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 Respondent-Union, the National Federation of Sugar Workers-Food and General Trades, filed an action against petitioner
Hawaiian Phil Co. for claims under RA 809 (The Sugar Act of 1952). Respondent Union alleged that they have never availed of
the benefits due them under the law.
 Under the said act: “the proceeds of any increase in participation granted to planters under this Act and above their present
share shall be divided between the planter and his laborers in the following proportions. 60% of the increase participation for the
laborers and 40% for the planters.
 Petitioner argued that respondent Labor Arbiter Gulmatico has no jurisdiction over the case considering their case does not
fall under those enumerated in Article 217 of the Labor Code which provides the jurisdiction of Labor Arbiters and the
Commission. Further, petitioner contends that it has no ER-EE relationship with the respondent sugar workers and that respondent
union has no cause of action because it is the planters-employers who is liable to pay the worker’s share under LOI No. 854.

Issue1: Whether public respondent Labor Arbiter has jurisdiction to hear and decide the case against petitioner
While jurisdiction over controversies involving agricultural workers has been transferred from the Court of Agrarian Relations to the
Labor Arbiters under the Labor Code, said transferred jurisdiction is however, not without limitations. The controversy must fall under
one of the cases enumerated under the Labor Code which arise out of or are in connection with an ER-EE relationship

In the CAB, there is no ER-EE relationship between petitioner company and respondent union. Hence, respondent Labor Arbiter has
no jurisdiction to hear and decide the case against petitioner.

Issue1: Whether respondent union has a cause of action

To have a cause of action, the claimant must show that he has a legal right and the respondent a correlative duty in respect thereof,
which the latter violated by some wrongful act or omission.

In the instant case, it would show that the payment of the worker’s share is liability of the planters-employers, and not of the petitioner
milling company. It is disputed that petitioner milling company has already distributed to its planters their respective shares. Hence, it
has fulfilled its part and has nothing more to do with the subsequent contribution by the planters of the worker’s share.


Austria vs NLRC (August 16, 1999)

Petitioner: Pastor Dionisio Austria

Private respondent Central Philippine Union Mission Corporation of the Seventh Day Adventists (SDA) is a religious corporation
under Philippine law and is represented by the other private respondents. Petitioner was a pastor of SDA until 1991, when his services
were terminated.
Austria worked with SDA for 28 years. He started as a literature evangelist in 1963 then got promoted several times. He became the
Assistant Publishing Director in the West Visayan Mission of the SDA in 1968 and Pastor in the West Visayan Mission in 1972.
Finally in 1989, he was promoted as District Pastor of the Negros Mission of the SDA.
On various occasions from August to October 1991, Austria received several communications from Mr. Ibesate, treasurer of the
Negros Mission, asking the former to admit accountability and responsibility for the church tithes and offerings collected by his wife,
Thelma Austria, in his district and to remit the same to the Negros Mission.
In his answer, petitioner said that he should not be made accountable since it was private respondent Pastor Buhat and Mr. Ibesate who
authorized his wife to collect the tithes and offerings since he was very sick to do the collecting at that time.
Thereafter, petitioner went to the office of Pastor Buhat, president of the Negros Mission, and asked for a convention to settle the
dispute between petitioner and Pastor Rodrigo. Pastor Buhat denied the request of petitioner because there was no quorum. The two
exchanged heated arguments until petitioner left the office. However, while on his way out, he heard Pastor Buhat saying, "Pastor daw
inisog na ina iya (Pador you are talking tough)” which prompted him to go back and overturn Pastor Buhat’s table, scatter books in the
office, bang Buhat’s attaché case and throw the phone.
Petitioner received a letter inviting him and his wife to attend the meeting to discuss the non-remittance of church collection and the
events that transpired between him and Pastor Buhat. A fact-finding committee was created to investigate petitioner. Subsequently,
petitioner received a letter of dismissal citing misappropriation of denominational funds, willful breach of trust, serious misconduct,
gross and habitual neglect of duties, and commission of an offense against the person of employer's duly authorized representative, as
grounds for the termination of his services.
(Nakakainis ‘tong part na ‘to dahil appeal nang appeal! Hahaha)
1) Petitioner filed a complaint with the Labor Arbiter for illegal dismissal. = decision rendered in favor of petitioner
2) SDA appealed to NLRC = decision rendered in favor of respondent
3) Petitioner filed motion for reconsideration = reinstated decision of Labor Arbiter
4) SDA filed motion for reconsideration = decision rendered in favor of respondent (grabe ang kulit!)
Hence, this recourse to the court by the petitioner.
1) WON the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint filed by petitioner against the SDA;
2) WON the termination of the services of petitioner is an ecclesiastical affair, and, as such, involves the separation of church and
1) YES.
2) NO.
Ratio Decidendi:
The principle of separation of church and state finds no application in this case. The rationale of the principle of the separation of
church and state is summed up in the familiar saying, "Strong fences make good-neighbors." The idea advocated by this principle is to
delineate the boundaries between the two institutions and thus avoid encroachments by one against the other because of a
misunderstanding of the limits of their respective exclusive jurisdictions.
The case at bar does not concern an ecclesiastical or purely religious affair as to bar the State from taking cognizance of the same. An
ecclesiastical affair is "one that concerns doctrine, creed, or form of worship of the church, or the adoption and enforcement within a
religious association of needful laws and regulations for the government of the membership, and the power of excluding from such
associations those deemed unworthy of membership. Examples of this so-called ecclesiastical affaits are proceedings for
excommunication, ordinations of religious ministers, administration of sacraments and other activities with attached religious
significance. The case at bar does not even remotely concern any of the given examples. What is involved here is the relationship of
the church as an employer and the minister as an employee. It is purely secular and has no relation whatsoever with the practice of
faith, worship or doctrines of the church. The matter of terminating an employee, which is purely secular in nature, is different from
the ecclesiastical act of expelling a member from the religious congregation.


G.R. No. 100222-23. September 14, 1993

Facts: Subsequent to the initial pleading filed by respondent-employees before the regional director of DOLE for redress in regard to
underpaid wages and non-payment of benefits, petitioners were instructed to allow the inspection of the employment records of
respondents on April 4, 1989. However, no inspection could be done on that date on account of the picket staged by other workers. At
the re-scheduled examination after closure of petitioners' business on April 16, 1989, instead of presenting the payrolls and daily time
records of private respondents, petitioner Peter Po submitted a motion to dismiss on the supposition that the regional director has no
jurisdiction over the case because the employer-employee relationship had been served as a result of the closure of petitioners'
business, apart from the fact that each of the claims of private respondents exceeded the jurisdictional limit of P5,000.00 pegged by
Republic Act No. 6715 or the New Labor Relations Law.

Issue: Who between the regional director of DOLE and the labor arbiter has jurisdictional competence over the complaint of private
respondents? To answer this will be to evaluate what will be the applicable law to the complaint, Executive Order No. 111 or Republic
Act No. 6715?

Ruling: Section 2 of EO No. 111, promulgated on December 24, 1986, which amended Article 128(b) of the Labor Code gives
concurrent jurisdiction to both the Secretary of Labor (or the various regional directors) and the labor arbiters over money claims
among the other cases mentioned by Article 217 of the Labor Code. This provision merely confirms/reiterates the
enforcement/adjudication authority of the Regional Director over uncontested money claims in cases where an employer-employee
relationship still exists.
However, with the enactment of Republic Act No. 6715, which took effect on March 21, 1989 or seven days after the complaint at bar
was filed on March 14, 1989, Articles 129 and 217 of the Labor Code were amended, there is no doubt that the regional directors can
try money claims only if the following requisites concur: (1) the claim is presented by an employee or person employed in domestic or
household service, or househelper under the code; (2) the claimant, no longer being employed, does not seek reinstatement; and (3) the
aggregate money claim of the employee or housekeeper does not exceed five thousand pesos (P5,000.00). Thus, the power to hear and
decide employees' claims arising from employer-employee relations, exceeding P5,000.00 for each employee should be left to the
Labor Arbiter as the exclusive repository of the power to hear and decide such claims.

In the instant case, a simple examination of the labor arbiter's impugned order dated September 25, 1989 readily shows that the
aggregate claims of each of the twenty-five employees of petitioner are above the amount of P5,000.00 fixed by Republic Act No.
6715. Therefore, the regional director had no jurisdiction over the case. Hence, the petition is granted and the public respondent is
directed to refer the workers' money claims to the appropriate Labor Arbiter for proper disposition.

RUBBER world v. NLRC [G. R No. 128003, July 26, 2000]

FACTS: Petitioner Rubberworld, Inc filed with the DOLE a notice of temporary shutdown of operation; but even before the effectivity
of such, was forced to prematurely shutdown its operation. Private Respondents filed with the NLRC a petition for illegal dismissal
and non- payment of separation pay. Rubberworld then filed the SEC a petition for declaration of suspension of payments with a
proposed rehabilitation plan. SEC then ordered an order, stating that “all action for claims against Rubberworld Philippines, Inc.
pending before any court, tribunal, office, board, body, Commission or sheriff are hereby deemed SUSPENDED.’’ Petitioner
submitted to the labor arbiter a motion to suspend the proceedings invoking the SEC order. The Labor arbiter ignored the motion and
thereafter rendered a decision finding Rubberworld quality of illegal shutdown ordering it to pay separation pay; and moral and
exemplary damages. On appeal, the NLRC affirmed the decision with modification deleting the award for moral and exemplary

ISSUE: W/N the DOLE, Labor arbiter, or NLRC may legally act on claims despite an order of the SEC suspending all actions against
a company under rehabilitation by a management committee.

HELD: Yes. PD 902-A is clear that “ all action for claims against corporation, partnerships or association under management or
receivership pending before any court, tribunal, board or body shall be suspended accordingly.’’ The law did not make any exception
in favor of labor claims. The justification for such to enable the management committee to exercise its powers free from interference
that might hinder or prevent the “rescue’’ of the debtor company. To allow the labor case to proceed would open the defeat the rescue
effort of the management committee. Even if an award is given, the ruling could not enforce as long as petitioner is under management



 Private Respondent Dante Villanueva was employed as service foreman by petitioner Hagonoy when he was indefinitely
suspended and thereafter dismissed for abandonment of work and conflict of interest
 Villanueva filed a complaint for illegal dismissal, illegal suspension and underpayment of wages and emergency cost of
living allowance against Hagonoy with the Ministry of Labor and Employment in San Fernando, Pampanga
 Petitioner Hagonoy moved for dismissal on the ground of lack of jurisdiction. Being government entity, its personnel are
governed by the provisions of the Civil Service Law and not by the Labor Code. And the protests concerning the lawlessness of
dismissal from service fall within the jurisdiction of the Civil Service Commission and not the Ministry of Labor and
 The Labor Arbiter rendered a decision on favor of Villanueva
 NLRC affirmed the decision of the Labor Arbiter. A “Writ of Execution” was issued by the Labor Arbiter to garnish petitioner
Hagonoy’s deposits with the planters Development Bank.
 Hagonoy filed a “Motion to Quash the Writ of Execution with Application for Writ of Preliminary Injunction”. NLRC denied
the application.

Issue: Whether local water districts are GOCC whose employees are subject to the provisions of the Civil Service Law

The Labor Arbiter, in asserting that it has jurisdiction over the employees of Hagonoy, relied on P.D. No. 198, known as “Provincial
Water Utilities Act of 1973” which exempts employees of water districts from the application of the Civil Service Law. However, the
Labor Arbiter failed to take into account that P.D. 1479 wiped away the said exemption

Moreover, the NLRC relied upon Article 9, Section 2, of the 1987 Constitution which provides that: “[T]he Civil Service embraces ...
government owned or controlled corporations with original charters.”

At the time the dispute in the CAB arose, and at the time the Labor Arbiter rendered its decision (which is on March 17, 1986), the
applicable law is that the Labor Arbiter has no jurisdiction to render a decision that he in fact rendered. By the time the NLRC
rendered its decision (August 20, 1987), the 1987 Constitution has already come into effect. The SC believes that the 1987
Constitution does not operate retroactively as to confer jurisdiction upon the Labor Arbiter to render a decision, which was before
outside the scope of its competence.

Therefore, a decision rendered by the Labor Arbiter without jurisdiction over the case is a complete nullity, vesting no rights and
imposing no liabilities. Villanueva, if he so wishes, may refile this complaint in an appropriate


CORPORATION, respondents.
[G.R. No. 124193. March 6, 1998]


The seven petitioners, William Dayag,, filed a complaint for illegal dismissal, non-payment of wages, overtime pay, premium
pay, holiday pay, service incentive leave, 13th month pay, and actual, moral and exemplary damages against Alfredo Young, a building
contractor doing business under the firm name Young’s Construction. They filed the complaint with the NCR Arbitration Branch of the
NLRC. The case was subsequently assigned to Labor Arbiter Canizares. According to the petitioners, they were hired by Young to
work as tower crane operators at the latter’s construction site in San Juan,

Metro Manila then they were transferred to Cebu City to work at the construction of his Shoemart Cebu project. The petitioners left
Cebu for Manila purportedly due to harassment by Young. Instead of attending the initial hearings set by the labor arbiter, Young filed
a motion to transfer the case to the Regional Arbitration Branch, Region VII of the NLRC. He claimed that the workplace where
petitioners were regularly assigned was in Cebu City and that, in consonance with Section 1(a) of Rule IV of the New Rules of
Procedure of the NLRC, the case should have been filed in Cebu City. The labor arbiter, agreeing that petitioners’ workplace when the
cause of action accrued was Cebu City, granted Young’s motion and ordered the transmittal of the case to the regional arbitration
branch of Region VII.

The petitioners promptly appealed said order to the NLRC, which, however, dismissed the same for lack of merit. Hence, the recourse
to this Court by petitioners.


Whether or not the proper venue is at Cebu City, being the workplace of the complainants


No. In the recent case of Sulpicio Lines, Inc. vs. NLRC this Court held that the question of venue essentially pertains to the trial and
relates more to the convenience of the parties rather than upon the substance and merits of the case. It underscored the fact that
the permissive rules underlying provisions on venue are intended to assure convenience for the plaintiff and his witnesses and to
promote the ends of justice. With more reason does the principle find applicability in cases involving labor and management because
of the doctrine well-entrenched in our jurisdiction that the State shall afford full protection to labor. The rationale for the rule is
obvious. The worker, being the economically-disadvantaged party — whether as complainant/petitioner or as respondent, as the case
may be, the nearest governmental machinery to settle the dispute must be placed at his immediate disposal, and the other party is not
to be given the choice of another competent agency sitting in another place as this will unduly burden the former. In fact, even in cases
where venue has been stipulated by the parties, this Court has not hesitated to set aside the same if it would lead to a situation so
grossly inconvenient to one party as to virtually negate his claim. In the case at hand, the ruling specifying the National Capital Region
Arbitration Branch as the venue of the present action cannot be considered oppressive to Young. His residence in Corinthian
Gardensalso serves as his correspondent office. Certainly, the filing of the suit in the National Capital
Region Arbitration Branch in Manila will not cause him as much inconvenience as it would the petitioners, whoare now residents of
Metro Manila, if the same was heard in Cebu. Hearing the case in Manila would clearly expedite proceedings and bring about the
speedy resolution of instant case.



 Respondent Abraham Tumala, Jr. was salesman petitioner company in Davao City. In the annual “Sumakwel” contest
conducted by the company, he was declared the winner of the “Lapu-Lapu Award” for his performance as top salesman of the
year, an award which entitled him to a prize of a house and lot. Petitioner company, despite demands, have unjustly refused to
deliver said prize.
 It was alleged that in 1980, petitioner company, in a manner oppressive to labor and without prior clearance from the
Ministry of Labor, arbitrarily and illegally terminated his employment. Hence, Tumala filed a complaint in the CFI Davao and
prayed that petitioner be ordered to deliver his prize of house and lot or its cash equivalent, and to pay his back salaries and
separation benefits.
 Petitioner moved to dismiss the complaint on grounds of lack of jurisdiction. Respondent Tumala maintains that the
controversy is triable exclusively by the court of general jurisdiction

Issue: Whether it is the court of general jurisdiction and not the Labor Arbiter that has exclusive jurisdiction over the recovery of
unpaid salaries, separation and damages

SC ruled that the Labor Arbiter has exclusive jurisdiction over the case. Jurisdiction over the subject matter is conferred by the
sovereign authority which organizes the court; and it is given by law. Jurisdiction is never presumed; it must be conferred by law
in words that do not admit of doubt.

Under the Labor Code, the NLRC has the exclusive jurisdiction over claims, money or otherwise, arising from ER-EE relations,
except those expressly excluded therefrom. The claim for the said prize unquestionable arose from an ER-EE relation and, therefore,
falls within the coverage of P.D. 1691, which speaks of “all claims arising from ER-EE relations, unless expressly excluded by this
Code. To hold that Tumala’s claim for the prize should be passed upon by the regular courts of justice would be to sanction split
jurisdiction and multiplicity of suits which are prejudicial to the orderly of administration of justice.


EMERLITO A. RANOA, respondents.
[G.R. No. 146336. December 13, 2001]



Assailed before this Court are the resolutions, promulgated on 19 July 2000 and 07 December 2000, of the Court of Appeals in
CA-G.R. SP No. 59602.

The case originated from a disability benefit claim filed by private respondent against Kvaerner Shipping A/S and C.F. Sharp &
Co., Inc., foreign employer and local manning agent of the vessel Hedda where private respondent was assigned as a Chief
Steward. While the case was pending, Havtor Management (Philippines), Inc. took over the operations of Hedda as its local manning
agent with A/S Havtor Management as its foreign principal.

Labor Arbiter Ernesto S. Dinopol ruled in favor of the complainant, as follows:

WHEREFORE, judgment is hereby rendered ordering respondent C.F. SHARP CO., INC. in its personal capacity and as agent of
Kvaerner Shipping A/S and third party respondent Havtor Management (Philippines), Inc. also in its personal capacity and as agent of
A/S Havtor Management to jointly and severally pay complainant EMERLITO A. RANOA the sum of:
Full disability benefit --------------- US$60,000.00

Less: Amount paid in advance----- 6,500.00

TOTAL AWARD ---------- US$53,500.00

plus the sum of US$5,350.00 as 10% attorney's fees since compelled to litigate complainant had to engage the services of counsel.

All other claims including respondents' counter claim are DISMISSED for lack of merit.


Petitioners went to the Court of Appeals for relief. However, the appellate court, in its resolution, dated 19 July 2000 dismissed
the petition for certiorari. The dismissal was anchored on the failure of petitioners to attach to the petition a board resolution showing
that Rolando C. Adorable, President and General Manager of Havtor Management (Philippines), Inc., who signed the certification of
non-forum shopping, was authorized to file the petition. The Court of Appeals likewise noted that no certification of non-forum
shopping was filed in behalf of A/S Havtor Management.

In the resolution, dated 07 December 2000, the Court of Appeals denied petitioners motion for reconsideration for lack of merit,
holding that the Secretarys Certificate submitted by petitioners showed that Rolando Adorable was authorized to file the petition by
Bergesen D.Y. Philippines, Inc., not Havtor Management (Philippines), Inc. The appellate court declared that the petition failed to
mention that Havtor Management already changed its name.

Hence, the present recourse.

In the petition before us, petitioners pointed out, among other things, that Havtor Management (Philippines), Inc. changed its
name to Bergesen D.Y. Philippines, Inc. as early as 1996. However, it continued to use its old name in this case.

In compliance with the Court's resolutions, dated 13 August 2001 and 22 October 2001, petitioners submitted to the Court
pertinent documents[2] certified by the Securities and Exchange Commission [3]showing its change of name from Havtor Management
(Philippines), Inc. to Bergesen D.Y. Philippines, Inc.

We find merit in the petition and give DUE COURSE thereto.

The Court has reviewed the documents submitted by petitioner, and it finds no reason to doubt that Havtor Management
(Philippines), Inc. is the same as Bergesen D.Y. Philippines, Inc., whose board of directors authorized Adorable to file the petition
before the Court of Appeals. The documents submitted by petitioners in compliance with the Court's directive fully supported
petitioners' contention as regards its change of name. The Court notes that while petitioners may have initially failed to submit a
secretary's certificate showing that Adorable was authorized by the Havtor Management (Philippines), Inc.'s board of directors to file
the petition, they substantially complied with this requirement when they filed their motion for reconsideration.

It is well settled that the application of technical rules of procedure may be relaxed in labor cases to serve the demands of
substantial justice.[4] Thus, in the interest of justice, procedural lapses may be disregarded by the Court to allow an examination of the
conflicting rights and responsibilities of the parties in a case. [5]

Private respondent alleged in its comment that petitioners motion for reconsideration of the Court of Appeals' 19 July 2000
resolution was filed out of time because while the petition was dated, and apparently posted on, 17 August 2000, the verification was
notarized only on 18 August 2000. The Court accepts the explanation of petitioners that the discrepancy was due to the mistake of the
paralegal personnel who effected the entries in the motion for reconsideration. The Court is convinced that the error is due to
inadvertence as the notarial register [6] of Atty. Dino Martin W. Segundo who notarized the document showed that the motion for
reconsideration was in fact notarized on 17 August 2000 and not on 18 August 2000. In addition, the registry receipt stamped on the
motion for reconsideration showed that it was indeed posted on 17 August 2000. Hence, the motion for reconsideration was filed on

Finally, as regards the lack of a separate certificate of non-forum shopping for A/S Havtor Management, it bears stressing here
that it is a foreign principal that is acting only through its local manning agent, that is, petitioner Havtor Management (Philippines),
Inc. In view thereof, there is no need for a separate certificate of non-forum shopping for A/S Havtor Management.

Considering the foregoing, the petition is GRANTED and the case is REMANDED to the Court of Appeals for its appropriate


Ang Tibay vs CIR

Teodoro Toribio owns and operates Ang Tibay, a leather company which supplies the Philippine Army. Due to alleged shortage of
leather, Toribio caused the lay off of a number of his employees. However, the National Labor Union, Inc. (NLU) questioned the
validity of said lay off as it averred that the said employees laid off were members of NLU while no members of the rival labor union
(National Worker’s Brotherhood) were laid off. NLU claims that NWB is a company dominated union and Toribio was merely busting
The case reached the Court of Industrial Relations (CIR) where Toribio and NWB won. Eventually, NLU went to the Supreme Court
invoking its right for a new trial on the ground of newly discovered evidence. The Supreme Court agreed with NLU. The Solicitor
General, arguing for the CIR, filed a motion for reconsideration.
ISSUE: Whether or not the National Labor Union, Inc. is entitled to a new trial.
HELD: Yes. The records show that the newly discovered evidence or documents obtained by NLU, which they attached to their
petition with the SC, were evidence so inaccessible to them at the time of the trial that even with the exercise of due diligence they
could not be expected to have obtained them and offered as evidence in the Court of Industrial Relations. Further, the attached
documents and exhibits are of such far-reaching importance and effect that their admission would necessarily mean the modification
and reversal of the judgment rendered (said newly obtained records include books of business/inventory accounts by Ang Tibay which
were not previously accessible but already existing).
The SC also outlined that administrative bodies, like the CIR, although not strictly bound by the Rules of Court must also make sure
that they comply to the requirements of due process. For administrative bodies, due process can be complied with by observing the
(1) The right to a hearing which includes the right of the party interested or affected to present his own case and submit evidence in
support thereof.
(2) Not only must the party be given an opportunity to present his case and to adduce evidence tending to establish the rights which
he asserts but the tribunal must consider the evidence presented.
(3) While the duty to deliberate does not impose the obligation to decide right, it does imply a necessity which cannot be
disregarded, namely, that of having something to support its decision. A decision with absolutely nothing to support it is a nullity, a
place when directly attached.
(4) Not only must there be some evidence to support a finding or conclusion but the evidence must be “substantial.” Substantial
evidence is more than a mere scintilla It means such relevant evidence as a reasonable mind might accept as adequate to support a
(5) The decision must be rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to the
parties affected.
(6) The administrative body or any of its judges, therefore, must act on its or his own independent consideration of the law and facts
of the controversy, and not simply accept the views of a subordinate in arriving at a decision.
(7) The administrative body should, in all controversial questions, render its decision in such a manner that the parties to the
proceeding can know the various issues involved, and the reasons for the decisions rendered. The performance of this duty is
inseparable from the authority conferred upon it.


AGBUYA and JUANITO COLLADO, respondents.

G.R. No. 54424 August 31, 1989


Petitioner Nasipit Lumber Company, Inc. (NALCO for brevity) is a domestic corporation organized and existing under the laws of the
Philippines. It is engaged in the business of logging, lumber manufacturing and wood processing with field offices at Nasipit, Agusan
del Norte.

Private respondent Juanita Collado was employed by petitioner as a security guard on September 9, 1970. He was assigned as lst
Sergeant of the NALCO Security Force at Nasipit. In the course of Collado's employment or on August 20, 1976, four (4) crates of
lawanit boards containing 1,000 panels were stolen from petitioner's premises, particularly the crating section of the Philippine
Wallboard Corporation, a NALCO affiliate.
Collado was implicated in the theft and was thereafter placed under preventive suspension. On September 8, 1976, NALCO filed a
petition (application) for clearance to dismiss Collado with the Regional Office No. X of the Department of Labor in Cagayan de Oro
City. 1 On September 15, 1976, Collado filed an opposition to said application for clearance to dismiss. The case was set for hearing
the following day, September 16, but Collado, despite notice, failed to appear. Hence, NALCO was allowed to present evidence ex-

On October 12, 1976, the application for clearance to dismiss was approved in an order issued by Regional Office No. X Officer-in-
Charge Roy V. Seneres. 2 The order was based on the investigation report of the head of the Agusan Provincial Labor Office. Collado
filed a motion for the reconsideration of said order on the ground that he was not given an opportunity to rebut the false findings or
adduce evidence in his favor. He further denied participation in the theft. 3

On December 7, 1976, the said Officer-in-Charge, through a subordinate, certified the case to the Executive Labor Arbiter for
compulsory arbitration. 4 Notice and summons were issued.NALCO and Collado were then required to submit their respective position
papers under pain of a default judgment. 5 After a perusal of the records, Executive Labor Arbiter Ildefonso G. Agbuya returned the
case to the Regional Director of Regional Office No. X in Cagayan de Oro City for whatever appropriate action he may deem fit. A
portion of the order dated February 25, 1977 of said Executive Labor Arbiter reads:

From all indications, we find that the Motion for Reconsideration should be treated as an appeal to (sic) the Order of
Roy V. Seneres, dated 12 October 1976, and as such it should be elevated to the Secretary of Labor. Besides, we also
fear that if we take cognizance of this case, perhaps, we might reverse the order of the Regional Director which, to
our thinking, would only create a disturbance to the harmonious relation existing between our two offices. . . . 6

Consequently, the case was elevated to the Secretary of Labor. On June 7, 1978, Acting Secretary of Labor Amado G. Inciong issued
an order affirming the order of Officer-in-Charge Roy V. Seneres thereby granting petitioner's application for clearance to dismiss
Collado. 7

Instead of resorting to this Court on a petition for certiorari, 8 on October 9, 1978, Collado filed a complaint before the Butuan District
Labor Office, Butuan City, for unjust dismiss and reinstatement with backwages and benefits. 9 Without going to specifics, Collado
averred therein that his termination from employment "was unfounded, unjust and illegal, based as it was on uncorroborated and
malicious suspicion, insinuation and hearsay, and characterized by harassment."

NALCO flied a motion to dismiss the complaint. It alleged that in view of Acting Secretary Inciong's aforesaid order, Collado did not
have any sufficient cause of action and therefore his complaint was a nuisance. 10 In its position paper, NALCO added that because
Acting Secretary Inciong's order had become final and executory, the issue of illegal dismissal had also become res judicata. 11

The case having been certified for compulsory arbitration, on January 29, 1979, Executive Labor Arbiter Ildefonso G. Agbuya
rendered a decision ordering NALCO to reinstate Collado to his former position without backwages and without loss of seniority
rights "provided he has the necessary papers required of the service as security guard. 12

In his decision, the said labor arbiter stated that while NALCO complied with the requirements of law when it obtained a clearance to
terminate, he could not discount the possibility that NALCO "knew or at least suspected that there was something wrong with the
manner in which the investigation was conducted" by the head of the Butuan District Labor Office whose report was the basis of the
approval of the clearance application. 13 He conceded that NALCO acted in good faith in terminating Collado's employment and that it
was NALCOs prerogative to terminate such employment to protect its business interests. However, he was constrained to arrive at said
conclusion ordering the reinstatement of Collado because of the order of the Nasipit municipal judge in Criminal Case No. 2236
finding that there was nothing in the testimony of the prosecution witness to establish the probable guilt of Collado who should
therefore be dropped from the complain for qualified theft. He also took into consideration the certification of the Agusan del Norte
provincial fiscal showing that Collado had also been dropped from the complaint in Criminal Case No. 1127.

Both parties appealed to the National Labor Relations Commission (NLRC).lâwphî1.ñèt NALCO asked for the reversal and
revocation of the decision of the Executive Labor Arbiter, while Collado prayed for a modification of the appealed decision to include
backwages and benefits in addition to reinstatement.

On May 30, 1980, the NLRC First Division 14 rendered a decision modifying the Executive Labor Arbiter's decision by ordering
Collado's reinstatement to his former position with two (2) years backwages without qualification and loss of seniority rights. 15 It
agreed with the findings and conclusions of the Executive Labor Arbiter with respect to the dropping of Collado from the criminal
cases but it ruled that the rights of Collado to backwages were not precluded by the findings that his termination was effected in good
faith. On the issue of res judicata, the NLRC said:

We cannot subscribe to the arguments of the respondent-appellant that the order of the OIC of Region X which was
subsequently approved by then Acting Secretary Amado G. Inciong has become the law of the case. Res
judicata cannot be validly invoked in this case because the granting of the application for clearance which although
admittedly was secured with all the formalities required by law, did not resolve the case on its merits. Records show
that on September 16, 1976 the application to terminate was scheduled for investigation before the Provincial Labor
Office. Petitioner Collado who was then the respondent in this case failed to appear although he was properly
notified of the scheduled investigation. On September 22, 1976, the Head of the Agusan Provincial Office submitted
its investigation report recommending the approval of the application to terminate Juanito Collado without affording
him another chance to be heard and defend his side. It is very clear that the investigation conducted by the Provincial
Labor Office was hastily done and vitiated with infirmities. What it should have done is to give the respondent
Collado another chance to defend his case considering the gravity of the offense imputed against him which if
proved would cause him his only means of livelihood. 16

NALCO filed the instant petition for certiorari and prohibition with prayer for the issuance of a writ of preliminary injunction and/or a
restraining order, seeking to annul the NLRC decision and to prohibit its execution. It imputed to the NLRC lack or excess of
jurisdiction and grave and patent abuse of discretion amounting to lack of jurisdiction in overturning the final decision of the Acting
Secretary of Labor thereby denigrating the time-honored doctrine of bar by former judgment or res judicata. It assailed Collado's
reinstatement as improper inasmuch as the employer-employee relations of the parties had been legally severed by the approval of the
clearance to dismiss.

This Court dismissed the petition for lack of merit. 17 Upon receipt of the dismissal resolution, NALCO filed an urgent motion for
reconsideration based on the following grounds: (a) it has a valid and meritorious cause of action due to the NLRC's violation of the
principle of res judicata; (b) the occurrence of a supervening event consisting of the remand of the records of the approved clearance
to dismiss for execution and/or appropriate action, 49 days after the promulgation of the herein questioned NLRC decision; (c) the
NLRC not only disregarded the final and executory decision of the Acting Secretary of Labor but also the pronouncements of this
Court on the curative effects of appeals in labor cases wherein the issue of denial of procedural due process had been raised; and (d)
should the NLRC decision become final, a confusing situation of two diametrically opposed decisions on the same issue of dismissal,
would arise.

Understandably, Collado opposed the motion for reconsideration. On the other hand, the Solicitor General, appearing for public
respondents, filed a manifestation and motion recommending that the urgent motion for reconsideration be granted. He stated therein
that the NLRC gravely abused its discretion because: (a) all the elements of res judicata are present in this case: (b) the merits of
Collado's dismissal had been litigated in the first case and Collado was therefore estopped from attacking the final decision of the
Acting Secretary of Labor either in the original action or in a new and subsequent action; (c) not only the "formal aspect" in the
application for clearance to terminate was involved in the first case as the merits thereof were fully taken into consideration; and (d) to
allow a distinction between the two cases would result in splitting a cause of action which would ultimately breed multiplicity of suits.

On the strength of the Solicitor General's manifestation and motion, the Court reconsidered the dismissal resolution and gave due
course to the instant petition for certiorari and prohibition. 18

The two principal issues presented to this Court for adjudication are the applicability of the principle of res judicataand the legality of
Collado's reinstatement with backwages and without loss of seniority rights.

On the first issue, we hold that this is one of the cases wherein the pronouncement of this Court thru Justice Vicente Abad Santos in
Razon vs. Inciong 19 applies. The Court stated therein that the principle of res judicata may not be invoked in labor relations
proceedings considering that Section 5, Rule XIII, Book V of the Rules and Regulations Implementing the Labor Code provides that
such proceedings are "non-litigious and summary in nature without regard to legal technicalities obtaining in courts of law." Said
pronouncement is in consonance with the jurisprudential dictum that the doctrine of res judicata applies only to judicial or quasi-
judicial proceedings and not to the exercise of administrative powers. 20

The requirement of a clearance to terminate employment was a creation of the Department of Labor to carry out the Labor Code
provisions on security of tenure and termination of employment. The proceeding subsequent to the filing of an application for
clearance to terminate employment was outlined in Book V, Rule XIV of the Rules and Regulations Implementing the Labor Code.
The fact that said rule allowed a procedure for the approval of the clearance with or without the opposition of the employee concerned
(Secs. 7 & 8), demonstrates the non-litigious and summary nature of the proceeding. The clearance requirement was therefore
necessary only as an expeditious shield against arbitrary dismissals without the knowledge and supervision of the Department of
Labor. Hence, a duly approved clearance implied that the dismissal was legal or for cause (Sec. 2).

But even while said clearance was a requirement, employees who faced dismissal still contested said applications not only through
oppositions thereto but by filing separate complaints for illegal dismissal. Usually, the investigation on the application and the hearing
on the complaint for illegal dismissal were conducted simultaneously. What makes the present case unusual is that the employee filed
the complaint for illegal dismissal only after the Acting Secretary of Labor had affirmed the approval of the application to terminate
his employment. Nonetheless, we are unprepared to rule that such action of the Acting Secretary of Labor barred Collado from filing
the complaint for illegal dismissal. If ever, the most that can be attributed against Collado is laches for his failure to question
seasonably the Acting Secretary of Labor's affirmance of the approval of the clearance to terminate. However, to count such laches
against Collado would be prejudicial to his rights as a laborer.

Be that as it may, the possibility that there would be two conflicting decisions on the issue of Collado's dismissal may now be
considered academic. The requirement of a written clearance from the Department prior to termination was abolished by the
enactment of Batas Pambansa Blg. 130 in 1981. Dismissal proceedings are now confined within the establishments. The NLRC or the
labor arbiter steps in only if the said decision is contested by the employee. 21

On the legality of Collado's dismissal, we hold that the NLRC abused its discretion in directing his reinstatement with two (2) years
backwages. The relation between petitioner and Collado is now strained by the latter's violation of the trust and confidence reposed on
him as a member of the security force, a position impressed with a high degree of trust. 22 Proof beyond reasonable doubt of an
employee's misconduct is not required when loss of confidence is the ground for dismissal. It is sufficient if the employer has "some
basis" to lose confidence or that the employer has reasonable ground to believe or to entertain the moral conviction that the employee
concerned is responsible for the misconduct and that the nature of his participation therein rendered him absolutely unworthy of the
trust and confidence demanded by his position. 23

In this case, petitioner supported its application for clearance to terminate Collado's employment with sworn statements implicating
him in the theft. 24 Such sworn statements are sufficient to warrant the dismissal. On the other hand, the dropping of the qualified theft
charges against Collado is not binding upon a labor tribunal. 25 The sensitivity of Collado's job as a security guard vis-a-vis the cause
of his dismissal cost him his right to be rehired to the same position. Reinstatement is not proper where termination of employment
was due to breach of trust and confidence. 26

We are aware of Collado's almost six years of service to the petitioner as well as the hardships resulting from the loss of his job.
Compassion dictates us to grant him separation pay as financial assistance but we are bound by the ruling of the Court en banc in
Philippine Long Distance Telephone Company v. NLRC 27 that henceforth separation pay shall be allowed as a measure of social
justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on
his moral character.

WHEREFORE, the decision of the NLRC is hereby reversed and set aside. Juanita Collado's dismissal from employment is hereby
declared valid. No costs.


Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.

St. Martin Funeral Homes vs. NLRC and B. Aricayos (1998)


P. respondent was dismissed from work by petitioner for allegedly misappropriating P38,000.00. Hence, a complaint was filed for
illegal dismissal before the NLRC. Petitioner argued that respondent was not its employee. The Labor Arbiter ruled in favor of
petitioner declaring that no employer-employee relationship between the parties and therefore his office had no jurisdiction over the
case. On appeal, the NLRC set aside the questioned decision and remanding the case to the labor arbiter for immediate appropriate

Issue: Whether or not the decision of the NLRC are appealable to the Court of Appeals.

Held: YES

The Supreme Court clarified and stressed that ever since appeals from the NLRC to the Supreme Court were eliminated, the
legislative intendment is that the special civil action of certiorari was and still the proper vehicle for judicial review of decisions of the
NLRC. The concurrent original jurisdiction of the Supreme Court can be availed of only under compelling and exceptional

To further explain, (1) the way to review NLRC decision is through the special civil action of certiorari under Rule 65; (2) the
jurisdiction of such action belongs both to the SC and CA; but (3) in line with the doctrine of hierarchy, of courts, the petition should
be initially presented to the lower court of the two courts, that is the Court of Appeals.