one is around and not in the lips."83
While petitioner did not admit to making these statements, in its Reply filed with the Labor
Arbiter, it stated:
Complainant alleged that according to Mrs. Palco, individual respondent Libradilla told Mrs.
Palco that he cannot immediately act on the case because there was no evidence such as
bruises and no witnesses. Based on Mrs. Palco's affidavit however, individual respondent
Libradilla never said he cannot immediately act on the case. Without admitting the truth hereof,
what individual respondent Libradilla was quoted as saying was that it was not easy to decide
the case because there is no evidence such as bruises and furthermore, even with the
resignation of complainant, he will pursue the case, but it will take time. . .
....
Moreover, complainant accused individual respondent Libradilla as dismissing respondent's act
of kissing complainant on the lips as a mere beso-beso. Based on the abovequoted statement of
Mrs. Palco, and without admitting the truth thereof, individual respondent Libradilla assured Mrs.
Palco of an investigation. He was never quoted as concluding that respondent Batucan's acts
were mere beso-beso.84
Petitioner was explicit enough in denying the statement that it would not immediately act on the
case. Yet it did not expressly deny stating that the case was difficult to decide because there are
no bruises or witnesses.
This Court emphasizes that statements suggesting that a case is weak because there are no
witnesses or bruises are highly insensitive to victims of sexual harassment. In stating that a
sexual harassment case is hard to prove without witnesses or physical manifestations of force,
employers discourage their employees from coming forward with sexual harassment incidents.
They foster an environment in which employees feel that their word cannot be taken against the
word of the perpetrator. In making these statements, the employer lends more credence to the
perpetrator, even without the latter having been questioned or having submitted a written
explanation. It allows the employee to feel that the sexual harassment complaint's resolution had
already been pre-determined against him or her.
Indifference to complaints of sexual harassment victims may no longer be tolerated. Recent
social movements have raised awareness on the continued prevalence of sexual harassment,
especially in the workplace, and has revealed that one of the causes of its pervasiveness is the
lack of concern, empathy, and responsiveness to the situation. Many times, victims are blamed,
hushed, and compelled to accept that it is just the way things are, and that they should either
just leave or move on.
In recognizing the need to address these concerns, the State's policy against sexual harassment
has been strengthened through Republic Act No. 11313, otherwise known as the Safe Spaces
Act. This law has expanded the definition of gender-based sexual harassment in the
workplace85 and has added to the duties of an employer as to its prevention, deterrence, and
punishment. It explicitly requires that complaints be investigated and resolved within 10 days or
less upon its reporting.86 It likewise expressly provides for the liability of employers87 and duties
of co-workers as to sexual harassment.88 The law likewise specifies the confidentiality of
proceedings,89 and the issuance of a restraining order for the offended person.90 Moreover, it
allows local government units to impose heavier penalties on perpetrators.91
While this law does not apply to this case as it was enacted after the commission of Batucan's
acts, its principles emphasize the need to accord more importance to complaints of sexual
harassment and recognize the severity of the offense.92
In any case, this Court will not hesitate in granting the affirmative relief that is due respondent
under the law. Under the Anti-Sexual Harassment Act, she may file a separate action for any
affirmative relief for sexual harassment:
SECTION 6. Independent Action for Damages. — Nothing in this Act shall preclude the victim of
work, education or training-related sexual harassment from instituting a separate and
independent action for damages and other affirmative relief.
Petitioner's insensibility to respondent's sexual harassment case is a ground for constructive
dismissal. In this instance, it cannot be denied that respondent was compelled to leave her
employment because of the hostile and offensive work environment created and reinforced by
Batucan and petitioner. She was thus clearly constructively dismissed.
WHEREFORE, in view of the foregoing, the Petition is DENIED. This the Court of Appeals May
13, 2014 Decision and February 10, 2015 Resolution are AFFIRMED. Respondent Monica C.
Palco is found to have been constructively dismissed. LBC Express-Vis, Inc., is hereby adjudged
liable to Monica C. Palco for separation pay, backwages, moral damages, exemplary damages,
and attorney's fees, as awarded by the National Labor Relations Commission in its Decision
dated May 31, 2012. It is likewise held solidarily liable with Arturo A. Batucan for any other
damages the latter is held liable for on account of his acts of sexual harassment against
respondent.
SO ORDERED.
 G.R. No. 241865, February 19, 2020
TRIFON B. TUMAODOS, PETITIONER, v. SAN MIGUEL YAMAMURA PACKAGINC
CORPORATION, RESPONDENT
DECISION
INTING, J.:
Before the Court is a Petition for Review1 under Rule 45 of the Rules of Court assailing the
Decision2 dated August 9, 2017 and the Resolution3 dated April 19, 2018 of the Court of Appeals
(CA) in CA-G.R. SP No. 10322. The assailed Decision granted the petition for certiorari filed by
San Miguel Yamamura Packaging Corporation (respondent), and nullified and set aside the
Decision4 dated March 1, 2016 and the Resolution5 dated May 18, 2016 of the National Labor
Relations Commission (NLRC) in NLRC Case No. VAC-02-000081-2016 as well as all other
issuances and proceedings rendered in the same case.
The assailed Resolution, on the other hand, denied the Motion for Reconsideration 6 filed by
Trifon B. Tumaodos (petitioner).
The Antecedents
Petitioner became an employee of respondent on October 6, 1988. As an employee of
respondent, petitioner became a member of SMC Employees & Its Subsidiaries Multi-Purpose
Cooperative (Cooperative).7
Due to its plant reorganization, respondent implemented an Involuntary Separation Program
effective November 15, 2014.8 Petitioner was one of the employees who availed himself of the
program. His separation package was computed at P3,080,244.66, but respondent withheld the
amount of P1,400,000.00 on behalf of the Cooperative, to which petitioner allegedly had an
outstanding indebtedness.9
On October 13, 2014, respondent paid out petitioner's separation benefits, less the amount
withheld. Petitioner signed a Receipt and Release in favor of respondent, but he made a
notation that the amount of P1,400,000.00 was still subject to verification. 10
On November 28, 2014, respondent received a letter from petitioner wherein he claimed that he
no longer had any outstanding obligation to the Cooperative. Thus, petitioner demanded
respondent to release to him the withheld amount. On February 13, 2015, respondent also
received a letter from the Cooperative, disputing petitioner's assertions and also claiming
entitlement to the withheld amount.
Due to petitioner's and the Cooperative's conflicting claims, respondent, on March 17, 2015, filed
a Complaint for Interpleader with Consignation before Branch 55, Regional Trial Court (RTC),
Mandaue City.11
Meanwhile, on April 22, 2015, petitioner filed a complaint before the NLRC Regional Arbitration
Branch No. VII for non-payment of separation pay and damages. The case was docketed as
NLRC RAB VII 04-1000-15. 12 Considering that settlements failed, the Labor Arbiter (LA) directed
the parties to simultaneously file their respective position papers. 13
In the [Petitioner's] Position Paper,14 petitioner alleged that on March 13, 2007, he applied for an
ordinary loan with the Cooperative in the amount of P250,000.00. When the loan was granted,
respondent had been deducting from his salary the amount of P5,091.00 per payday, or a total
of P10,182.00 per month, even though he had not so authorized respondent to make deductions
for the payment of his loan with the Cooperative. Deductions were made from petitioner's salary
since March 2007 until June 2011, when respondent allegedly noticed certain anomalous and
unscrupulous practices of the Cooperative. For this reason, respondent issued a
Memorandum15 dated June 23, 2011 informing the Cooperative that it would no longer
accommodate deductions on the employees' payrolls.16
Petitioner claimed that respondent made deductions totaling P529,464.00, which was more than
double the sum that he owed to the Cooperative. He averred that he had not only paid his loan
in full but had made excess payment in the amount of P279,464.00, which respondent must
return.17
Petitioner further alleged that sometime in the early part of 2011, he applied for a loan with
Home Development and Mutual Fund (Pag-IBIG). As a requirement for the Pag-IBIG loan, he
requested for a Certificate of Employment and Compensation from respondent. However, the
Human Resource (HR) Manager refused to issue the document unless petitioner would sign
what appeared, then, to be a blank form, but later turned out to be an Authority to Deduct.
Petitioner signed the form in order that he could obtain the required employment certificate. 18
Anent the deduction of P1,400,000.00 from his separation pay, petitioner alleged that
respondent merely relied on the purported Authority to Deduct without seeing the loan
documents or determining his total obligations. Petitioner asserted that the Authority to Deduct
had suspicious discrepancies; that the loans reflected therein were fictitious and fabricated; and
that the Cooperative and the HR Manager took advantage of the existing deductions from
petitioner's salary to make it appear that petitioner obtained a loan from the Cooperative, when
in truth, he did not. Petitioner averred that the Cooperative could not have known about the
P5,091.00 deduction in his salary, unless respondent connived with it in disclosing such amount
and allowed it to unduly "piggyback" on the same deduction as if it were in payment of the
alleged fictitious loans appearing in the Authority to Deduct.19
For its part, respondent alleged in its Position Paper 20 that it had a long-standing agreement with
the Cooperative, whereby it undertook to deduct the amount of monthly amortizations from the
salary of the employees who were members of the Cooperative, subject to the company's
policies on deduction.21 This agreement was formalized in the Memorandum of Agreement
(MOA)22 dated May 14, 2013. After the execution of the MOA, the Cooperative submitted to the
HR Department several Authorities to Deduct signed by the employee-members concerned,
including petitioner, to effect the implementation of the payroll deductions. 23 In view of such
authority from the employees and due to its obligations under the MOA to make the subject
deductions, respondent withheld a portion of petitioner's separation pay. 24
Petitioner, however, asserted that he no longer had any obligation to the Cooperative. He thus
demanded the release of the withheld amount. At the same time, the Cooperative also claimed
entitlement to the same amount and invoked the provisions of the MOA and the Cooperative
Code of the Philippines. Moreover, the Cooperative filed a complaint for collection of sum of
money before the Cooperative Development Authority Voluntary Arbitration Secretariat in
relation to petitioner's alleged outstanding obligations to it.
Respondent averred that it acted in good faith when it withheld the sum supposedly due to
petitioner or to the Cooperative in the hope of determining who between the two is entitled to
such amount.25
On October 29, 2015, the LA rendered a Decision,26 the dispositive portion of which reads:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered ordering the
respondent corporation SAN MIGUEL YAMAMURA PACKAGING CORPORATION to pay
complainant the following:
Refund of the deductions since March 2007 P 529,464.00
Separation Pay Withheld P 1,400.000.00
Plus 6% interest P 115,767.84
Moral Damages P 50,000.00
Exemplary Damages P 30,000.00
P 2,125,231.84
10% Attorneys Fees P 212,523.18
Or in the total aggregate sum of TWO MILLION THREE HUNDRED THIRTY SEVEN
THOUSAND SEVEN HUNDRED FIFTY FIVE PESOS AND 2/100 (P2,337,755.02)[.]
Other claims are denied for lack of merit and basis.
SO ORDERED.27
Respondent appealed to the NLRC. It posted the full amount of the judgment award but
subsequently moved to reduce the required bond on the ground that the amount of
P1,400,000.00 had already been consigned before the RTC in connection with the Complaint for
Interpleader with Consignation it previously filed.28
On March 1, 2016, the NLRC rendered its Decision  affirming the ruling of the LA. On March 18,
29
2016, the NLRC issued a Resolution30 which merely noted the motion to reduce
bond.31 Subsequently, in the Resolution32 dated May 18, 2016, the NLRC denied respondent's
motion for reconsideration with respect to both its Decision and its inaction on the motion to
reduce bond.
Aggrieved, respondent filed a petition for certiorari with the CA. Respondent contended, among
others, that the NLRC committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it held that the LA had jurisdiction over the case, notwithstanding the fact that
petitioner's asserted claim has no reasonable causal connection with the employer-employee
relationship, and that the ultimate issue at hand is the validity or authority to deduct or the lack
thereof which should be brought before the RTC.33 Respondent also averred that the
interpleader case was filed prior to the labor case and was the more appropriate action; hence,
the labor case should be dismissed and the resolution of the issue should be deferred to the
RTC in which the interpleader case was pending.34 Respondent further argued that the NLRC
committed grave abuse of discretion when it affirmed the order for the refund of P529,464.00,
notwithstanding that it is contrary to the principle of unjust enrichment and that petitioner was
already barred by estoppel.35
In resolving the petition for certiorari, the CA particularly concentrated on the issue of whether
the labor tribunals had jurisdiction to resolve the instant case. Answering in the negative, the CA
ruled that the issues raised and the reliefs prayed for by petitioner in his position paper are not
cognizable by the labor tribunals.36 The dispositive portion of the CA assailed Decision dated
August 9, 2017 reads:
WHEREFORE, the Petition is GRANTED. The Decision and Resolution dated March 1, 2016
and May 18, 2016, respectively, as well as all other issuances and proceedings rendered in
NLRC Case No. VAC-02-000081-2016, are NULLIFIED and SET ASIDE.
SO ORDERED.37
The CA found that petitioner was not seeking to enforce his rights under the Labor Code, other
labor statutes, or any collective bargaining agreement, and his claims could not be resolved by
referring to labor law provisions.38 On the contrary, the CA held that the money claim presented
before the labor tribunal relates, on the one hand, to petitioner's supposed financial obligations
to the Cooperative, if there were still any; and on the other hand, to respondent's contractual
obligation to the Cooperative pursuant to the MOA provision wherein respondent undertook to
deduct any unpaid loan balances from the final pay of the borrower-employee in the event of
his/her retirement, resignation, or termination. 39 To the CA, the determination of these matters
does not require the expertise in labor management relations, wage structures or other terms
and conditions of employment; rather, it entails the application of civil law, particularly on
obligations and contracts.40
Hence, this petition.
Assignment of Errors
I
AS A MATTER OF LAW, LABOR COURTS HAVE JURISDICTION OVER, AND THE
AUTHORITY TO AWARD, EMPLOYMENT BENEFITS SUCH AS SEPARATION PAY. THUS,
THE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT THE LABOR COURT
HAS NO JURISDICTION OVER THE SUBJECT MATTER.
II
THE HONORABLE COURT ERRED WHEN IT HELD THAT THE ISSUES IN THIS CASE DO
NOT REQUIRE THE APPLICATION OF ANY LABOR LAWS.41
The Court's Ruling
The petition is bereft of merit.
In cases involving workers and their employers, the delineation between the jurisdiction of the
regular courts and that of the labor courts has always been a matter of dispute.42 In this case, the
Court agrees with the CA that it is the regular courts that have jurisdiction over petitioner's
claims.
Not all controversies or money claims by an employee against the employer or vice versa fall
within the exclusive jurisdiction of the LA. 43 With regard to money claims and damages, Article
224 (formerly Article 217) of the Labor Code, as amended, bestows upon the LA original and
exclusive jurisdiction over cases filed by workers involving wages, among others, if accompanied
by a claim for reinstatement;44 all claims, except those for Employees Compensation, Social
Security, Medicare and maternity benefits, arising from employer-employee relations involving
an amount exceeding P5,000.00 regardless of whether accompanied with a claim for
reinstatement;45 and claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relations.46
As can be gleaned above, the jurisdiction of the LA over money claims and damages is confined
to those cases which are either accompanied by a claim for reinstatement or arising from
employer-employee relations. Here, the Court finds that petitioner's claims do not fall under any
of these cases.
In ruling that the determination of the case is beyond the competence of the labor tribunals, the
CA found that although employment relations existed between respondent and petitioner, and
the subject of the complaint before the LA was petitioner's money claims against respondent,
such money claims did not involve and did not arise out of such employment
relationship.47 Hence, the CA held that the jurisdiction over petitioner's claims belonged to the
RTC, and not the labor tribunals.
The Court agrees.
In Indophil Textile Mills, Inc. v. Engr. Adviento,48 the Court declared:
While we have upheld the present trend to refer worker-employer controversies to labor courts in
light of the aforequoted provision, we have also recognized that not all claims involving
employees can be resolved solely by our labor courts, specifically when the law provides
otherwise. For this reason, we have formulated the "reasonable causal connection rule," wherein
if there is a reasonable causal connection between the claim asserted and the employer-
employee relations, then the case is within the jurisdiction of the labor courts; and in the absence
thereof, it is the regular courts that have jurisdiction. Such distinction is apt since it cannot be
presumed that money claims of workers which do not arise out of or in connection with their
employer-employee relationship. and which would therefore fall within the general jurisdiction of
the regular courts of justice, were intended by the legislative authority to be taken away from the
jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. 49
To the Court, petitioner's claims have no "reasonable causal connection" with his employment
relationship with respondent. It bears to point out that the case that petitioner filed was neither a
complaint for illegal dismissal nor a claim for reinstatement. His complaint was for alleged non-
payment of separation benefits and damages. It is notable, however, that respondent never
denied petitioner's entitlement to his separation pay. In fact, on October 13, 2014, respondent
paid out petitioner's separation package, except that it withheld the amount of P1,400,000.00,
which, purportedly, was his outstanding indebtedness to the Cooperative. 50 Petitioner, in turn,
signed a Receipt and Release in favor of respondent but made notation that the amount of
P1,400,000.00 was still subject to verification. 51 Thus, by signing the Receipt and Release,
petitioner had in fact acknowledged that he had been paid all amounts due him comprising his
separation benefits, except that he questioned the withholding of the P1,400,000.00 as he
claimed that he no longer had existing loan obligations to the Cooperative. It appears, thus, that
the principal relief sought by petitioner in his complaint was not the payment of his separation
package but the release to him of the withheld amount of P1,400,000.00, to which both he and
the Cooperative claimed entitlement. In addition, he also sought the return of the alleged excess
deductions made for his 2007 loan in the amount of P279,464.00.
Ergo, given that the disputed amount of P1,400,000.00 and the alleged excess deductions of
P279,464.00 both relate to petitioner's alleged indebtedness to the Cooperative and not to
respondent, it becomes apparent that the controversy involves debtor-creditor relations between
petitioner and the Cooperative, rather than employer-employee relations between respondent
and petitioner. Evidently, the employer-employee relationship between respondent and petitioner
in this case is merely incidental and the principal relief sought by petitioner can be resolved not
by reference to the Labor Code or other labor relations statute or a collective bargaining
agreement but by the general civil law.
Thus, as held in Halagueña, et al. v. PAL, Inc.:52
Not every controversy or money claim by an employee against the employer or vice-versa is
within the exclusive jurisdiction of the labor arbiter. Actions between employees and employer
where the employer-employee relationship is merely incidental and the cause of action precedes
from a different source of obligation is within the exclusive jurisdiction of the regular court. Here,
the employer-employee relationship between the parties is merely incidental and the cause of
action ultimately arose from different sources of obligation, i.e., the Constitution and CEDAW.
Thus, where the principal relief sought is to be resolved not by reference to the Labor Code or
other labor relations statute or a collective bargaining agreement but by the general civil law, the
jurisdiction over the dispute belongs to the regular courts of justice and not to the labor arbiter
and the NLRC. In such situations, resolution of the dispute requires expertise, not in labor
management relations nor in wage structures and other terms and conditions of employment,
but rather in the application of the general civil law. Clearly, such claims fall outside the area of
competence or expertise ordinarily ascribed to labor arbiters and the NLRC and the rationale for
granting jurisdiction over such claims to these agencies disappears.53
Here, since both petitioner and the Cooperative claimed entitlement to the withheld amount of
P1,400,000.00, respondent appropriately filed a Complaint for Interpleader with Consignation
before Branch 55 of the RTC of Mandaue City. Under Section 1, Rule 62 of the Rules of Court, a
person may file a special civil action for interpleader if conflicting claims are made against
him/her/it over a subject matter in which he/she/it has no interest. The action is brought against
the claimants to compel them to litigate their claims among themselves. Section 1, Rule 62 of
the Rules of Court provides:
SECTION 1. When interpleader proper. - Whenever conflicting claims upon the same subject
matter are or may be made against a person who claims no interest whatever in the subject
matter, or an interest which in whole or in part is not disputed by the claimants, he may bring an
action against the conflicting claimants to compel them to interplead and litigate their several
claims among themselves.
It bears emphasis that the interpleader case before the RTC was filed prior to petitioner's filing of
his complaint before the LA. The fact that respondent filed the interpleader case is even an
indication of good faith on its part as both petitioner and the Cooperative would be given the right
to have their respective claims ventilated before the court. Contrarily, the Cooperative who is not
a party to the labor complaint before the LA would not have the opportunity to oppose or refute
petitioner's unilateral claims therein. In addition, the fact that respondent had consigned the
amount of P1,400,000.00 in the RTC where the interpleader case was pending demonstrates
the lack of intention on its part to deprive petitioner of such amount, if he was indeed the one
entitled to it.
Moreover, it is also worthy to mention that neither petitioner nor respondent presented before the
LA the purported loan agreement between petitioner and the Cooperative. 54 To the Court, given
that the disputed sum of P1,400,000.00 pertained to the alleged outstanding loan obligation of
petitioner to the Cooperative, it was necessary that all documents pertinent thereto, most
especially the loan agreement itself, be presented before the adjudicating body, assessed, and
taken into consideration in determining who is entitled to the amount contested. As correctly
submitted by respondent in his Comment 55 to the petition, a just resolution of petitioner's
complaint cannot be done without affording the Cooperative a fair and equal opportunity to prove
its entitlement to the amount of P1,400,000.00. 56
Thus, the CA aptly ruled:
When the Corporation filed its Position Paper, it wasted no time to inform the labor arbiter that
prior to Tumaodos' filing of his money claim complaint, there was already an Interpleader with
Consignation case before the RTC, since the amount subject of Tumaodos' money claim was
also being claimed by the Cooperative. This fact should have cautioned the [LA], and later the
NLRC, that the subject matter of the case is beyond their competence.
Noteworthy, Tumaodos himself admitted being a member of the Cooperative and having
incurred a loan therefrom in 2007. Considering these circumstances, the determination of
Tumaodos' entitlement to the amount he was claiming could not, and should not just be made to
rest on his bare allegation. Instead, the adjudicating body should entail the presentation of loan
documents, payment slips, and other documents to support Tumaodos' and the Cooperative's
respective claims. The [LA] and the NLRC's area of competence or expertise simply do not
encompass these matters; hence, the said labor tribunals should have prudently dismissed the
case and yielded to the jurisdiction of the RTC. x x x57
The Court also finds that the LA and the NLRC erred in ordering the refund to petitioner of the
amount of P529,464.00, the total deductions on his salary which started in March 2007.
According to petitioner, respondent made total deductions amounting to P529,464.00 and he
had made an excess payment of P279,464.00, which respondent must return. Thus, petitioner
had in fact admitted that he was indebted to the Cooperative but only for the amount of
P250,000.00; yet, the LA and the NLRC both found proper the refund of P529,464.00 based on
their conclusion that this whole amount constituted an illegal deduction on his salary. In any
case, the Court finds that the refund of either P529,464.00 or P279,464.00 has no sufficient
basis. To reiterate, the presentation of all pertinent loan documents is necessary in order to
arrive at a complete and just resolution of the case. Apparently, this cannot be possible in this
labor complaint filed by petitioner against respondent considering that the Cooperative is not
afforded the opportunity to present its own evidence and the determination of the case would be
based merely on the unilateral claims of petitioner.
In sum, the determination of petitioner's case is beyond the competence of the labor tribunals for
the following reasons: 1) petitioner's claims have no reasonable causal connection with his
employment relationship with respondent; 2) the Cooperative is not a party to the labor
complaint and would therefore be deprived of the opportunity to plead its claims; and 3) the
Interpleader with Consignation case before the RTC, which was filed by respondent prior to
petitioner's labor complaint, was the proper forum to ventilate the claimants' respective claims
over the disputed amount of P1,400,000.00.
WHEREFORE, the Petition for Review is DENIED. The Decision dated August 9, 2017 and the
Resolution dated April 19, 2018 of the Court of Appeals in CA-G.R. SP No. 10322
are AFFIRMED.
SO ORDERED.