Republic of the Philippines employees dismissed under the Code be reinstated and their cases subjected to
SUPREME COURT further hearing; and that PAL be declared guilty of unfair labor practice and be ordered
Manila
THIRD DIVISION
G.R. No. 85985 August 13, 1993
PHILIPPINE AIRLINES, INC. (PAL), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P.
ORTIGUERRA and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION
(PALEA), respondents.
Solon Garcia for petitioner.
Adolpho M. Guerzon for respondent PALEA.
MELO, J.:
In the instant petition for certiorari, the Court is presented the issue of whether or not
the formulation of a Code of Discipline among employees is a shared responsibility of
the employer and the employees.
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966
Code of Discipline. The Code was circulated among the employees and was
immediately implemented, and some employees were forthwith subjected to the
disciplinary measures embodied therein.
Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA)
filed a complaint before the National Labor Relations Commission (NLRC) for unfair
labor practice (Case No. NCR-7-2051-85) with the following remarks: "ULP with
arbitrary implementation of PAL's Code of Discipline without notice and prior
discussion with Union by Management" (Rollo, p. 41). In its position paper, PALEA
contended that PAL, by its unilateral implementation of the Code, was guilty of unfair
labor practice, specifically Paragraphs E and G of Article 249 and Article 253 of the
Labor Code. PALEA alleged that copies of the Code had been circulated in limited
numbers; that being penal in nature the Code must conform with the requirements of
sufficient publication, and that the Code was arbitrary, oppressive, and prejudicial to
the rights of the employees. It prayed that implementation of the Code be held in
abeyance; that PAL should discuss the substance of the Code with PALEA; that
to pay damages (pp. 7-14, Record.)
PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer
to prescibe rules and regulations regarding employess' conduct in carrying out their
duties and functions, and alleging that by implementing the Code, it had not violated
the collective bargaining agreement (CBA) or any provision of the Labor Code.
Assailing the complaint as unsupported by evidence, PAL maintained that Article 253
of the Labor Code cited by PALEA reffered to the requirements for negotiating a CBA
which was inapplicable as indeed the current CBA had been negotiated.
In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor
Code was violated when PAL unilaterally implemented the Code, and cited provisions
of Articles IV and I of Chapter II of the Code as defective for, respectively, running
counter to the construction of penal laws and making punishable any offense within
PAL's contemplation. These provisions are the following:
Sec. 2. Non-exclusivity. — This Code does not contain the entirety of
the rules and regulations of the company. Every employee is bound to
comply with all applicable rules, regulations, policies, procedures and
standards, including standards of quality, productivity and behaviour,
as issued and promulgated by the company through its duly authorized
officials. Any violations thereof shall be punishable with a penalty to be
determined by the gravity and/or frequency of the offense.
Sec. 7. Cumulative Record. — An employee's record of offenses shall
be cumulative. The penalty for an offense shall be determined on the
basis of his past record of offenses of any nature or the absence
thereof. The more habitual an offender has been, the greater shall be
the penalty for the latest offense. Thus, an employee may be dismissed
if the number of his past offenses warrants such penalty in the judgment
of management even if each offense considered separately may not
warrant dismissal. Habitual offenders or recidivists have no place in
PAL. On the other hand, due regard shall be given to the length of time
between commission of individual offenses to determine whether the
employee's conduct may indicate occasional lapses (which may
nevertheless require sterner disciplinary action) or a pattern of
incorrigibility.
Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference
but they failed to appear at the scheduled date. Interpreting such failure as a waiver of
the parties' right to present evidence, the labor arbiter considered the case submitted
for decision. On November 7, 1986, a decision was rendered finding no bad faith on
the part of PAL in adopting the Code and ruling that no unfair labor practice had been
committed. However, the arbiter held that PAL was "not totally fault free" considering
that while the issuance of rules and regulations governing the conduct of employees
is a "legitimate management prerogative" such rules and regulations must meet the
test of "reasonableness, propriety and fairness." She found Section 1 of the Code
aforequoted as "an all embracing and all encompassing provision that makes
punishable any offense one can think of in the company"; while Section 7, likewise
quoted above, is "objectionable for it violates the rule against double jeopardy thereby
ushering in two or more punishment for the same misdemeanor." (pp. 38-39, Rollo.)
The labor arbiter also found that PAL "failed to prove that the new Code was amply
circulated." Noting that PAL's assertion that it had furnished all its employees copies
of the Code is unsupported by documentary evidence, she stated that such "failure"
on the part of PAL resulted in the imposition of penalties on employees who thought
all the while that the 1966 Code was still being followed. Thus, the arbiter concluded
that "(t)he phrase ignorance of the law excuses no one from compliance . . . finds
application only after it has been conclusively shown that the law was circulated to all
the parties concerned and efforts to disseminate information regarding the new law
have been exerted. (p. 39, Rollo.) She thereupon disposed:
WHEREFORE, premises considered, respondent PAL is hereby
ordered as follows:
1. Furnish all employees with the new Code of Discipline;
2. Reconsider the cases of employees meted with penalties under the
New Code of Discipline and remand the same for further hearing; and
3. Discuss with PALEA the objectionable provisions specifically tackled
in the body of the decision.
All other claims of the complainant union (is) [are] hereby, dismissed
for lack of merit.
SO ORDERED. (p. 40, Rollo.)
PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner
Encarnacion, with Presiding Commissioner Bonto-Perez and Commissioner Maglaya
concurring, found no evidence of unfair labor practice committed by PAL and affirmed
the dismissal of PALEA's charge. Nonetheless, the NLRC made the following
observations:
Indeed, failure of management to discuss the provisions of a
contemplated code of discipline which shall govern the conduct of its
employees would result in the erosion and deterioration of an otherwise
harmonious and smooth relationship between them as did happen in
the instant case. There is no dispute that adoption of rules of conduct
or discipline is a prerogative of management and is imperative and
essential if an industry, has to survive in a competitive world. But labor
climate has progressed, too. In the Philippine scene, at no time in our
contemporary history is the need for a cooperative, supportive and
smooth relationship between labor and management more keenly felt
if we are to survive economically. Management can no longer exclude
labor in the deliberation and adoption of rules and regulations that will
affect them.
The complainant union in this case has the right to feel isolated in the
adoption of the New Code of Discipline. The Code of Discipline involves
security of tenure and loss of employment — a property right! It is time
that management realizes that to attain effectiveness in its conduct
rules, there should be candidness and openness by Management and
participation by the union, representing its members. In fact, our
Constitution has recognized the principle of "shared responsibility"
between employers and workers and has likewise recognized the right
of workers to participate in "policy and decision-making process
affecting their rights . . ." The latter provision was interpreted by the
Constitutional Commissioners to mean participation in "management"'
(Record of the Constitutional Commission, Vol. II).
In a sense, participation by the union in the adoption of the code if
conduct could have accelerated and enhanced their feelings of
belonging and would have resulted in cooperation rather than
resistance to the Code. In fact, labor-management cooperation is now
"the thing." (pp. 3-4, NLRC Decision ff. p. 149, Original Record.)
Respondent Commission thereupon disposed:
WHEREFORE, premises considered, we modify the appealed decision
in the sense that the New Code of Discipline should be reviewed and
discussed with complainant union, particularly the disputed provisions
[.] (T)hereafter, respondent is directed to furnish each employee with a
 copy of the appealed Code of Discipline. The pending cases adverted
to in the appealed decision if still in the arbitral level, should be
reconsidered by the respondent Philippine Air Lines. Other dispositions
of the Labor Arbiter are sustained.
SO ORDERED. (p. 5, NLRC Decision.)
PAL then filed the instant petition for certiorari charging public respondents with grave
abuse of discretion in: (a) directing PAL "to share its management prerogative of
formulating a Code of Discipline"; (b) engaging in quasi-judicial legislation in ordering
PAL to share said prerogative with the union; (c) deciding beyond the issue of unfair
labor practice, and (d) requiring PAL to reconsider pending cases still in the arbitral
level (p. 7, Petition; p. 8, Rollo.)
As stated above, the Principal issue submitted for resolution in the instant petition is
whether management may be compelled to share with the union or its employees its
prerogative of formulating a code of discipline.
PAL asserts that when it revised its Code on March 15, 1985, there was no law which
mandated the sharing of responsibility therefor between employer and employee.
Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715,
amending Article 211 of the Labor Code, that the law explicitly considered it a State
policy "(t)o ensure the participation of workers in decision and policy-making
processes affecting the rights, duties and welfare." However, even in the absence of
said clear provision of law, the exercise of management prerogatives was never
considered boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it was held
that management's prerogatives must be without abuse of discretion.
In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]),
we upheld the company's right to implement a new system of distributing its products,
but gave the following caveat:
So long as a company's management prerogatives are exercised in
good faith for the advancement of the employer's interest and not for
the purpose of defeating or circumventing the rights of the employees
under special laws or under valid agreements, this Court will uphold
them.
(at p. 28.)
All this points to the conclusion that the exercise of managerial prerogatives
is not unlimited. It is circumscribed by limitations found in law, a collective bargaining
agreement, or the general principles of fair play and justice (University of Sto. Tomas
vs. NLRC, 190 SCRA 758 [1990]). Moreover, as enunciated in Abbott Laboratories
(Phil.), vs. NLRC (154 713 [1987]), it must be duly established that the prerogative
being invoked is clearly a managerial one.
A close scrutiny of the objectionable provisions of the Code reveals that they are not
purely business-oriented nor do they concern the management aspect of the business
of the company as in the San Miguel case. The provisions of the Code clearly have
repercusions on the employee's right to security of tenure. The implementation of the
provisions may result in the deprivation of an employee's means of livelihood which,
as correctly pointed out by the NLRC, is a property right (Callanta, vs Carnation
Philippines, Inc., 145 SCRA 268 [1986]). In view of these aspects of the case which
border on infringement of constitutional rights, we must uphold the constitutional
requirements for the protection of labor and the promotion of social justice, for these
factors, according to Justice Isagani Cruz, tilt "the scales of justice when there is doubt,
in favor of the worker" (Employees Association of the Philippine American Life
Insurance Company vs. NLRC, 199 SCRA 628 [1991] 635).
Verily, a line must be drawn between management prerogatives regarding business
operations per se and those which affect the rights of the employees. In treating the
latter, management should see to it that its employees are at least properly informed
of its decisions or modes action. PAL asserts that all its employees have been
furnished copies of the Code. Public respondents found to the contrary, which finding,
to say the least is entitled to great respect.
PAL posits the view that by signing the 1989-1991 collective bargaining agreement,
on June 27, 1990, PALEA in effect, recognized PAL's "exclusive right to make and
enforce company rules and regulations to carry out the functions of
management without having to discuss the same with PALEA and much less, obtain
the latter's conformity thereto" (pp. 11-12, Petitioner's Memorandum; pp 180-
181, Rollo.) Petitioner's view is based on the following provision of the agreement:
The Association recognizes the right of the Company to determine
matters of management it policy and Company operations and to direct
its manpower. Management of the Company includes the right to
organize, plan, direct and control operations, to hire, assign employees
to work, transfer employees from one department, to another, to
promote, demote, discipline, suspend or discharge employees for just
cause; to lay-off employees for valid and legal causes, to introduce new
or improved methods or facilities or to change existing methods or
 facilities and the right to make and enforce Company rules and
regulations to carry out the functions of management.

The exercise by management of its prerogative shall be done in a just

reasonable, humane and/or lawful manner.

Such provision in the collective bargaining agreement may not be interpreted as

cession of employees' rights to participate in the deliberation of matters which may
affect their rights and the formulation of policies relative thereto. And one such mater
is the formulation of a code of discipline.

Indeed, industrial peace cannot be achieved if the employees are denied their just
participation in the discussion of matters affecting their rights. Thus, even before Article
211 of the labor Code (P.D. 442) was amended by Republic Act No. 6715, it was
already declared a policy of the State, "(d) To promote the enlightenment of workers
concerning their rights and obligations . . . as employees." This was, of course,
amplified by Republic Act No 6715 when it decreed the "participation of workers in
decision and policy making processes affecting their rights, duties and welfare." PAL's
position that it cannot be saddled with the "obligation" of sharing management
prerogatives as during the formulation of the Code, Republic Act No. 6715 had not yet
been enacted (Petitioner's Memorandum, p. 44; Rollo, p. 212), cannot thus be
sustained. While such "obligation" was not yet founded in law when the Code was
formulated, the attainment of a harmonious labor-management relationship and the
then already existing state policy of enlightening workers concerning their rights as
employees demand no less than the observance of transparency in managerial moves
affecting employees' rights.

Petitioner's assertion that it needed the implementation of a new Code of Discipline

considering the nature of its business cannot be overemphasized. In fact, its being a
local monopoly in the business demands the most stringent of measures to attain safe
travel for its patrons. Nonetheless, whatever disciplinary measures are adopted cannot
be properly implemented in the absence of full cooperation of the employees. Such
cooperation cannot be attained if the employees are restive on account, of their being
left out in the determination of cardinal and fundamental matters affecting their
employment.

WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED.

No special pronouncement is made as to costs.

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

As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor
tribunals. As explicitly provided for in Article 217 of the Labor Code, prior to its
amendment by R.A. No. 6715 on 21 March 1989, since the suit below was instituted
on 6 March 1989, Labor Arbiters have original and exclusive jurisdiction to hear and
decide the following cases involving all workers including "1. unfair labor practice
cases; 2. those that workers may file involving wages, hours of work and other terms
and conditions of employment; ... and 5. cases arising from any violation of Article 265
of this Code, including questions involving the legality of striker and lockouts. ..." Article
217 lays down the plain command of the law.

The claim of SanMig that the action below is for damages under Articles 19, 20 and
21 of the Civil Code would not suffice to keep the case within the jurisdictional
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 90856 July 23, 1992
ARTURO DE GUZMAN, petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER MA. LOURDES
A. SALES, AVELINO D. VALLESTEROL, ALEJANDRO Q. FRIAS, LINDA DE LA
CRUZ, CORAZON M. DE LA FUENTE, LILIA F. FLORO, and MARIO F. JAYME,
respondents.
CRUZ, J.:
It is a fundamental principle of law and human conduct that a person "must, in the
exercise of his rights and in the performance of his duties, act with justice, give every
one his due, and observe honesty and good faith." 1 This is the principle we shall apply
in the case at bar to gauge the petitioner's motives in his dealings with the private
respondents.
Arturo de Guzman was the general manager of the Manila office of the Affiliated
Machineries Agency, Ltd., which was based in Hongkong. On June 30, 1986, he
received a telex message from Leo A. Fialla, managing director of AMAL in its main
office, advising him of the closure of the company due to financial reverses. This
message triggered the series of events that are the subject of this litigation.
Immediately upon receipt of the advise, De Guzman notified all the personnel of the
Manila office. The employees then sent a letter to AMAL accepting its decision to
close, subject to the payment to them of their current salaries, severance pay, and
other statutory benefits. De Guzman joined them in these representations.
These requests were, however, not heeded. Consequently, the employees, now
herein private respondents, lodged a complaint with the NLRC against AMAL, through
Leo A. Fialla and Arturo de Guzman, for illegal dismissal, unpaid wages or
commissions, separation pay, sick and vacation leave benefits, 13th month pay, and
bonus.
For his part, the petitioner began selling some of AMAL's assets and applied the
proceeds thereof, as well as the remaining assets, to the payment of his claims against
the company. He also organized Susarco, Inc., with himself as its president and his
wife as one of the incorporators and a member of the board of directors. This company
is engaged in the same line of business and has the same clients as that of the
dissolved AMAL.
With this development, Susarco and its officers were impleaded in the amended
complaint of the private respondents. Later, William Quasha and/or Cirilo Asperilla
were also included in the suit as the resident agents of AMAL of the Philippines.
On November 7, 1986, the petitioner filed his own complaint with the NLRC against
AMAL for his remaining unsatisfied claims.
On May 29, 1987, Labor Arbiter Eduardo G. Magno, to whom the petitioner's complaint
was assigned, rendered a decision ordering AMAL to pay the petitioner the amount of
P371,469.59 as separation pay, unpaid salary and commissions, after deducting the
value of the assets earlier appropriated by the petitioner. 2
On September 30, 1987, Labor Arbiter Ma. Lourdes A. Sales, who tried the private
respondents' complaint, rendered a decision —
1. Ordering Respondents AMAL and Arturo de Guzman to pay jointly and
severally to each Complainant separation pay computed at one-half month pay for
every year of service, backwages for one month, unpaid salaries for June 16-30, 1986,
13th month pay from January to June 30, 1986 and incentive leave pay equivalent to
two and-a-half days pay;
2. Dismissing the complaint against respondents Leo Fialla, William Quasha,
Susarco, Inc. and its directors Susan de Guzman, Pacita Castaneda, George
Estomata and Cynthia Serrano for lack of basis and/or merit;
3. Dismissing the claims for damages for lack of basis;
4. Ordering respondents AMAL and Arturo de Guzman to pay jointly and severally
attorney's fees to Complainants equivalent to 10% of the monetary awards herein. 3
This decision was on appeal affirmed in toto by the NLRC, which is now faulted for
grave abuse of discretion in this petition for certiorari.
The petitioner does not dispute the jurisdiction of the Labor Arbiter and NLRC over the
complaint of the private respondents against AMAL in view of their previous
employment relationship. He argues, however, that the public respondents acted
without or in excess of jurisdiction in holding him jointly and severally liable with AMAL
as he was not an employer of the private respondents.
The Solicitor General and the private respondents disagree. They maintain that the
petitioner, being AMAL's highest local representative in the Philippines, may be held
personally answerable for the private respondents' claims because he is included in
the term "employer" under Art. 212 (c),
(now e) of the Labor Code which provides:
Art. 212. Definitions. —
xxx xxx xxx
c. "Employer" includes any person acting in the interest of an employer, directly
or indirectly. . . .
In the leading case of A.C. Ransom Labor Union-CCLU vs. NLRC, 4 as affirmed in the
subsequent cases of Gudez vs. NLRC, 5 and Maglutac vs.
NLRC, 6 this Court treated the president of the employer corporation as an "employer"
and held him solidarily liable with the said corporation for the payment of the
employees' money claims. So was the vice-president of the employer corporation in
the case of Chua vs. NLRC. 7
The aforecited cases will not apply to the instant case, however, because the persons
who were there made personally liable for the employees' claims were stockholders-
officers of the respondent corporation. In the case at bar, the petitioner, while
admittedly the highest ranking local representative of AMAL in the Philippines, is
nevertheless not a stockholder and much less a member of the board of directors or
an officer thereof. He is at most only a managerial employee under Art. 212 (m) of the
Labor Code, which reads in relevant part as follows:
Art 212. Definitions. —
xxx xxx xxx
m. Managerial employee is one who is vested with powers and prerogatives to lay
down and execute management policies and/or to
hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. . . .
As such, the petitioner cannot be held directly responsible for the decision to close the
business that resulted in his separation and that of the private respondents. That
decision came directly and exclusively from AMAL. The petitioner's participation was
limited to the enforcement of this decision in line with his duties as general manager
of the company. Even in a normal situation, in fact, he would not be liable, as a
managerial employee of AMAL, for the monetary claims of its employees. There
should be no question that the private respondents' recourse for such claims cannot
be against the petitioner but against AMAL and AMAL alone.
The judgment in favor of the private respondents could have been enforced against
the properties of AMAL located in this country except for one difficulty. The problem is
that these properties have already been appropriated by the petitioner to satisfy his
own claims against the company.
By so doing, has the petitioner incurred liability to the private respondents?
The Labor Arbiter believed he had because of his bad faith and ruled as follows:
Considering that Respondent A. de Guzman is guilty of bad faith in appropriating for
himself the properties of Respondent AMAL to the prejudice of Complainants herein
whose claims are known to Respondent at the time he made the disposition of AMAL's
properties, he is held jointly and severally liable with Respondent AMAL for the award
of unpaid wages, separation pay, backwages for one month, 13th month pay and cash
value of unused vacation leave.
In Velayo v. Shell Co. of the Philippines, 8 Commercial Air Lines, Inc. (CALI), knowing
that it did not have enough assets to pay off its liabilities, called a meeting of its
creditors where it announced that in case of non-agreement on a pro-rata distribution
of its assets, including the C-54 plant in California, it would file insolvency proceedings.
Shell Company of the Philippines, one of its creditors, took advantage of this
information and immediately made a telegraphic assignment of its credits in favor of
its sister corporation in the United States. The latter thereupon promptly attached the
plane in California and disposed of the same, thus depriving the other creditors of their
proportionate share in its value. The Court declared that Shell had acted in bad faith
and betrayed the trust of the other creditors of CALI. The said company was ordered
to pay them compensatory damages in a sum equal to the value of the C-54 plane at
the time it assigned its credit and exemplary damages in the sum of P25,000.00.
We quote with approval the following observations of Labor Arbiter Sales in her
decision:
While the legitimacy of Respondent A. de Guzman's claims against AMAL is not
questioned, it must be stated that the manner and the means by which he satisfied
such claims are evidently characterized by bad faith on his part. For one, Respondent
A. de Guzman took advantage of his position as General Manager and arrogated to
himself the right to retain possession and ownership of all properties owned and left
by AMAL in the Philippines, even if he knew that Complainants herein have similar
valid claims for unpaid wages and other employee benefits from the Respondent
AMAL. . . .
Another strong indication of bad faith on the part of Respondent A. de Guzman is his
filing of a separate complaint against AMAL before the NLRC Arbitration Branch about
four (4) months after the filing of the instant case without informing this Office about
the existence of said case during the proceedings in the instant case. This case was
deemed submitted for decision on May 18, 1987 but it was only on June 2, 1987 that
Respondent A. de Guzman formally notified this Office through his Supplemental
Position Paper of his pending complaint before Arbiter Eduardo Magno docketed as
NLRC Case No. 11-4441-86. Under Rule V, Section 4 of the revised rules of the NLRC,
it is provided that:
Sec. 4. CONSOLIDATION OF CASES — where there are two or more cases pending
before different Labor Arbiters in the same Regional Arbitration Branch involving the
same employer and issues or the same parties with different issues, the case which
was filed last shall be consolidated with the first to avoid unnecessary costs or delay.
Such cases shall be disposed of by the Labor Arbiter to whom the first case was
assigned. (Emphasis supplied).
Had Respondent A. de Guzman given timely notice of his complaint, his case could
have been consolidated with this case and the issues in both cases could have been
resolved in a manner that would give due consideration to the rights and liabilities of
all parties in interest at the least, in case consolidation is objected to or no longer
possible, the Complainants herein could have been given a chance to intervene in the
other case so that whatever disposition might be rendered by Arbiter Magno would
include consideration of Complainants' claims herein.
It is not disputed that the petitioner in the case at bar had his own claims against AMAL
and consequently had some proportionate right over its assets. However, this right
ceased to exist when, knowing fully well that the private respondents had similarly
valid claims, he took advantage of his position as general manager and applied
AMAL's assets in payment exclusively of his own claims.
According to Tolentino in his distinguished work on the Civil Code:
The exercise of a right ends when the right disappears, and it disappears when it is
abused, especially to the prejudice of others. The mask of a right without the spirit of
justice which gives it life, is repugnant to the modern concept of social law. It cannot
be said that a person exercises a right when he unnecessarily prejudices another or
offends morals or good customs. Over and above the specific precepts of positive law
are the supreme norms of justice which the law develops and which are expressed in
three principles: honeste vivere, alterum non laedre and just suum quique tribuere;
and he who violates them violates the law. For this reason, it is not permissible to
abuse our rights to prejudice others. 9
The modern tendency, he continues, is to depart from the classical and traditional
theory, and to grant indemnity for damages in cases where there is an abuse of rights,
even when the act is not illicit. Law cannot be given an anti-social effect. If mere fault
or negligence in one's acts can make him liable for damages for injury caused thereby,
with more reason should abuse or bad faith make him liable. A person should be
protected only when he acts in the legitimate exercise of his right, that is, when he acts
with prudence and in good faith; but not when he acts with negligence or abuse. 10
The above-mentioned principles are contained in Article 19 of the Civil Code which
provides:
Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
This is supplemented by Article 21 of the same Code thus:
Art. 21. Any person who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage.
Applying these provisions, we hold that although the petitioner cannot be made
solidarily liable with AMAL for the monetary demand of its employees, he is
nevertheless directly liable to them for his questionable conduct in attempting to
deprive them of their just share in the assets of AMAL.
Under Art. 2219, (10) of the Civil Code, moral damages may be recovered for the acts
referred to in Art. 21. In Bert Osmeña & Associates vs. Court of Appeals, 11 we held
that "fraud and bad faith having been established, the award of moral damages is in
order." And in Pan Pacific Company (Phil.) vs. Phil. Advertising Corp., 12 moral
damages were awarded against the defendant for its wanton and deliberate refusal to
pay the just debt due the plaintiff.
It is settled that the court can grant the relief warranted by the allegation and the proof
even if it is not specifically sought by the injured party. 13 In the case at bar, while the
private respondents did not categorically pray for damages, they did allege that the
petitioner, taking advantage of his position as general manager, had appropriated the
properties of AMAL in payment of his own claims against the company. That was
averment enough of the injury they suffered as a result of the petitioner's bad faith.
The fact that no actual or compensatory damages was proven before the trial court
does not adversely affect the private respondents' right to recover moral damages. We
have held that moral damages may be awarded in the cases referred to in the chapter
on Human Relations of the Civil Code (Articles 19-36) without need of proof that the
wrongful act complained of had caused any physical injury upon the complainant. 14
When moral damages are awarded, exemplary damages may also be decreed. 15
Exemplary damages are imposed by the way of example or correction for the public
good, in additional to moral, temperate, liquidated or compensatory damages. 16
According to the Code Commission, "exemplary damages are required by public
policy, for wanton acts must be suppressed. They are an antidote so that the poison
of wickedness may not run through the body politic." 17 These damages are legally
assessible against him.
The petitioner asserts that, assuming the private respondents to have a cause of action
against him for his alleged bad faith, the civil courts and not the Labor Arbiter have
jurisdiction over the case.
In Associated Citizen Bank, et al. vs. Judge Japson, 18 this Court held:
Primarily, the issue to be resolved is whether or not the respondent court has
jurisdiction to hear and decide an action for damages based on the dismissal of the
employee.
On all fours to the above issue is the ruling of this Court in Primero v. Intermediate
Appellate Court (156 SCRA 435 [1987]) which once again reiterated the doctrine that
the jurisdiction of the Labor Arbiter under Article 217 of the Labor Code is broad and
comprehensive enough to include claims for moral and exemplary damages sought to
be recovered by an employee whose services has been illegally terminated by is
employer (Ebon v. De Guzman, 113 SCRA 55 [1982]; Aguda v. Vallejos, 113 SCRA
69 [1982]; Getz Corporation v. Court of Appeals, 116 SCRA 86 [1982]).
For the unlawful termination of employment, this Court in Primero v. Intermediate
Appellate Court, supra, ruled that the Labor Arbiter had the exclusive and original
jurisdiction over claims for moral and other forms of damages, so that the employee in
the proceedings before the Labor Arbiter should prosecute his claims not only for
reliefs specified under the Labor Code but also for damages under the Civil Code.
. . . Question of damages which arose out of or connected with the labor dispute should
be determined by the labor tribunal to the exclusion of the regular courts of justice
(Limquiaco, Jr. v. Ramolete, 156 SCRA 162 [1987]). The regular courts have no
jurisdiction over claims for moral and exemplary damages arising from illegal dismissal
of an employee (Vargas v. Akai Philippines, Inc., 156 SCRA 531 [1987]).
Although the question of damages arising from the petitioner's bad faith has not
directly sprung from the illegal dismissal, it is clearly intertwined therewith. The
predicament of the private respondents caused by their dismissal was aggravated by
the petitioner's act in the arrogating to himself all of AMAL's assets to the exclusion of
its other creditors, including its employees. The issue of bad faith is incidental to the
main action for illegal dismissal and is thus properly cognizable by the Labor Arbiter.
We agree that, strictly speaking, the determination of the amount thereof would require
a remand to the Labor Arbiter. However, inasmuch as the private respondents were
separated in 1986 and this case has been pending since then, the interests of justice
demand the direct resolution of this motion in this proceeding.
As this Court has consistently declared:
. . . it is a cherished rule of procedure for this Court to always strive to settle the entire
controversy in a single proceeding leaving no root or branch to bear the seeds of future
litigation. No useful purpose will be served if this case is remanded to the trial court
only to have its decision raised again tot the Indeterminate Appellate Court and from
there to this Court. (Alger Electric, Inc. v. Court of Appeals, 135 SCRA 37)
Remand of the case to the lower court for further reception of evidence is not
necessary where the court is in a position to resolve the dispute based on the records
before it. On many occasions, the Court, in the public interest and the expeditious
administration of justice, has resolved actions on the merits instead of remanding them
to the trial court for further proceedings, such as where the ends of justice would not
be subserved by the remand of the case or when public interest demands an early
disposition of the case. (Lianga Bay Logging Co., Inc. v. CA, 157 SCRA 357)

Sound practice seeks to accommodate the theory which avoids waste of time, effort
and expense, both to the parties and the government, not to speak of delay in the
disposal of the case (cf. Fernandez v. Garcia, 92 Phil. 592, 597). A marked
characteristics of our judicial set-up is that where the dictates of justice so demand . .
. the Supreme Court should act, and act with finality. (Li Siu Liat v. Republic, 21 SCRA
1039, 1046, citing Samal v. CA, 99 Phil. 230 and U.S. v. Gimenez, 34 Phil. 74). In this
case, the dictates of justice do demand that this Court act, and act with finality.
(Beautifont, Inc. v. CA, 157 SCRA 481)

It is stressed that the petitioner's liability to the private respondents is a direct liability
in the form of moral and exemplary damages and not a solidary liability with AMAL for
the claims of its employees against the company. He is being held liable not because
he is the general manager of AMAL but because he took advantage of his position by
applying the properties of AMAL to the payment exclusively of his own claims to the
detriment of other employees.

WHEREFORE, the questioned decision is AFFIRMED but with the modification that
the petitioner shall not be held jointly and severally liable with AMAL for the private
respondents' money claims against the latter. However, for his bad faith in arrogating
to himself AMAL's properties to the prejudice of the private respondents, the petitioner
is ordered: 1) to pay the private respondents moral damages in the sum of P20,00.00
and exemplary damages in the sum of P20,00.00; and 2) to return the assets of AMAL
that he has appropriated, or the value thereof, with legal interests thereon from the
date of the appropriation until they are actually restored, these amounts to be
proportionately distributed among the private respondents in satisfaction of the
judgment rendered in their favor against AMAL.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-39084 February 23, 1988
PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU), petitioner, vs.
EMILIO V. SALAS, Judge of the Court of First Instance of Rizal, Seventh Judicial
District, Branch I, Pasig, Rizal and WONG KING YUEN, respondents.
GANCAYCO, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court.
The record of the case discloses that the herein petitioner Philippine Association of
Free Labor Unions (PAFLU) is a labor organization registered with the Department of
Labor and Employment. Sometime in 1963, the petitioner filed a Complaint for unfair
labor practice with the then Court of Industrial Relations (CIR) against the Northwest
manufacturing Corporation and a certain Gan Hun. The suit was docketed as Case
No. 3901-ULP.
On September 25, 1972, the CIR rendered a Decision in favor of the petitioner labor
organization. Pursuant to a writ of execution issued by the CIR, the provincial sheriff
of Rizal commenced levying the personal properties of the said Gan Hun, particularly
the properties found in his residential apartment unit in San Juan, then a town of Rizal
province.
The herein private respondent Wong King Yuen however, claims that Gan Hun is his
boarder in the apartment unit mentioned earlier and that the properties inside the
apartment unit levied by the provincial sheriff belong to him and not to Gan Hun.
Thus, on October 18, 1973, the private respondent filed a Complaint for damages with
the then Court of First Instance (CFI) of Rizal against the provincial sheriff. The suit
was docketed as Civil Case No. 18460. The amount of money involved in the said
case is about P24,680.00.
As sought by the private respondent, the CFI, with the herein respondent Judge Emilio
V. Salas presiding therein, issued an injunctive writ restraining the provincial sheriff
from proceeding with the sale of the properties in question.
After having been allowed by the CFI to intervene in Civil Case No. 18460, the
petitioner labor organization sought to dismiss the Complaint on the ground that the
said court had no jurisdiction over the case filed by the private respondent.1 The
petitioner argued that Civil Case No. 18460 relates to an existing labor dispute and as
such the proper forum for the same is the industrial court.
In an Order dated July 9, 1974, the CFI denied the Motion to Dismiss filed by the
petitioner. 2 The petitioner sought a reconsideration of the said case but did not
succeed in doing so. 3
On August 8, 1974, the petitioner elevated the case to this Court by way of the instant
Petition.4 The petitioner maintains its stand that the CFI has no jurisdiction over Civil
Case No. 18460.
In an Answer filed with this Court on August 29, 1974, the private respondent contends
that Civil Case No. 18460 is not a labor dispute recognizable by the industrial court.
The private respondent points out that Civil Case No. 18460 is an ordinary civil action
for damages against the provincial sheriff and directed against the sheriffs bond
required under Section 17, Rule 39 of the Rules of Court. The private respondent adds
that it is an entirely separate proceeding distinct from the labor case filed with the CIR
and that, accordingly, it is the Court of First Instance which has jurisdiction over the
same.5
After a careful examination of the entire record of the case, We find that instant Petition
to be devoid of merit.
The sole issue in this case is whether or not the CFI has the jurisdiction to issue the
injunctive relief questioned by the petitioner. We rule in the affirmative.
It is clear that Civil Case No. 18460 is an ordinary civil action for damages, not a labor
dispute. The case is directed against the provincial sheriff and the recovery of
damages is sought against the bond provided for Section 17, Rule 39 of the Rules of
Court governing execution and satisfaction of judgments.
Even if the act complained of by the private respondent arose from a labor dispute
between the petitioner and another party, the inevitable conclusion remains the same
— there is no labor dispute between the petitioner and the private respondent. Civil
Case No. 18460 has no direct bearing with the case flied with the industrial court. The
civil case remains distinct from the labor dispute pending with the CIR.

Under Commonwealth Act No. 103, the law creating the Court of Industrial Relations,
the jurisdiction of the industrial court is limited to labor disputes. i.e., problems and
controversies pertaining to the relationship between employer and employee. Section
I thereof provides as follows —

Sec. 1. Jurisdiction. — There is created a Court of Industrial Relations hereinafter

called the court, which shall have jurisdiction over the entire Philippines to consider,
investigate, decide and settle all questions, matters, controversies, or disputes arising
between, and/or affecting employers and employees or laborers, and regulate the
relations between them, . . . . (Emphasis supplied.)

From the foregoing, it is clear that the jurisdiction of the CIR can be invoked only when
there is a dispute arising between or affecting employers and employees, or when an
employer-employee relationship exists between the parties.

There being no labor dispute between the petitioner and the private respondent, the
Court of First Instance 6 has the jurisdiction to issue the injunctive relief sought by the
private respondent in Civil Case No. 18460.7 The latter case can proceed
independently of the case pending in the Court of Industrial Relations. 8

Accordingly, the writ of certiorari sought by the petitioner cannot issue.

WHEREFORE, in view of the foregoing, the instant Petition for certiorari is hereby
DISMISSED for lack of merit. We make no pronouncement as to costs:

SO ORDERED.