1

[G.R. No. 108961. November 27, 1998]

CITIBANK, N. A., petitioners, vs. COURT OF APPEALS (Third Division), AND CITIBANK INTEGRATED GUARDS LABOR ALLIANCE (CIGLA) SEGATUPAS/FSM LOCAL
CHAPTER No. 1394, respondents.

DECISION

PARDO, J.:

The Case

The case before the Court is a petition for review on certiorari seeking to reverse and set aside the decision of the Court of Appeals [1] and its resolution denying
reconsideration[2], ruling that it is the labor tribunal, not the regional trial court, that has jurisdiction over the complaint for injunction and damages filed by petitioner
with the regional trial court.

The Facts

In 1983, Citibank and El Toro Security Agency, Inc. (hereafter El Toro) entered into a contract for the latter to provide security and protective services to safeguard and
protect the bank's premises, situated at 8741 Paseo de Roxas, Makati, Metro Manila. Under the contract, El Toro obligated itself to provide the services of security
guards to safeguard and protect the premises and property of Citibank against theft, robbery or any other unlawful acts committed by any person or persons, and
assumed responsibility for losses and/or damages that may be incurred by Citibank due to or as a result of the negligence of El Toro or any of its assigned personnel. 3

Citibank renewed the security contract with El Toro yearly until 1990. On April 22, 1990, the contract between Citibank and El Toro expired.

On June 7, 1990, respondent Citibank Integrated Guards Labor Alliance-SEGA-TUPAS/FSM (hereafter CIGLA) filed with the National Conciliation and Mediation Board
(NCMB) a request for preventive mediation citing Citibank as respondent therein giving as issues for preventive mediation the following:

a) Unfair labor practice;

b) Dismissal of union officers/members; and

c) Union busting.

On June 10, 1990, petitioner Citibank served on El Toro a written notice that the bank would not renew anymore the service agreement with the latter. Simultaneously,
Citibank hired another security agency, the Golden Pyramid Security Agency, to render security services at Citibank's premises.

On the same date, June 10, 1990, respondent CIGLA filed a manifestation with the NCMB that it was converting its request for preventive mediation into a notice of
strike for failure of the parties to reach a mutually acceptable settlement of the issues, which it followed with a supplemental notice of strike alleging as supplemental
issue the mass dismissal of all union officers and members.

On June 11, 1990, security guards of El Toro who were replaced by guards of the Golden Pyramid Security Agency considered the non-renewal of El Toro's service
agreement with Citibank as constituting a lockout and/or a mass dismissal. They threatened to go on strike against Citibank and picket its premises.
 2

In fact, security guards formerly assigned to Citibank under the expired agreement loitered around and near the Citibank premises in large groups of from twenty (20)
and at times fifty (50) persons.

On June 14, 1990, respondent CIGLA filed a notice of strike directed at the premises of the Citibank main office.

Faced with the prospect of disruption of its business operations, on June 5, 1990, petitioner Citibank filed with the Regional Trial Court, Makati, a complaint for
injunction and damages.4 The complaint sought to enjoin CIGLA and any person claiming membership therein from striking or otherwise disrupting the operations of the
bank.

On June 18, 1990, respondent CIGLA filed with the trial court a motion to dismiss the complaint. The motion alleged that:

a) The Court had no jurisdiction, this being labor dispute.

b) The guards were employees of the bank.

c) There were pending cases/labor disputes between the guards and the bank at the different agencies of the Department of Labor and Employment (DOLE).

d) The bank was guilty of forum shopping in filing the complaint with the Regional Trial Court after submitting itself voluntarily to the jurisdiction of the different
agencies of the DOLE.

By order dated August 19, 1990, the trial court denied respondent CIGLA's motion to dismiss. The relevant portion of the order reads as follows:

"Plaintiff in its Opposition alleged that jurisdiction of the court is determined by the allegations of the complaints. In the plaintiff's complaint there are allegations, which
negate any employer-employee relationship between it and the CIGLA members; however the Court could not dismiss the case and lift the restraining order without first
threshing out the same at the trial of the case.

The Court finding the grounds alleged in the defendant's motion well taken, the motion is hereby denied.

SO ORDERED."

In due time, respondent CIGLA filed with the trial court a motion for reconsideration of the above-mentioned order. On October 1, 1990, the trial court denied the
motion.

Subsequently, respondent CIGLA filed with the trial court its answer to the complaint, and averred as special and affirmative defense lack of jurisdiction of the court
over the subject matter of the case.Treating the averment as motion to dismiss, on April 27, 1991, the lower court issued an order denying the motion. The lower court
stated:

"The Court noted in defendant's Memorandum of Authorities that they made no mention who among the parties - the plaintiff bank or the defendants union - paid their
wages or salaries and who has the power to dismiss them.

Defendants also alleged that the complaint states no valid cause of action as plaintiff's allegations are purely anchored on conjectures and conclusions and not based on
ultimate facts.
 3

Plaintiff in its Opposition alleged that it is a well-settled rule, that in a motion to dismiss based on the ground that the complaint fails to state a cause of action, the
question submitted to the court for determination is the sufficiency of the allegation in the complaint itself. Plaintiff also alleged that the defendants disputed the
jurisdiction of the court, the parties having employer-employee relationship; this mere allegation did not serve to automatically deprive the court of its jurisdiction duly
conferred by the allegations of the complaint; in the opinion of the defendants, a labor dispute exists, the court is duty bound to find out if such circumstances really
exist.

The Court weighing the evidence and jurisprudence in support of the respective contention of the parties, and finding that in the case at bar, plaintiff seeks to recover
pecuniary damages, the Court gives more credence to the decisions cited by the plaintiff, hence the special and affirmative defenses alleged in the answer treated as a
'Motion to Dismiss' is hereby denied."

On May 24, 1991, respondent CIGLA filed with the Court of Appeals a petition for certiorari with preliminary injunction 5 assailing the validity of the proceedings had
before the regional trial court.

After due proceedings, on March 31, 1992, the Court of Appeals promulgated its decision in CIGLA's favor, the dispositive portion of which states:

"WHEREFORE, the Writ of Certiorari is GRANTED, and the proceedings before respondent Judge more particularly the challenged orders are declared null and void and
respondent Judge is enjoined from taking any further action in Civil Case No. 90-1612 except for the purpose of dismissing it. Following, however, the disposition in San
Miguel Corporation Employees Union vs. Bersamira, the status quo ante declaration of strike shall be observed pending the proceedings in the National Conciliation and
Mediation Board, Department of Labor and Employment, National Capital Region (Annex A of Petition). No Costs.

SO ORDERED."

On April 29, 1992, petitioner Citibank filed a motion for reconsideration of the decision. On February 12, 1993, the Court of Appeals denied the motion, finding that the
arguments in the motion forreconsideration are but a rehash, if not a repetition, of the arguments in its comments, which had been considered by the Court in its
decision.

Hence, the petitioner's recourse to this Court.

The Issue

The basic issue involved is whether it is the labor tribunal or the regional trial court that has jurisdiction over the subject matter of the complaint filed by Citibank with
the trial court.

Petitioner's Submission

Petitioner Citibank contends that there is no employer-employee relationship between Citibank and the security guards represented by respondent CIGLA and that there
is no "labor dispute" in the subject controversy. The security guards were employees of El Toro security agency, not of Citibank. Its service contract with Citibank had
expired and not renewed.

The Court's Ruling

We sustain the petitioner's contention. This Court has held in many cases that "in determining the existence of an employer-employee relationship, the following
elements are generally considered: 1) the selection and engagement of the employee; 2) the payment of wages; 3) the power of dismissal; and 4) the employer's
 4

power to control the employee with respect to the means and methods by which the workis to be accomplished".6 It has been decided also that the Labor Arbiter has no
jurisdiction over a claim filed where no employer-employee relationship existed between a company and the security guards assigned to it by a security service
contractor.7 In this case, it was the security agency El Toro that recruited, hired and assigned the watchmen to their place of work. It was the security agency that was
answerable to Citibank for the conduct of its guards.

The question arises. Is there a labor dispute between Citibank and the security guards, members of respondent CIGLA, regardless of whether they stand in the relation
of employer and employees? Article 212, paragraph l of the Labor Code provides the definition of a "labor dispute". It "includes any controversy or matter concerning
terms or 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."

If at all, the dispute between Citibank and El Toro security agency is one regarding the termination or non-renewal of the contract of services. This is a civil dispute 8. El
Toro was an independent contractor. Thus, no employer-employee relationship existed between Citibank and the security guard members of the union in the security
agency who were assigned to secure the bank's premises and property. Hence, there was no labor dispute and no right to strike against the bank.

It is a basic rule of procedure that "jurisdiction of the court over the subject matter of the action is determined by the allegations of the complaint, irrespective of
whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. The jurisdiction of the court can not be made to depend upon the
defenses set up in the answer or upon the motion to dismiss, for otherwise, the question of jurisdiction would almost entirely depend upon the defendant." 9 "What
determines the jurisdiction of the court is the nature of the action pleaded as appearing from the allegations in the complaint. The averments therein and the character
of the relief sought are the ones to be consulted."10

In the complaint filed with the trial court, petitioner alleged that in 1983, it entered into a contract with El Toro, a security agency, for security and protection service.
The parties renewed the contract yearly until April 22, 1990. Petitioner further alleged that from June 11, 1990, until the filing of the complaint, El Toro security guards
formerly assigned to guard Citibank premises loitered around the bank's premises in large groups and threatened to stage a strike, which would hamper its operations
and the normal conduct of its business and that the bank would suffer damages should a strike push through.

On the basis of the allegations of the complaint, it is safe to conclude that the dispute involved is a civil one, not a labor dispute. 11 Consequently, we rule that
jurisdiction over the subject matter of the complaint lies with the regional trial court.

Relief

WHEREFORE, the Court hereby GRANTS the petition for review on certiorari. We REVERSE and SET ASIDE the decision of the Court of Appeals and its resolution denying
reconsideration in CA-G. R. SP No. 25584, and REMAND the records of the case to the Regional Trial Court, Makati, for further proceedings in line with the ruling herein
that jurisdiction over the subject matter of the complaint in Civil Case No. 90-1612, is vested therein.

No pronouncement as to costs.

SO ORDERED.
 5

[G.R. No. 120567. March 20, 1998]

PHILIPPINE AIRLINES, INC., petitioner, vs., NATIONAL LABOR RELATIONS COMMISSION, FERDINAND PINEDA and GODOFREDO CABLING,respondents.

DECISION

MARTINEZ, J.:

Can the National Labor Relations Commission (NLRC), even without a complaint for illegal dismissal filed before the labor arbiter, entertain an action for injunction and
issue such writ enjoining petitioner Philippine Airlines, Inc. from enforcing its Orders of dismissal against private respondents, and ordering petitioner to reinstate the
private respondents to their previous positions?

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

Private respondents are flight stewards of the petitioner. Both were dismissed from the service for their alleged involvement in the April 3, 1993 currency smuggling in
Hong Kong.

Aggrieved by said dismissal, private respondents filed with the NLRC a petition [1] for injunction praying that:

"I. Upon filing of this Petition, a temporary restraining order be issued, prohibiting respondents (petitioner herein) from effecting or enforcing the Decision dated Feb.
22, 1995, or to reinstate petitioners temporarily while a hearing on the propriety of the issuance of a writ of preliminary injunction is being undertaken;

"II. After hearing, a writ of preliminary mandatory injunction be issued ordering respondent to reinstate petitioners to their former positions pending the hearing of this
case, or, prohibiting respondent from enforcing its Decision dated February 22,1995 while this case is pending adjudication;

"III. After hearing, that the writ of preliminary injunction as to the reliefs sought for be made permanent, that petitioners be awarded full backwages, moral damages of
PHP 500,000.00 each and exemplary damages of PHP 500,000.00 each, attorneys fees equivalent to ten percent of whatever amount is awarded, and the costs of suit."

On April 3, 1995, the NLRC issued a temporary mandatory injunction [2] enjoining petitioner to cease and desist from enforcing its February 22, 1995 Memorandum of
dismissal. In granting the writ, the NLRC considered the following facts, to wit:

x x x that almost two (2) years ago, i.e. on April 15, 1993, the petitioners were instructed to attend an investigation by respondents Security and Fraud Prevention Sub-
Department regarding an April 3, 1993 incident in Hongkong at which Joseph Abaca, respondents Avionics Mechanic in Hongkong was intercepted by the Hongkong
Airport Police at Gate 05 xxx the ramp area of the Kai Tak International Airport while xxx about to exit said gate carrying a xxx bag said to contain some 2.5 million
pesos in Philippine Currencies. That at the Police Station, Mr. Abaca claimed that he just found said plastic bag at the Skybed Section of the arrival flight PR300/03 April
93, where petitioners served as flight stewards of said flight PR300; x x the petitioners sought a more detailed account of what this HKG incident is all about; but
instead, the petitioners were administratively charged, a hearing on which did not push through until almost two (2) years after, i.e. on January 20, 1995 xxx where a
 6

confrontation between Mr. Abaca and petitioners herein was compulsorily arranged by the respondents disciplinary board at which hearing, Abaca was made to identify
petitioners as co-conspirators; that despite the fact that the procedure of identification adopted by respondents Disciplinary Board was anomalous as there was no one
else in the line-up (which could not be called one) but petitioners xxx Joseph Abaca still had difficulty in identifying petitioner Pineda as his co-conspirator, and as to
petitioner Cabling, he was implicated and pointed by Abaca only after respondents Atty. Cabatuando pressed the former to identify petitioner Cabling as co-conspirator;
that with the hearing reset to January 25, 1995, Mr. Joseph Abaca finally gave exculpating statements to the board in that he cleared petitioners from any participation
or from being the owners of the currencies, and at which hearing Mr. Joseph Abaca volunteered the information that the real owner of said money was one who
frequented his headquarters in Hongkong to which information, the Disciplinary Board Chairman, Mr. Ismael Khan, opined for the need for another hearing to go to the
bottom of the incident; that from said statement, it appeared that Mr. Joseph Abaca was the courier, and had another mechanic in Manila who hid the currency at the
planes skybed for Abaca to retrieve in Hongkong, which findings of how the money was found was previously confirmed by Mr. Joseph Abaca himself when he was first
investigated by the Hongkong authorities; that just as petitioners thought that they were already fully cleared of the charges, as they no longer received any
summons/notices on the intended additional hearings mandated by the Disciplinary Board, they were surprised to receive on February 23, 1995 xxx a Memorandum
dated February 22, 1995 terminating their services for alleged violation of respondents Code of Discipline effective immediately; that sometime xxx first week of March,
1995, petitioner Pineda received another Memorandum from respondent Mr. Juan Paraiso, advising him of his termination effective February 3, 1995, likewise for
violation of respondents Code of Discipline; x x x"

In support of the issuance of the writ of temporary injunction, the NLRC adopted the view that: (1) private respondents cannot be validly dismissed on the strength of
petitioner's Code of Discipline which was declared illegal by this Court in the case of PAL, Inc. vs. NLRC, (G.R. No. 85985), promulgated August 13, 1993, for the reason
that it was formulated by the petitioner without the participation of its employees as required in R.A. 6715, amending Article 211 of the Labor Code; (2) the whimsical,
baseless and premature dismissals of private respondents which "caused them grave and irreparable injury" is enjoinable as private respondents are left "with no
speedy and adequate remedy at law'"except the issuance of a temporary mandatory injunction; (3) the NLRC is empowered under Article 218 (e) of the Labor Code not
only to restrain any actual or threatened commission of any or all prohibited or unlawful acts but also to require the performance of a particular act in any labor dispute,
which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party; and (4) the temporary mandatory power of the NLRC was
recognized by this Court in the case of Chemo-Technicshe Mfg., Inc. Employees Union,DFA, et.al. vs. Chemo-Technische Mfg., Inc. [G.R. No. 107031, January 25,1993].

On May 4,1995, petitioner moved for reconsideration [3] arguing that the NLRC erred:

1. in granting a temporary injunction order when it has no jurisdiction to issue an injunction or restraining order since this may be issued only under Article 218 of the
Labor Code if the case involves or arises from labor disputes;

2. in granting a temporary injunction order when the termination of private respondents have long been carried out;

3. ..in ordering the reinstatement of private respondents on the basis of their mere allegations, in violation of PAL's right to due process;

4. ..in arrogating unto itself management prerogative to discipline its employees and divesting the labor arbiter of its original and exclusive jurisdiction over illegal
dismissal cases;

5. ..in suspending the effects of termination when such action is exclusively within the jurisdiction of the Secretary of Labor;

6. ..in issuing the temporary injunction in the absence of any irreparable or substantial injury to both private respondents.

On May 31,1995, the NLRC denied petitioner's motion for reconsideration, ruling:
 7

The respondent (now petitioner), for one, cannot validly claim that we cannot exercise our injunctive power under Article 218 (e) of the Labor Code on the pretext that
what we have here is not a labor dispute as long as it concedes that as defined by law, a(l) Labor Dispute includes any controversy or matter concerning terms or
conditions of employment. . If security of tenure, which has been breached by respondent and which, precisely, is sought to be protected by our temporary mandatory
injunction (the core of controversy in this case) is not a term or condition of employment, what then is?

xxxxxxxxx

Anent respondents second argument x x x, Article 218 (e) of the Labor Code x x x empowered the Commission not only to issue a prohibitory injunction, but a
mandatory (to require the performance) one as well. Besides, as earlier discussed, we already exercised (on August 23,1991) this temporary mandatory injunctive
power in the case of Chemo-Technische Mfg., Inc. Employees Union-DFA et.al. vs. Chemo-Technishe Mfg., Inc., et. al. (supra) and effectively enjoined one (1) month
old dismissals by Chemo-Technische and that our aforesaid mandatory exercise of injunctive power, when questioned through a petition for certiorari, was sustained by
the Third Division of the Supreme court per its Resolution dated January 25,1993.

xxxxxxxxx

Respondents fourth argument that petitioner's remedy for their dismissals is 'to file an illegal dismissal case against PAL which cases are within the original and
exclusive jurisdiction of the Labor Arbiter' is ignorant. In requiring as a condition for the issuance of a 'temporary or permanent injunction'- '(4) That complainant has no
adequate remedy at law;' Article 218 (e) of the Labor Code clearly envisioned adequacy , and not plain availability of a remedy at law as an alternative bar to the
issuance of an injunction. An illegal dismissal suit (which takes, on its expeditious side, three (3) years before it can be disposed of) while available as a remedy under
Article 217 (a) of the Labor Code, is certainly not an 'adequate; remedy at law. Ergo, it cannot, as an alternative remedy, bar our exercise of that injunctive power given
us by Article 218 (e) of the Code.

xxx xxx xxx

Thus, Article 218 (e), as earlier discussed [which empowers this Commission 'to require the performance of a particular act' (such as our requiring respondent 'to cease
and desist from enforcing' its whimsical memoranda of dismissals and 'instead to reinstate petitioners to their respective position held prior to their subject dismissals')
in 'any labor dispute which, if not xxx performed forthwith, may cause grave and irreparable damage to any party'] stands as the sole 'adequate remedy at law' for
petitioners here.

Finally, the respondent, in its sixth argument claims that even if its acts of dismissing petitioners 'may be great, still the same is capable of compensation', and that
consequently, 'injunction need not be issued where adequate compensation at law could be obtained'. Actually, what respondent PAL argues here is that we need not
interfere in its whimsical dismissals of petitioners as, after all, it can pay the latter its backwages. x x x

But just the same, we have to stress that Article 279 does not speak alone of backwages as an obtainable relief for illegal dismissal; that reinstatement as well is the
concern of said law, enforceable when necessary, through Article 218 (e) of the Labor Code (without need of an illegal dismissal suit under Article 217 (a) of the Code) if
such whimsical and capricious act of illegal dismissal will 'cause grave or irreparable injury to a party'. x x x " [4]

Hence, the present recourse.

Generally, injunction is a preservative remedy for the protection of one's substantive rights or interest. It is not a cause of action in itself but merely a provisional
remedy, an adjunct to a main suit. It is resorted to only when there is a pressing necessity to avoid injurious consequences which cannot be remedied under any
standard of compensation. The application of the injunctive writ rests upon the existence of an emergency or of a special reason before the main case be regularly
 8

heard. The essential conditions for granting such temporary injunctive relief are that the complaint alleges facts which appear to be sufficient to constitute a proper
basis for injunction and that on the entire showing from the contending parties, the injunction is reasonably necessary to protect the legal rights of the plaintiff pending
the litigation.[5] Injunction is also a special equitable relief granted only in cases where there is no plain, adequate and complete remedy at law. [6]

In labor cases, Article 218 of the Labor Code empowers the NLRC-

"(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the performance of a particular act in any labor
dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party; x
x x." (Emphasis Ours)

Complementing the above-quoted provision, Sec. 1, Rule XI of the New Rules of Procedure of the NLRC, pertinently provides as follows:

"Section 1. Injunction in Ordinary Labor Dispute.-A preliminary injunction or a restraining order may be granted by the Commission through its divisions pursuant to the
provisions of paragraph (e) of Article 218 of the Labor Code, as amended, when it is established on the bases of the sworn allegations in the petition that the acts
complained of, involving or arising from any labor dispute before the Commission, which, if not restrained or performed forthwith, may cause grave or irreparable
damage to any party or render ineffectual any decision in favor of such party.

xxx xxx xxx

The foregoing ancillary power may be exercised by the Labor Arbiters only as an incident to the cases pending before them in order to preserve the rights of the parties
during the pendency of the case, but excluding labor disputes involving strikes or lockout. [7] (Emphasis Ours)

From the foregoing provisions of law, the power of the NLRC to issue an injunctive writ originates from "any labor dispute" upon application by a party thereof, which
application if not granted "may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party."

The term "labor dispute" is defined as "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 or not the disputants stand in the proximate
relation of employers and employees."[8]

The term "controversy" is likewise defined as "a litigated question; adversary proceeding in a court of law; a civil action or suit, either at law or in equity; a justiciable
dispute."[9]

A "justiciable controversy" is "one involving an active antagonistic assertion of a legal right on one side and a denial thereof on the other concerning a real, and not a
mere theoretical question or issue."[10]

Taking into account the foregoing definitions, it is an essential requirement that there must first be a labor dispute between the contending parties before the labor
arbiter. In the present case, there is no labor dispute between the petitioner and private respondents as there has yet been no complaint for illegal dismissal filed with
the labor arbiter by the private respondents against the petitioner.

The petition for injunction directly filed before the NLRC is in reality an action for illegal dismissal. This is clear from the allegations in the petition which prays for:
reinstatement of private respondents; award of full backwages, moral and exemplary damages; and attorney's fees. As such, the petition should have been filed with
the labor arbiter who has the original and exclusive jurisdiction to hear and decide the following cases involving all workers, whether agricultural or non-agricultural:
 9

(1) Unfair labor practice;

(2) Termination disputes;

(3) If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of
employment;

(4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;

(5) Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and

(6) Except claims for employees compensation, social security, medicare and maternity benefits, all other claims arising from employer-employee relations, including
those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P 5,000.00), whether or not accompanied with a claim for
reinstatement.[11]

The jurisdiction conferred by the foregoing legal provision to the labor arbiter is both original and exclusive, meaning, no other officer or tribunal can take cognizance of,
hear and decide any of the cases therein enumerated. The only exceptions are where the Secretary of Labor and Employment or the NLRC exercises the power of
compulsory arbitration, or the parties agree to submit the matter to voluntary arbitration pursuant to Article 263 (g) of the Labor Code, the pertinent portions of which
reads:

"(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of
Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has
already taken place at the time of assumption or certification, all striking or locked out employees shall immediately resume operations and readmit all workers under
the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law
enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same.

xxxxxxxxx"

On the other hand, the NLRC shall have exclusive appellate jurisdiction over all cases decided by labor arbiters as provided in Article 217(b) of the Labor Code. In short,
the jurisdiction of the NLRC in illegal dismissal cases is appellate in nature and, therefore, it cannot entertain the private respondents' petition for injunction which
challenges the dismissal orders of petitioner. Article 218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its divisions to issue writs of
injunction, considering that Section 1 of Rule XI of the New Rules of Procedure of the NLRC makes injunction only an ancillary remedy in ordinary labor disputes" [12]

Thus, the NLRC exceeded its jurisdiction when it issued the assailed Order granting private respondents' petition for injunction and ordering the petitioner to reinstate
private respondents.

The argument of the NLRC in its assailed Order that to file an illegal dismissal suit with the labor arbiter is not an "adequate" remedy since it takes three (3) years
before it can be disposed of, is patently erroneous. An "adequate" remedy at law has been defined as one "that affords relief with reference to the matter in
controversy, and which is appropriate to the particular circumstances of the case." [13] It is a remedy which is equally beneficial, speedy and sufficient which will
promptly relieve the petitioner from the injurious effects of the acts complained of. [14]
 10

Under the Labor Code, the ordinary and proper recourse of an illegally dismissed employee is to file a complaint for illegal dismissal with the labor arbiter. [15] In the case
at bar, private respondents disregarded this rule and directly went to the NLRC through a petition for injunction praying that petitioner be enjoined from enforcing its
dismissal orders. In Lamb vs. Phipps,[16] we ruled that if the remedy is specifically provided by law, it is presumed to be adequate. Moreover, the preliminary mandatory
injunction prayed for by the private respondents in their petition before the NLRC can also be entertained by the labor arbiter who, as shown earlier, has the ancillary
power to issue preliminary injunctions or restraining orders as an incident in the cases pending before him in order to preserve the rights of the parties during the
pendency of the case.[17]

Furthermore, an examination of private respondents' petition for injunction reveals that it has no basis since there is no showing of any urgency or irreparable injury
which the private respondents might suffer. An injury is considered irreparable if it is of such constant and frequent recurrence that no fair and reasonable redress can
be had therefor in a court of law, [18] or where there is no standard by which their amount can be measured with reasonable accuracy, that is, it is not susceptible of
mathematical computation. It is considered irreparable injury when it cannot be adequately compensated in damages due to the nature of the injury itself or the nature
of the right or property injured or when there exists no certain pecuniary standard for the measurement of damages. [19]

In the case at bar, the alleged injury which private respondents stand to suffer by reason of their alleged illegal dismissal can be adequately compensated and therefore,
there exists no "irreparable injury," as defined above which would necessitate the issuance of the injunction sought for. Article 279 of the Labor Code provides that an
employee who is unjustly dismissed from employment shall be entitled to reinstatement, without loss of seniority rights and other privileges, and to the payment of full
backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement.

The ruling of the NLRC that the Supreme Court upheld its power to issue temporary mandatory injunction orders in the case of Chemo-Technische Mfg., Inc. Employees
Union-DFA, et.al. vs. Chemo-Technische Mfg., Inc. et.al., docketed as G.R. No. 107031, is misleading. As correctly argued by the petitioner, no such pronouncement
was made by this Court in said case. On January 25,1993, we issued a Minute Resolution in the subject case stating as follows:

"Considering the allegations contained, the issues raised and the arguments adduced in the petition for certiorari , as well as the comments of both public and private
respondents thereon, and the reply of the petitioners to private respondent's motion to dismiss the petition, the Court Resolved to DENY the same for being premature."

It is clear from the above resolution that we did not in anyway sustain the action of the NLRC in issuing such temporary mandatory injunction but rather we dismissed
the petition as the NLRC had yet to rule upon the motion for reconsideration filed by peitioner. Thus, the minute resolution denying the petition for being prematurely
filed.

Finally, an injunction, as an extraordinary remedy, is not favored in labor law considering that it generally has not proved to be an effective means of settling labor
disputes.[20] It has been the policy of the State to encourage the parties to use the non-judicial process of negotiation and compromise, mediation and arbitration.
[21]
Thus, injunctions may be issued only in cases of extreme necessity based on legal grounds clearly established, after due consultations or hearing and when all efforts
at conciliation are exhausted which factors, however, are clearly absent in the present case.

WHEREFORE, the petition is hereby GRANTED. The assailed Orders dated April 3,1995 and May 31,1995, issued by the National Labor Relations Commission (First
Division), in NLRC NCR IC No. 000563-95, are hereby REVERSED and SET ASIDE.

SO ORDERED.
 11

G.R. No. 159577 May 3, 2006

CHARLITO PEÑARANDA, Petitioner,

vs.
BAGANGA PLYWOOD CORPORATION and HUDSON CHUA, Respondents.

DECISION

PANGANIBAN, CJ:

Managerial employees and members of the managerial staff are exempted from the provisions of the Labor Code on labor standards. Since petitioner belongs to this
class of employees, he is not entitled to overtime pay and premium pay for working on rest days.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the January 27, 2003 2 and July 4, 20033 Resolutions of the Court of Appeals (CA) in CA-
GR SP No. 74358. The earlier Resolution disposed as follows:

"WHEREFORE, premises considered, the instant petition is hereby DISMISSED."4

The latter Resolution denied reconsideration.

On the other hand, the Decision of the National Labor Relations Commission (NLRC) challenged in the CA disposed as follows:

"WHEREFORE, premises considered, the decision of the Labor Arbiter below awarding overtime pay and premium pay for rest day to complainant is hereby REVERSED
and SET ASIDE, and the complaint in the above-entitled case dismissed for lack of merit. 5

The Facts

Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an employee of Baganga Plywood Corporation (BPC) to take charge of the operations and
maintenance of its steam plant boiler. 6 In May 2001, Peñaranda filed a Complaint for illegal dismissal with money claims against BPC and its general manager, Hudson
Chua, before the NLRC.7

After the parties failed to settle amicably, the labor arbiter 8 directed the parties to file their position papers and submit supporting documents. 9 Their respective
allegations are summarized by the labor arbiter as follows:

"[Peñaranda] through counsel in his position paper alleges that he was employed by respondent [Baganga] on March 15, 1999 with a monthly salary of P5,000.00 as
Foreman/Boiler Head/Shift Engineer until he was illegally terminated on December 19, 2000. Further, [he] alleges that his services [were] terminated without the
 12

benefit of due process and valid grounds in accordance with law. Furthermore, he was not paid his overtime pay, premium pay for working during holidays/rest days,
night shift differentials and finally claims for payment of damages and attorney’s fees having been forced to litigate the present complaint.

"Upon the other hand, respondent [BPC] is a domestic corporation duly organized and existing under Philippine laws and is represented herein by its General Manager
HUDSON CHUA, [the] individual respondent. Respondents thru counsel allege that complainant’s separation from service was done pursuant to Art. 283 of the Labor
Code. The respondent [BPC] was on temporary closure due to repair and general maintenance and it applied for clearance with the Department of Labor and
Employment, Regional Office No. XI to shut down and to dismiss employees (par. 2 position paper). And due to the insistence of herein complainant he was paid his
separation benefits (Annexes C and D, ibid). Consequently, when respondent [BPC] partially reopened in January 2001, [Peñaranda] failed to reapply. Hence, he was
not terminated from employment much less illegally. He opted to severe employment when he insisted payment of his separation benefits. Furthermore, being a
managerial employee he is not entitled to overtime pay and if ever he rendered services beyond the normal hours of work, [there] was no office order/or authorization
for him to do so. Finally, respondents allege that the claim for damages has no legal and factual basis and that the instant complaint must necessarily fail for lack of
merit."10

The labor arbiter ruled that there was no illegal dismissal and that petitioner’s Complaint was premature because he was still employed by BPC. 11 The temporary closure
of BPC’s plant did not terminate his employment, hence, he need not reapply when the plant reopened.

According to the labor arbiter, petitioner’s money claims for illegal dismissal was also weakened by his quitclaim and admission during the clarificatory conference that
he accepted separation benefits, sick and vacation leave conversions and thirteenth month pay. 12

Nevertheless, the labor arbiter found petitioner entitled to overtime pay, premium pay for working on rest days, and attorney’s fees in the total amount of P21,257.98.13

Ruling of the NLRC

Respondents filed an appeal to the NLRC, which deleted the award of overtime pay and premium pay for working on rest days. According to the Commission, petitioner
was not entitled to these awards because he was a managerial employee. 14

Ruling of the Court of Appeals

In its Resolution dated January 27, 2003, the CA dismissed Peñaranda’s Petition for Certiorari. The appellate court held that he failed to: 1) attach copies of the
pleadings submitted before the labor arbiter and NLRC; and 2) explain why the filing and service of the Petition was not done by personal service. 15

In its later Resolution dated July 4, 2003, the CA denied reconsideration on the ground that petitioner still failed to submit the pleadings filed before the NLRC. 16

Hence this Petition.17

The Issues

Petitioner states the issues in this wise:

"The [NLRC] committed grave abuse of discretion amounting to excess or lack of jurisdiction when it entertained the APPEAL of the respondent[s] despite the lapse of
the mandatory period of TEN DAYS.1avvphil.net
 13

"The [NLRC] committed grave abuse of discretion amounting to an excess or lack of jurisdiction when it rendered the assailed RESOLUTIONS dated May 8, 2002 and
AUGUST 16, 2002 REVERSING AND SETTING ASIDE the FACTUAL AND LEGAL FINDINGS of the [labor arbiter] with respect to the following:

"I. The finding of the [labor arbiter] that [Peñaranda] is a regular, common employee entitled to monetary benefits under Art. 82 [of the Labor Code].

"II. The finding that [Peñaranda] is entitled to the payment of OVERTIME PAY and OTHER MONETARY BENEFITS." 18

The Court’s Ruling

The Petition is not meritorious.

Preliminary Issue:

Resolution on the Merits

The CA dismissed Peñaranda’s Petition on purely technical grounds, particularly with regard to the failure to submit supporting documents.

In Atillo v. Bombay,19 the Court held that the crucial issue is whether the documents accompanying the petition before the CA sufficiently supported the allegations
therein. Citing this case, Piglas-Kamao v. NLRC20 stayed the dismissal of an appeal in the exercise of its equity jurisdiction to order the adjudication on the merits.

The Petition filed with the CA shows a prima facie case. Petitioner attached his evidence to challenge the finding that he was a managerial employee. 21 In his Motion for
Reconsideration, petitioner also submitted the pleadings before the labor arbiter in an attempt to comply with the CA rules. 22 Evidently, the CA could have ruled on the
Petition on the basis of these attachments. Petitioner should be deemed in substantial compliance with the procedural requirements.

Under these extenuating circumstances, the Court does not hesitate to grant liberality in favor of petitioner and to tackle his substantive arguments in the present case.
Rules of procedure must be adopted to help promote, not frustrate, substantial justice. 23 The Court frowns upon the practice of dismissing cases purely on procedural
grounds.24 Considering that there was substantial compliance, 25 a liberal interpretation of procedural rules in this labor case is more in keeping with the constitutional
mandate to secure social justice.26

First Issue:

Timeliness of Appeal

Under the Rules of Procedure of the NLRC, an appeal from the decision of the labor arbiter should be filed within 10 days from receipt thereof. 27

Petitioner’s claim that respondents filed their appeal beyond the required period is not substantiated. In the pleadings before us, petitioner fails to indicate when
respondents received the Decision of the labor arbiter. Neither did the petitioner attach a copy of the challenged appeal. Thus, this Court has no means to determine
from the records when the 10-day period commenced and terminated. Since petitioner utterly failed to support his claim that respondents’ appeal was filed out of time,
we need not belabor that point. The parties alleging have the burden of substantiating their allegations. 28

Second Issue:

Nature of Employment
 14

Petitioner claims that he was not a managerial employee, and therefore, entitled to the award granted by the labor arbiter.

Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor standards provide the working conditions of employees,
including entitlement to overtime pay and premium pay for working on rest days. 29 Under this provision, managerial employees are "those whose primary duty consists
of the management of the establishment in which they are employed or of a department or subdivision." 30

The Implementing Rules of the Labor Code state that managerial employees are those who meet the following conditions:

"(1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof;

"(2) They customarily and regularly direct the work of two or more employees therein;

"(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion
or any other change of status of other employees are given particular weight." 31

The Court disagrees with the NLRC’s finding that petitioner was a managerial employee. However, petitioner was a member of the managerial staff, which also takes
him out of the coverage of labor standards. Like managerial employees, officers and members of the managerial staff are not entitled to the provisions of law on labor
standards.32 The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties and responsibilities:

"(1) The primary duty consists of the performance of work directly related to management policies of the employer;

"(2) Customarily and regularly exercise discretion and independent judgment;

"(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is
employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge;
or (iii) execute under general supervision special assignments and tasks; and

"(4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work
described in paragraphs (1), (2), and (3) above."33

As shift engineer, petitioner’s duties and responsibilities were as follows:

"1. To supply the required and continuous steam to all consuming units at minimum cost.

"2. To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories.

"3. To evaluate performance of machinery and manpower.

"4. To follow-up supply of waste and other materials for fuel.

"5. To train new employees for effective and safety while working.

"6. Recommend parts and supplies purchases.

 15

"7. To recommend personnel actions such as: promotion, or disciplinary action.

"8. To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit.

"9. Implement Chemical Dosing.

"10. Perform other task as required by the superior from time to time." 34

The foregoing enumeration, particularly items 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the managerial staff. His duties and responsibilities conform to
the definition of a member of a managerial staff under the Implementing Rules.

Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of the machines and the performance of the workers
in the engineering section. This work necessarily required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As
supervisor, petitioner is deemed a member of the managerial staff. 35

Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was the foreman responsible for the operation of the
boiler.36 The term foreman implies that he was the representative of management over the workers and the operation of the department. 37 Petitioner’s evidence also
showed that he was the supervisor of the steam plant.38 His classification as supervisor is further evident from the manner his salary was paid. He belonged to the 10%
of respondent’s 354 employees who were paid on a monthly basis; the others were paid only on a daily basis. 39

On the basis of the foregoing, the Court finds no justification to award overtime pay and premium pay for rest days to petitioner.

WHEREFORE, the Petition is DENIED. Costs against petitioner.

SO ORDERED.

G.R. No. 169717 March 16, 2011

SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (SMCC-SUPER), ZACARRIAS
JERRY VICTORIO-Union President,Petitioner,
vs.
CHARTER CHEMICAL and COATING CORPORATION, Respondent.

DECISION

DEL CASTILLO, J.:

The right to file a petition for certification election is accorded to a labor organization provided that it complies with the requirements of law for proper registration. The
inclusion of supervisory employees in a labor organization seeking to represent the bargaining unit of rank-and-file employees does not divest it of its status as a
legitimate labor organization. We apply these principles to this case.
 16

This Petition for Review on Certiorari seeks to reverse and set aside the Court of Appeal’s March 15, 2005 Decision 1 in CA-G.R. SP No. 58203, which annulled and set
aside the January 13, 2000 Decision 2 of the Department of Labor and Employment (DOLE) in OS-A-6-53-99 (NCR-OD-M-9902-019) and the September 16, 2005
Resolution3 denying petitioner union’s motion for reconsideration.

Factual Antecedents

On February 19, 1999, Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms (petitioner union) filed a
petition for certification election among the regular rank-and-file employees of Charter Chemical and Coating Corporation (respondent company) with the Mediation
Arbitration Unit of the DOLE, National Capital Region.

On April 14, 1999, respondent company filed an Answer with Motion to Dismiss 4 on the ground that petitioner union is not a legitimate labor organization because of (1)
failure to comply with the documentation requirements set by law, and (2) the inclusion of supervisory employees within petitioner union. 5

Med-Arbiter’s Ruling

On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a Decision 6 dismissing the petition for certification election. The Med-Arbiter ruled that petitioner union is not
a legitimate labor organization because the Charter Certificate, "Sama-samang Pahayag ng Pagsapi at Authorization," and "Listahan ng mga Dumalo sa Pangkalahatang
Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas" were not executed under oath and certified by the union secretary and attested to by the union president
as required by Section 235 of the Labor Code 7 in relation to Section 1, Rule VI of Department Order (D.O.) No. 9, series of 1997. The union registration was, thus,
fatally defective.

The Med-Arbiter further held that the list of membership of petitioner union consisted of 12 batchman, mill operator and leadman who performed supervisory functions.
Under Article 245 of the Labor Code, said supervisory employees are prohibited from joining petitioner union which seeks to represent the rank-and-file employees of
respondent company.

As a result, not being a legitimate labor organization, petitioner union has no right to file a petition for certification election for the purpose of collective bargaining.

Department of Labor and Employment’s Ruling

On July 16, 1999, the DOLE initially issued a Decision 8 in favor of respondent company dismissing petitioner union’s appeal on the ground that the latter’s petition for
certification election was filed out of time. Although the DOLE ruled, contrary to the findings of the Med-Arbiter, that the charter certificate need not be verified and that
there was no independent evidence presented to establish respondent company’s claim that some members of petitioner union were holding supervisory positions, the
DOLE sustained the dismissal of the petition for certification after it took judicial notice that another union, i.e., Pinag-isang Lakas Manggagawa sa Charter Chemical and
Coating Corporation, previously filed a petition for certification election on January 16, 1998. The Decision granting the said petition became final and executory on
September 16, 1998 and was remanded for immediate implementation. Under Section 7, Rule XI of D.O. No. 9, series of 1997, a motion for intervention involving a
certification election in an unorganized establishment should be filed prior to the finality of the decision calling for a certification election. Considering that petitioner
union filed its petition only on February 14, 1999, the same was filed out of time.

On motion for reconsideration, however, the DOLE reversed its earlier ruling. In its January 13, 2000 Decision, the DOLE found that a review of the records indicates
that no certification election was previously conducted in respondent company. On the contrary, the prior certification election filed by Pinag-isang Lakas Manggagawa
sa Charter Chemical and Coating Corporation was, likewise, denied by the Med-Arbiter and, on appeal, was dismissed by the DOLE for being filed out of time. Hence,
there was no obstacle to the grant of petitioner union’s petition for certification election, viz:
 17

WHEREFORE, the motion for reconsideration is hereby GRANTED and the decision of this Office dated 16 July 1999 is MODIFIED to allow the certification election among
the regular rank-and-file employees of Charter Chemical and Coating Corporation with the following choices:

1. Samahang Manggagawa sa Charter Chemical-Solidarity of Unions in the Philippines for Empowerment and Reform (SMCC-SUPER); and

2. No Union.

Let the records of this case be remanded to the Regional Office of origin for the immediate conduct of a certification election, subject to the usual pre-election
conference.

SO DECIDED.9

Court of Appeal’s Ruling

On March 15, 2005, the CA promulgated the assailed Decision, viz:

WHEREFORE, the petition is hereby GRANTED. The assailed Decision and Resolution dated January 13, 2000 and February 17, 2000 are hereby [ANNULLED] and SET
ASIDE.

SO ORDERED.10

In nullifying the decision of the DOLE, the appellate court gave credence to the findings of the Med-Arbiter that petitioner union failed to comply with the documentation
requirements under the Labor Code. It, likewise, upheld the Med-Arbiter’s finding that petitioner union consisted of both rank-and-file and supervisory employees.
Moreover, the CA held that the issues as to the legitimacy of petitioner union may be attacked collaterally in a petition for certification election and the infirmity in the
membership of petitioner union cannot be remedied through the exclusion-inclusion proceedings in a pre-election conference pursuant to the ruling in Toyota Motor
Philippines v. Toyota Motor Philippines Corporation Labor Union. 11 Thus, considering that petitioner union is not a legitimate labor organization, it has no legal right to
file a petition for certification election.

Issues

Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in granting the respondent [company’s] petition
for certiorari (CA G.R. No. SP No. 58203) in spite of the fact that the issues subject of the respondent company[’s] petition was already settled with finality and barred
from being re-litigated.

II

Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in holding that the alleged mixture of rank-and-file
and supervisory employee[s] of petitioner [union’s] membership is [a] ground for the cancellation of petitioner [union’s] legal personality and dismissal of [the] petition
for certification election.

III
 18

Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in holding that the alleged failure to certify under
oath the local charter certificate issued by its mother federation and list of the union membership attending the organizational meeting [is a ground] for the cancellation
of petitioner [union’s] legal personality as a labor organization and for the dismissal of the petition for certification election. 12

Petitioner Union’s Arguments

Petitioner union claims that the litigation of the issue as to its legal personality to file the subject petition for certification election is barred by the July 16, 1999 Decision
of the DOLE. In this decision, the DOLE ruled that petitioner union complied with all the documentation requirements and that there was no independent evidence
presented to prove an illegal mixture of supervisory and rank-and-file employees in petitioner union. After the promulgation of this Decision, respondent company did
not move for reconsideration, thus, this issue must be deemed settled.

Petitioner union further argues that the lack of verification of its charter certificate and the alleged illegal composition of its membership are not grounds for the
dismissal of a petition for certification election under Section 11, Rule XI of D.O. No. 9, series of 1997, as amended, nor are they grounds for the cancellation of a
union’s registration under Section 3, Rule VIII of said issuance. It contends that what is required to be certified under oath by the local union’s secretary or treasurer
and attested to by the local union’s president are limited to the union’s constitution and by-laws, statement of the set of officers, and the books of accounts.

Finally, the legal personality of petitioner union cannot be collaterally attacked but may be questioned only in an independent petition for cancellation pursuant to
Section 5, Rule V, Book IV of the Rules to Implement the Labor Code and the doctrine enunciated in Tagaytay Highlands International Golf Club Incoprorated v.
Tagaytay Highlands Empoyees Union-PTGWO.13

Respondent Company’s Arguments

Respondent company asserts that it cannot be precluded from challenging the July 16, 1999 Decision of the DOLE. The said decision did not attain finality because the
DOLE subsequently reversed its earlier ruling and, from this decision, respondent company timely filed its motion for reconsideration.

On the issue of lack of verification of the charter certificate, respondent company notes that Article 235 of the Labor Code and Section 1, Rule VI of the Implementing
Rules of Book V, as amended by D.O. No. 9, series of 1997, expressly requires that the charter certificate be certified under oath.

It also contends that petitioner union is not a legitimate labor organization because its composition is a mixture of supervisory and rank-and-file employees in violation
of Article 245 of the Labor Code. Respondent company maintains that the ruling in Toyota Motor Philippines vs. Toyota Motor Philippines Labor Union 14 continues to be
good case law. Thus, the illegal composition of petitioner union nullifies its legal personality to file the subject petition for certification election and its legal personality
may be collaterally attacked in the proceedings for a petition for certification election as was done here.

Our Ruling

The petition is meritorious.

The issue as to the legal personality of petitioner union is not barred by the July 16, 1999 Decision of the DOLE.

A review of the records indicates that the issue as to petitioner union’s legal personality has been timely and consistently raised by respondent company before the Med-
Arbiter, DOLE, CA and now this Court. In its July 16, 1999 Decision, the DOLE found that petitioner union complied with the documentation requirements of the Labor
Code and that the evidence was insufficient to establish that there was an illegal mixture of supervisory and rank-and-file employees in its membership. Nonetheless,
 19

the petition for certification election was dismissed on the ground that another union had previously filed a petition for certification election seeking to represent the
same bargaining unit in respondent company.

Upon motion for reconsideration by petitioner union on January 13, 2000, the DOLE reversed its previous ruling. It upheld the right of petitioner union to file the subject
petition for certification election because its previous decision was based on a mistaken appreciation of facts. 15 From this adverse decision, respondent company timely
moved for reconsideration by reiterating its previous arguments before the Med-Arbiter that petitioner union has no legal personality to file the subject petition for
certification election.

The July 16, 1999 Decision of the DOLE, therefore, never attained finality because the parties timely moved for reconsideration. The issue then as to the legal
personality of petitioner union to file the certification election was properly raised before the DOLE, the appellate court and now this Court.

The charter certificate need not be certified under oath by the local union’s secretary or treasurer and attested to by its president.

Preliminarily, we must note that Congress enacted Republic Act (R.A.) No. 9481 16 which took effect on June 14, 2007. 17 This law introduced substantial amendments to
the Labor Code. However, since the operative facts in this case occurred in 1999, we shall decide the issues under the pertinent legal provisions then in force ( i.e., R.A.
No. 6715,18 amending Book V of the Labor Code, and the rules and regulations 19 implementing R.A. No. 6715, as amended by D.O. No. 9, 20

series of 1997) pursuant to our ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc. 21

In the main, the CA ruled that petitioner union failed to comply with the requisite documents for registration under Article 235 of the Labor Code and its implementing
rules. It agreed with the Med-Arbiter that the Charter Certificate, Sama-samang Pahayag ng Pagsapi at Authorization, and Listahan ng mga Dumalo sa Pangkalahatang
Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas were not executed under oath. Thus, petitioner union cannot be accorded the status of a legitimate labor
organization.

We disagree.

The then prevailing Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, provides:

Section 1. Chartering and creation of a local chapter — A duly registered federation or national union may directly create a local/chapter by submitting to the Regional
Office or to the Bureau two (2) copies of the following:

(a) A charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter;

(b) The names of the local/chapter’s officers, their addresses, and the principal office of the local/chapter; and

(c) The local/chapter’s constitution and by-laws provided that where the local/chapter’s constitution and by-laws [are] the same as [those] of the federation or national
union, this fact shall be indicated accordingly.

All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President.

As readily seen, the Sama-samang Pahayag ng Pagsapi at Authorization and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa
Saligang Batas are not among the documents that need to be submitted to the Regional Office or Bureau of Labor Relations in order to register a labor organization. As
to the charter certificate, the above-quoted rule indicates that it should be executed under oath. Petitioner union concedes and the records confirm that its charter
 20

certificate was not executed under oath. However, in San Miguel Corporation (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel
Corporation Monthlies Rank-and-File Union-FFW (MPPP-SMPP-SMAMRFU-FFW),22 which was decided under the auspices of D.O. No. 9, Series of 1997, we ruled –

In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil. 356 (1996), the Court ruled that it was not necessary for the charter certificate to be certified
and attested by the local/chapter officers. Id. While this ruling was based on the interpretation of the previous Implementing Rules provisions which were supplanted by
the 1997 amendments, we believe that the same doctrine obtains in this case. Considering that the charter certificate is prepared and issued by the national union and
not the local/chapter, it does not make sense to have the local/chapter’s officers x x x certify or attest to a document which they had no hand in the preparation
of.23 (Emphasis supplied)

In accordance with this ruling, petitioner union’s charter certificate need not be executed under oath. Consequently, it validly acquired the status of a legitimate labor
organization upon submission of (1) its charter certificate, 24 (2) the names of its officers, their addresses, and its principal office, 25 and (3) its constitution and by-laws 26
— the last two requirements having been executed under oath by the proper union officials as borne out by the records.

The mixture of rank-and-file and supervisory employees in petitioner union does not nullify its legal personality as a legitimate labor organization.

The CA found that petitioner union has for its membership both rank-and-file and supervisory employees. However, petitioner union sought to represent the bargaining
unit consisting of rank-and-file employees. Under Article 245 27 of the Labor Code, supervisory employees are not eligible for membership in a labor organization of rank-
and-file employees. Thus, the appellate court ruled that petitioner union cannot be considered a legitimate labor organization pursuant to Toyota Motor Philippines v.
Toyota Motor Philippines Corporation Labor Union28 (hereinafter Toyota).

Preliminarily, we note that petitioner union questions the factual findings of the Med-Arbiter, as upheld by the appellate court, that 12 of its members, consisting of
batchman, mill operator and leadman, are supervisory employees. However, petitioner union failed to present any rebuttal evidence in the proceedings below after
respondent company submitted in evidence the job descriptions 29 of the aforesaid employees. The job descriptions indicate that the aforesaid employees exercise
recommendatory managerial actions which are not merely routinary but require the use of independent judgment, hence, falling within the definition of supervisory
employees under Article 212(m)30 of the Labor Code. For this reason, we are constrained to agree with the Med-Arbiter, as upheld by the appellate court, that petitioner
union consisted of both rank-and-file and supervisory employees.

Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner union does not divest it of its status as a legitimate labor organization. The appellate
court’s reliance on Toyota is misplaced in view of this Court’s subsequent ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc. 31 (hereinafter Kawashima).
In Kawashima, we explained at length how and why the Toyota doctrine no longer holds sway under the altered state of the law and rules applicable to this case, viz:

R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition [on the co-mingling of supervisory and rank-and-file employees] would bring about on
the legitimacy of a labor organization.

It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules) which supplied the deficiency by introducing the following amendment to
Rule II (Registration of Unions):

"Sec. 1. Who may join unions. - x x x Supervisory employees and security guards shall not be eligible for membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor organizations of their own; Provided, that those supervisory employees who are included in an existing rank-and-
file bargaining unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x. (Emphasis supplied) and Rule V (Representation Cases and Internal-
Union Conflicts) of the Omnibus Rules, viz:
 21

"Sec. 1. Where to file. - A petition for certification election may be filed with the Regional Office which has jurisdiction over the principal office of the employer. The
petition shall be in writing and under oath.

Sec. 2. Who may file. - Any legitimate labor organization or the employer, when requested to bargain collectively, may file the petition.

The petition, when filed by a legitimate labor organization, shall contain, among others:

xxxx

(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; and provided further, that the appropriate bargaining unit
of the rank-and-file employees shall not include supervisory employees and/or security guards. (Emphasis supplied)

By that provision, any questioned mingling will prevent an otherwise legitimate and duly registered labor organization from exercising its right to file a petition for
certification election.

Thus, when the issue of the effect of mingling was brought to the fore in Toyota, the Court, citing Article 245 of the Labor Code, as amended by R.A. No. 6715, held:

"Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all. It cannot, for any guise
or purpose, be a legitimate labor organization. Not being one, an organization which carries a mixture of rank-and-file and supervisory employees cannot possess any of
the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor
organization is challenged on the basis of Article 245 of the Labor Code.

xxxx

In the case at bar, as respondent union's membership list contains the names of at least twenty-seven (27) supervisory employees in Level Five positions, the union
could not, prior to purging itself of its supervisory employee members, attain the status of a legitimate labor organization. Not being one, it cannot possess the requisite
personality to file a petition for certification election." (Emphasis supplied)

In Dunlop, in which the labor organization that filed a petition for certification election was one for supervisory employees, but in which the membership included rank-
and-file employees, the Court reiterated that such labor organization had no legal right to file a certification election to represent a bargaining unit composed of
supervisors for as long as it counted rank-and-file employees among its members.

It should be emphasized that the petitions for certification election involved in Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995,
respectively; hence, the 1989 Rules was applied in both cases.

But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended by Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules).
Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules – that the petition for certification election indicate that the bargaining unit of rank-
and-file employees has not been mingled with supervisory employees – was removed. Instead, what the 1997 Amended Omnibus Rules requires is a plain description of
the bargaining unit, thus:

Rule XI
Certification Elections
 22

xxxx

Sec. 4. Forms and contents of petition. - The petition shall be in writing and under oath and shall contain, among others, the following: x x x (c) The description of the
bargaining unit.

In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the validity of the 1997 Amended Omnibus Rules, although the specific provision involved therein
was only Sec. 1, Rule VI, to wit:

"Section. 1. Chartering and creation of a local/chapter.- A duly registered federation or national union may directly create a local/chapter by submitting to the Regional
Office or to the Bureau two (2) copies of the following: a) a charter certificate issued by the federation or national union indicating the creation or establishment of the
local/chapter; (b) the names of the local/chapter's officers, their addresses, and the principal office of the local/chapter; and (c) the local/ chapter's constitution and by-
laws; provided that where the local/chapter's constitution and by-laws is the same as that of the federation or national union, this fact shall be indicated accordingly.

All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President."

which does not require that, for its creation and registration, a local or chapter submit a list of its members.

Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay Highlands Employees Union-PGTWO in which the core issue was whether mingling affects the legitimacy
of a labor organization and its right to file a petition for certification election. This time, given the altered legal milieu, the Court abandoned the view
in Toyota and Dunlopand reverted to its pronouncement in Lopez that while there is a prohibition against the mingling of supervisory and rank-and-file employees in one
labor organization, the Labor Code does not provide for the effects thereof. Thus, the Court held that after a labor organization has been registered, it may exercise all
the rights and privileges of a legitimate labor organization. Any mingling between supervisory and rank-and-file employees in its membership cannot affect its legitimacy
for that is not among the grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation, false statement or fraud under
Article 239 of the Labor Code.

In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-and-File
Union-FFW, the Court explained that since the 1997 Amended Omnibus Rules does not require a local or chapter to provide a list of its members, it would be improper
for the DOLE to deny recognition to said local or chapter on account of any question pertaining to its individual members.

More to the point is Air Philippines Corporation v. Bureau of Labor Relations, which involved a petition for cancellation of union registration filed by the employer in 1999
against a rank-and-file labor organization on the ground of mixed membership: the Court therein reiterated its ruling in Tagaytay Highlands that the inclusion in a union
of disqualified employees is not among the grounds for cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under the circumstances
enumerated in Sections (a) and (c) of Article 239 of the Labor Code.

All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules, as interpreted by the Court in Tagaytay Highlands, San Miguel and Air
Philippines, had already set the tone for it. Toyota and Dunlop no longer hold sway in the present altered state of the law and the rules.32 [Underline supplied]

The applicable law and rules in the instant case are the same as those in Kawashima because the present petition for certification election was filed in 1999 when D.O.
No. 9, series of 1997, was still in effect. Hence, Kawashimaapplies with equal force here. As a result, petitioner union was not divested of its status as a legitimate labor
organization even if some of its members were supervisory employees; it had the right to file the subject petition for certification election.

The legal personality of petitioner union cannot be collaterally attacked by respondent company in the certification election proceedings.
 23

Petitioner union correctly argues that its legal personality cannot be collaterally attacked in the certification election proceedings. As we explained in Kawashima:

Except when it is requested to bargain collectively, an employer is a mere bystander to any petition for certification election; such proceeding is non-adversarial and
merely investigative, for the purpose thereof is to determine which organization will represent the employees in their collective bargaining with the employer. The choice
of their representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein; it cannot interfere with, much less oppose,
the process by filing a motion to dismiss or an appeal from it; not even a mere allegation that some employees participating in a petition for certification election are
actually managerial employees will lend an employer legal personality to block the certification election. The employer's only right in the proceeding is to be notified or
informed thereof.

The amendments to the Labor Code and its implementing rules have buttressed that policy even more. 33

WHEREFORE, the petition is GRANTED. The March 15, 2005 Decision and September 16, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 58203
are REVERSED and SET ASIDE. The January 13, 2000 Decision of the Department of Labor and Employment in OS-A-6-53-99 (NCR-OD-M-9902-019) is REINSTATED.

No pronouncement as to costs.

SO ORDERED.
 24

GR NO. 187887

PAMELA FLORENTINA JUMUAD VS. HY-FLYER FOOD, INC. AND/OR JESUS R. MONTEMAYOR

DECISION

MENDOZA, J.:

This is a petition for review on certiorari assailing the April 20, 2009 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 03346, which reversed the August 10,
2006 Decision[2] and the November 29, 2007 Resolution[3] of the National Labor Relations Commission, 4 th Division (NLRC), in NLRC Case No. V-000813-06. The NLRC
Decision and Resolution affirmed in toto the Decision[4] of the Labor Arbiter Julie C. Ronduque (LA) in RAB Case No. VII-10-2269-05 favoring the petitioner.

The Facts:

On May 22, 1995, petitioner Pamela Florentina P. Jumuad (Jumuad) began her employment with respondent Hi-Flyer Food, Inc. (Hi-Flyer), as management trainee. Hi-
Flyer is a corporation licensed to operate Kentucky Fried Chicken (KFC) restaurants in the Philippines. Based on her performance through the years, Jumuad received
several promotions until she became the area manager for the entire Visayas-Mindanao 1 region, comprising the provinces of Cebu, Bacolod, Iloilo and Bohol.[5]

Aside from being responsible in monitoring her subordinates, Jumuad was tasked to: 1) be highly visible in the restaurants under her jurisdiction; 2) monitor and
support day-to-day operations; and 3) ensure that all the facilities and equipment at the restaurant were properly maintained and serviced. [6] Among the branches
 25

under her supervision were the KFC branches in Gaisano Mall, Cebu City (KFC-Gaisano); in Cocomall, Cebu City (KFC-Cocomall); and in Island City Mall, Bohol (KFC-
Bohol).

As area manager, Jumuad was allowed to avail of Hi-Flyers car loan program, [7] wherein forty (40%) percent of the total loanable amount would be subsidized by Hi-
Flyer and the remaining sixty (60%) percent would be deducted from her salary. It was also agreed that in the event that she would resign or would be terminated prior
to the payment in full of the said car loan, she could opt to surrender the car to Hi-Flyer or to pay the full balance of the loan. [8]

In just her first year as Area Manager, Jumuad gained distinction and was awarded the 3 rd top area manager nationwide. She was rewarded with a trip to Singapore for
her excellent performance.[9]

On October 4, 2004, Hi Flyer conducted a food safety, service and sanitation audit at KFC-Gaisano. The audit, denominated as CHAMPS Excellence
Review (CER),revealed several sanitation violations, such as the presence of rodents and the use of a defective chiller for the storage of food. [10] When asked to explain,
Jumuad first pointed out that she had already taken steps to prevent the further infestation of the branch. As to why the branch became infested with rodents, Jumuad
faulted managements decision to terminate the services of the branchs pest control program and to rely solely on the pest control program of the mall. As for the
defective chiller, she explained that it was under repair at the time of the CER. [11] Soon thereafter, Hi-Flyer ordered the KFC-Gaisano branch closed.

Then, sometime in June of 2005, Hi-Flyer audited the accounts of KFC-Bohol amid reports that certain employees were covering up cash shortages. As a result, the
following irregularities were discovered: 1) cash shortage amounting to ₱62,290.85; 2) delay in the deposits of cash sales by an average of three days; 3) the presence
of two sealed cash-for-deposit envelopes containing paper cut-outs instead of cash; 4) falsified entries in the deposit logbook; 5) lapses in inventory control; and 6)
material product spoilage.[12] In her report regarding the incident, Jumuad disclaimed any fault in the incident by pointing out that she was the one responsible for the
discovery of this irregularity.[13]

On August 7, 2005, Hi-Flyer conducted another CER, this time at its KFC-Cocomall branch. Grout and leaks at the branchs kitchen wall, dried up spills from the
marinator, as well as a live rat under postmix, and signs of rodent gnawing/infestation were found. [14] This time, Jumuad explained to management that she had been
busy conducting management team meetings at the other KFC branches and that, at the date the CER was conducted, she had no scheduled visit at the KFC-Cocomall
branch.[15]

Seeking to hold Jumuad accountable for the irregularities uncovered in the branches under her supervision, Hi-Flyer sent Jumuad an Irregularities Report [16] and Notice
of Charges[17] which she received on September 5, 2005. On September 7, 2005 Jumuad submitted her written explanation. [18] On September 28, 2005, Hi-Flyer held an
administrative hearing where Jumuad appeared with counsel. Apparently not satisfied with her explanations, Hi-Flyer served her a Notice of Dismissal [19] dated October
14, 2005, effecting her termination on October 17, 2005.
 26

This prompted Jumuad to file a complaint against Hi-Flyer and/or Jesus R. Montemayor (Montemayor) for illegal dismissal before the NLRC on October 17, 2005, praying
for reinstatement and payment of separation pay, 13 th month pay, service incentive leave, moral and exemplary damages, and attorneys fees. Jumuad also sought the
reimbursement of the amount equivalent to her forty percent (40%) contribution to Hi-Flyers subsidized car loan program.

While the LA found that Jumuad was not completely blameless for the anomalies discovered, she was of the view that the employers prerogative to dismiss or layoff an
employee must be exercised without abuse of discretion and should be tempered with compassion and understanding. [20] Thus, the dismissal was too harsh considering
the circumstances. After finding that no serious cause for termination existed, the LA ruled that Jumuad was illegally dismissed. The LA disposed:

WHEREFORE, VIEWED FROM THE FOREGOING PREMISES, judgment is hereby rendered declaring complainants dismissal as ILLEGAL. Consequently, reinstatement not
being feasible, respondents HI-FLYER FOOD, INC. AND OR JESUS R. MONTEMAYOR are hereby ordered to pay, jointly and severally, complainant PAMELA FLORENTINA
P. JUMUAD, the total amount of THREE HUNDRED THIRTY-SIX THOUSAND FOUR HUNDRED PESOS ( ₱336,400.00), Philippine currency, representing Separation Pay,
within ten (10) days from receipt hereof, through the Cashier of this Arbitration Branch.

Further, same respondents are ordered to reimburse complainant an amount equivalent to 40% of the value of her car loaned pursuant to the car loan entitlement
memorandum.

Other claims are DISMISSED for lack of merit.[21]

Both Jumuad and Hi-Flyer appealed to the NLRC. Jumuad faulted the LA for not awarding backwages and damages despite its finding that she was illegally dismissed.
Hi-Flyer and Montemayor, on the other hand, assailed the finding that Jumuad was illegally dismissed and that they were solidarily liable therefor. They also questioned
the orders of the LA that they pay separation pay and reimburse the forty percent (40%) of the loan Jumuad paid pursuant to Hi-Flyers car entitlement program.

Echoing the finding of the LA that the dismissal of Jumuad was too harsh, the NLRC affirmed in toto the LA decision dated August 10, 2006. In addition, the NLRC noted
that even before the Irregularities Report and Notice of Charges were given to Jumuad on September 5, 2005, two (2) electronic mails (e-mails) between Montemayor
and officers of Hi-Flyer showed that Hi-Flyer was already determined to terminate Jumuad. The first e-mail [22] read:

From: Jess R. Montemayor

Sent: Tuesday, August 16, 2005 5:59 PM

 27

To: bebe chaves; Maria Judith N. Marcelo; Jennifer Coloma Ravela; Bernard Joseph A. Velasco

Cc: Odjie Belarmino; Jesse D. Cruz

Subject: RE: 049 KFC Cocomall Food Safety Risk/Product Quality Violation

I agree if the sanctions are light we should change them. In the case of Pamela however, the fact that Cebu Colon store had these violations is not the first time this
incident has happened in her area. The Bohol case was also in her area and maybe these two incidents is enough grounds already for her to be terminated or maybe
asked to resign instead of being terminated.

I know if any Ops person serves expired product this is ground for termination. I think serving off specs products such as this lumpy gravy in the case of Coco Mall
should be grounds for termination. How many customers have we lost due to this lumpy clearly out of specs gravy? 20 customers maybe.

Jess.

The second e-mail,[23] sent by one Bebe Chaves of Hi-Flyer to Montemayor and other officers of Hi-Flyer, reads:

From: bebe chaves

Sent: Sat 9/3/2005 3:45 AM

To: Maria Judith N. Marcelo

CC: Jennifer Coloma Ravela; Goodwin Belarmino; Jess R. Montemayor

Subject: RE: 049 KFC Cocomall Food Safety Risk/Product Quality Violation
 28

Jojo,

Just an update of our meeting yesterday with Jennifer. After having reviewed the case and all existing documents, we have decided that there is enough ground to
terminate her services. IR/Jennifer are working hand in hand to service due notice and close the case.

According to the NLRC, these e-mails were proof that Jumuad was denied due process considering that no matter how she would refute the charges hurled against her,
the decision of Hi-Flyer to terminate her would not change. [24]

Sustaining the order of the LA to reimburse Jumuad the amount equivalent to 40% of the value of the car loan, the NLRC explained that Jumuad enjoyed this benefit
during her period of employment as Area Manager and could have still enjoyed the same if not for her illegal dismissal. [25]

Finally, the NLRC held that the active participation of Montemayor in the illegal dismissal of Jumuad justified his solidary liability with Hi-Flyer.

Both Jumuad and Hi-Flyer sought reconsideration of the NLRC Decision but their respective motions were denied on November 29, 2007.[26]

Alleging grave abuse of discretion on the part of the NLRC, Hi-Flyer appealed the case before the CA in Cebu City.

On April 20, 2009, the CA rendered the subject decision reversing the decision of the labor tribunal. The appellate court disposed:
 29

WHEREFORE, in view of the foregoing, the Petition is GRANTED. The Decision of the National Labor Relations Commission (4 th Division) dated 28 September 2007 in
NLRC Case No. V-000813-06 (RAB Case No. VII-10-2269-05, as well as the Decision dated 10 August 2006 of the Honorable Labor Arbiter Julie C. Ronduque, and the
29 November 2006 Resolution of the NLRC denying petitioners Motion for Reconsideration dated 08 November 2007, are hereby REVERSED and SET ASIDE.

No pronouncement as to costs.

SO ORDERED.[27]

Contrary to the findings of the LA and the NLRC, the CA was of the opinion that the requirements of substantive and procedural due process were complied with
affording Jumuad an opportunity to be heard first, when she submitted her written explanation and then, when she was informed of the decision and the basis of her
termination.[28] As for the e-mail exchanges between Montemayor and the officers of Hi-Flyer, the CA opined that they did not equate to a predetermination of Jumuads
termination. It was of the view that the e-mail exchanges were mere discussions between Montemayor and other officers of Hi-Flyer on whether grounds for disciplinary
action or termination existed. To the mind of the CA, the e-mails just showed that Hi-Flyer extensively deliberated the nature and cause of the charges against Jumuad.
[29]

On the issue of loss of trust and confidence, the CA considered the deplorable sanitary conditions and the cash shortages uncovered at three of the seven KFC branches
supervised by Jumuad as enough bases for Hi-Flyer to lose its trust and confidence in her. [30]

With regard to the reimbursement of the 40% of the car loan as awarded by the labor tribunal, the CA opined that the terms of the car loan program did not provide for
reimbursement in case an employee was terminated for just cause and they, in fact, required that the employee should stay with the company for at least three (3)
years from the date of the loan to obtain the full 40% subsidy. The CA further stated that the rights and obligations of the parties should be litigated in a separate civil
action before the regular courts.[31]

The CA also exculpated Montemayor from any liability since it considered Jumuads dismissal with a just cause and it found no evidence that he acted with malice and
bad faith.[32]
 30

Hence, this petition on the following

GROUNDS:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLD[ING] AS VALID THE TERMINATION OF PETITIONERS SERVICES BY RESPONDENTS.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT REVERSED THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION 4 TH DIVISION
OF CEBU CITY WHICH AFFIRMED THE DECISION OF LABOR ARBITER JULUE RENDOQUE.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT REVERSED THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION 4 THDIVISION
OF CEBU CITY WHEN IT RULED THAT PETITIONER IS NOT ENTITLED TO REIMBURSEMENT OF FORTY PERCENT (40%) OF THE CAR VALUE BENEFITS.

It is a hornbook rule that factual findings of administrative or quasi-judicial bodies, which are deemed to have acquired expertise in matters within their respective
jurisdictions, are generally accorded not only respect but even finality, and bind the Court when supported by substantial evidence. [33] While this rule is strictly adhered
to in labor cases, the same rule, however, admits exceptions. These include: (1) when there is grave abuse of discretion; (2) when the findings are grounded on
speculation; (3) when the inference made is manifestly mistaken; (4) when the judgment of the Court of Appeals is based on a misapprehension of facts; (5) when the
factual findings are conflicting; (6) when the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of the parties; (7) when
the Court of Appeals overlooked undisputed facts which, if properly considered, would justify a different conclusion; (8) when the facts set forth by the petitioner are not
disputed by the respondent; and (9) when the findings of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record.
[34]

In the case at bench, the factual findings of the CA differ from that of the LA and the NLRC. This divergence of positions between the CA and the labor tribunal below
constrains the Court to review and evaluate assiduously the evidence on record.

The petition is without merit.

On whether Jumuad was illegally dismissed, Article 282 of the Labor Code provides:
 31

Art. 282. Termination by Employer. An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized
representative; and

(e) Other causes analogous to the foregoing.

Jumuad was terminated for neglect of duty and breach of trust and confidence. Gross negligence connotes want or absence of or failure to exercise slight care or
diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Fraud and willful neglect of duties
imply bad faith of the employee in failing to perform his job, to the detriment of the employer and the latters business. Habitual neglect, on the other hand, implies
repeated failure to perform one's duties for a period of time, depending upon the circumstances. It has been said that a single or an isolated act of negligence cannot
constitute as a just cause for the dismissal of an employee. [35] To be a ground for removal, the neglect of duty must be both gross and habitual.[36]

On the other hand, breach of trust and confidence, as a just cause for termination of employment, is premised on the fact that the employee concerned holds a position
of trust and confidence, where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. The betrayal of this trust is
the essence of the offense for which an employee is penalized. [37]

It should be noted, however, that the finding of guilt or innocence in a charge of gross and habitual neglect of duty does not preclude the finding of guilty or innocence
in a charge of breach of trust and confidence. Each of the charges must be treated separately, as the law itself has treated them separately. To repeat, to warrant
removal from service for gross and habitual neglect of duty, it must be shown that the negligence should not merely be gross, but also habitual. In breach of trust and
confidence, so long as it is shown there is some basis for management to lose its trust and confidence and that the dismissal was not used as an occasion for abuse, as
a subterfuge for causes which are illegal, improper, and unjustified and is genuine, that is, not a mere afterthought intended to justify an earlier action taken in bad
faith, the free will of management to conduct its own business affairs to achieve its purpose cannot be denied.

After an assiduous review of the facts as contained in the records, the Court is convinced that Jumuad cannot be dismissed on the ground of gross and habitual neglect
of duty. The Court notes the apparent neglect of Jumuad of her duty in ensuring that her subordinates were properly monitored and that she had dutifully done all that
was expected of her to ensure the safety of the consuming public who continue to patronize the KFC branches under her jursidiction. Had Jumuad discharged her duties
 32

to be highly visible in the restaurants under her jurisdiction, monitor and support the day to day operations of the branches and ensure that all the facilities and
equipment at the restaurant were properly maintained and serviced, the deplorable conditions and irregularities at the various KFC branches under her jurisdiction
would have been prevented.

Considering, however, that over a year had lapsed between the incidences at KFC-Gaisano and KFC-Bohol, and that the nature of the anomalies uncovered were each of
a different nature, the Court finds that her acts or lack of action in the performance of her duties is not born of habit.

Despite saying this, it cannot be denied that Jumuad willfully breached her duties as to be unworthy of the trust and confidence of Hi-Flyer. First, there is no denying
that Jumuad was a managerial employee. As correctly noted by the appellate court, Jumuad executed management policies and had the power to
discipline the employees of KFC branches in her area. She recommended actions on employees to the head office. Pertinent is Article 212 (m) of the Labor Code
defining a managerial employee as one who is vested with powers or prerogatives to lay down and execute management policies and/or hire, transfer, suspend, lay off,
recall, discharge, assign or discipline employees.

Based on established facts, the mere existence of the grounds for the loss of trust and confidence justifies petitioners dismissal. Pursuant to the Courts ruling in Lima
Land, Inc. v. Cuevas,[38] as long as there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee
concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded of his
position, a managerial employee may be dismissed.

In the present case, the CERs reports of Hi-Flyer show that there were anomalies committed in the branches managed by Jumuad. On the principle
of respondeat superior or command responsibility alone, Jumuad may be held liable for negligence in the performance of her managerial duties. She may not have been
directly involved in causing the cash shortages in KFC-Bohol, but her involvement in not performing her duty monitoring and supporting the day to day operations of the
branches and ensure that all the facilities and equipment at the restaurant were properly maintained and serviced, could have truly prevented the whole debacle from
ever occurring.

Moreover, it is observed that rather than taking proactive steps to prevent the anomalies at her branches, Jumuad merely effected remedial measures. In the restaurant
business where the health and well-being of the consuming public is at stake, this does not suffice. Thus, there is reasonable basis for Hi-Flyer to withdraw its trust in
her and dismissing her from its service.

The disquisition of the appellate court on the matter is also worth mentioning:
 33

In this case, there is ample evidence that private respondent indeed committed acts justifying loss of trust and confidence of Hi-Flyer, and eventually, which resulted to
her dismissal from service. Private respondents mismanagement and negligence in supervising the effective operation of KFC branches in the span of less than a year,
resulting in the closure of KFC-Gaisano due to deplorable sanitary conditions, cash shortages in KFC-Bohol, in which the said branch, at the time of discovery, was only
several months into operation, and the poor sanitation at KFC-Cocomall. The glaring fact that three (3) out of the seven (7) branches under her area were neglected
cannot be glossed over by private respondents explanation that there was no negligence on her part as the sanitation problem was structural, that she had been usually
busy conducting management team meetings in several branches of KFC in her area or that she had no participation whatsoever in the alleged cash shortages.

xxx

It bears stressing that both the Labor Arbiter and the NLRC found that private respondent was indeed lax in her duties. Thus, said the NLRC: xxx [i]t is Our considered
view that xxx complainant cannot totally claim that she was not remiss in her duties xxx. [39]

As the employer, Hi-Flyer has the right to regulate, according to its discretion and best judgment, all aspects of employment, including work assignment, working
methods, processes to be followed, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers.
Management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations. [40]

So long as they are exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, the employers exercise of its management prerogative must be upheld. [41]

In this case, Hi-Flyer exercised in good faith its management prerogative as there is no dispute that it has lost trust and confidence in her and her managerial abilities,
to its damage and prejudice. Her dismissal, was therefore, justified.

As for Jumuads claim for the reimbursement of the 40% of the value of the car loan subsidized by Hi-Flyer under its car loan policy, the same must also be denied. The
rights and obligations of the parties to a car loan agreement is not a proper issue in a labor dispute but in a civil one. [42] It involves the relationship of debtor and
creditor rather than employee-employer relations.[43] Jurisdiction, therefore, lies with the regular courts in a separate civil action. [44]
 34

The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural requirements of notice and hearing in
the termination of employment. On the other hand, the law also recognizes the right of the employer to expect from its workers not only good performance, adequate
work and diligence, but also good conduct and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will
patently be inimical to its interests.[45]

WHEREFORE, the petition is DENIED.

SO ORDERED.

PEOPLE’S BROADCASTING SERVICE VS. SEC. OF LABOR; MARCH 6, 2012

RESOLUTION

VELASCO, JR., J.:

In a Petition for Certiorari under Rule 65, petitioner Peoples Broadcasting Service, Inc. (Bombo Radyo Phils., Inc.) questioned the Decision and Resolution of the Court of
Appeals (CA) dated October 26, 2006 and June 26, 2007, respectively, in C.A. G.R. CEB-SP No. 00855.

Private respondent Jandeleon Juezan filed a complaint against petitioner with the Department of Labor and Employment (DOLE) Regional Office No. VII, Cebu City, for
illegal deduction, nonpayment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of
wages and noncoverage of SSS, PAG-IBIG and Philhealth. [1] After the conduct of summary investigations, and after the parties submitted their position papers, the DOLE
Regional Director found that private respondent was an employee of petitioner, and was entitled to his money claims. [2] Petitioner sought reconsideration of the
Directors Order, but failed. The Acting DOLE Secretary dismissed petitioners appeal on the ground that petitioner submitted a Deed of Assignment of Bank Deposit
instead of posting a cash or surety bond.When the matter was brought before the CA, where petitioner claimed that it had been denied due process, it was held that
petitioner was accorded due process as it had been given the opportunity to be heard, and that the DOLE Secretary had jurisdiction over the matter, as the jurisdictional
limitation imposed by Article 129 of the Labor Code on the power of the DOLE Secretary under Art. 128(b) of the Code had been repealed by Republic Act No. (RA)
7730.[3]
 35

In the Decision of this Court, the CA Decision was reversed and set aside, and the complaint against petitioner was dismissed. The dispositive portion of the Decision
reads as follows:

WHEREFORE, the petition is GRANTED. The Decision dated 26 October 2006 and the Resolution dated 26 June 2007 of the Court of Appeals in C.A. G.R. CEB-SP No.
00855 are REVERSED and SET ASIDE. The Order of the then Acting Secretary of the Department of Labor and Employment dated 27 January 2005 denying petitioners
appeal, and the Orders of the Director, DOLE Regional Office No. VII, dated 24 May 2004 and 27 February 2004, respectively, are ANNULLED. The complaint against
petitioner is DISMISSED.[4]

The Court found that there was no employer-employee relationship between petitioner and private respondent. It was held that while the DOLE may make a
determination of the existence of an employer-employee relationship, this function could not be co-extensive with the visitorial and enforcement power provided in Art.
128(b) of the Labor Code, as amended by RA 7730. The National Labor Relations Commission (NLRC) was held to be the primary agency in determining the existence of
an employer-employee relationship. This was the interpretation of the Court of the clause in cases where the relationship of employer-employee still exists in Art.
128(b).[5]

From this Decision, the Public Attorneys Office (PAO) filed a Motion for Clarification of Decision (with Leave of Court). The PAO sought to clarify as to when the visitorial
and enforcement power of the DOLE be not considered as co-extensive with the power to determine the existence of an employer-employee relationship. [6] In its
Comment,[7] the DOLE sought clarification as well, as to the extent of its visitorial and enforcement power under the Labor Code, as amended.

The Court treated the Motion for Clarification as a second motion for reconsideration, granting said motion and reinstating the petition. [8] It is apparent that there is a
need to delineate the jurisdiction of the DOLE Secretary vis--vis that of the NLRC.

Under Art. 129 of the Labor Code, the power of the DOLE and its duly authorized hearing officers to hear and decide any matter involving the recovery of wages and
other monetary claims and benefits was qualified by the proviso that the complaint not include a claim for reinstatement, or that the aggregate money claims not
exceed PhP 5,000. RA 7730, or an Act Further Strengthening the Visitorial and Enforcement Powers of the Secretary of Labor, did away with the PhP 5,000 limitation,
allowing the DOLE Secretary to exercise its visitorial and enforcement power for claims beyond PhP 5,000. The only qualification to this expanded power of the DOLE
was only that there still be an existing employer-employee relationship.

It is conceded that if there is no employer-employee relationship, whether it has been terminated or it has not existed from the start, the DOLE has no
jurisdiction. Under Art. 128(b) of the Labor Code, as amended by RA 7730, the first sentence reads, Notwithstanding the provisions of Articles 129 and 217 of this Code
to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives
shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor
 36

employment and enforcement officers or industrial safety engineers made in the course of inspection. It is clear and beyond debate that an employer-employee
relationship must exist for the exercise of the visitorial and enforcement power of the DOLE. The question now arises, may the DOLE make a determination of whether
or not an employer-employee relationship exists, and if so, to what extent?

The first portion of the question must be answered in the affirmative.

The prior decision of this Court in the present case accepts such answer, but places a limitation upon the power of the DOLE, that is, the determination of the existence
of an employer-employee relationship cannot be co-extensive with the visitorial and enforcement power of the DOLE. But even in conceding the power of the DOLE to
determine the existence of an employer-employee relationship, the Court held that the determination of the existence of an employer-employee relationship is still
primarily within the power of the NLRC, that any finding by the DOLE is merely preliminary.

This conclusion must be revisited.

No limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-employee relationship. No procedure was laid down where
the DOLE would only make a preliminary finding, that the power was primarily held by the NLRC. The law did not say that the DOLE would first seek the NLRCs
determination of the existence of an employer-employee relationship, or that should the existence of the employer-employee relationship be disputed, the DOLE would
refer the matter to the NLRC. The DOLE must have the power to determine whether or not an employer-employee relationship exists, and from there to decide whether
or not to issue compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by RA 7730.

The DOLE, in determining the existence of an employer-employee relationship, has a ready set of guidelines to follow, the same guide the courts themselves use. The
elements to determine the existence of an employment relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; (4) the employers power to control the employees conduct. [9] The use of this test is not solely limited to the NLRC. The DOLE Secretary, or his or her
representatives, can utilize the same test, even in the course of inspection, making use of the same evidence that would have been presented before the NLRC.

The determination of the existence of an employer-employee relationship by the DOLE must be respected. The expanded visitorial and enforcement power of the DOLE
granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer-employee relationship, force the
referral of the matter to the NLRC. The Court issued the declaration that at least a prima facie showing of the absence of an employer-employee relationship be made to
oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully
refute the existence of an employer-employee relationship.

If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would
have no jurisdiction only if the employer-employee relationship has already been terminated, or it appears, upon review, that no employer-employee relationship
existed in the first place.
 37

The Court, in limiting the power of the DOLE, gave the rationale that such limitation would eliminate the prospect of competing conclusions between the DOLE and the
NLRC. The prospect of competing conclusions could just as well have been eliminated by according respect to the DOLE findings, to the exclusion of the NLRC, and this
We believe is the more prudent course of action to take.

This is not to say that the determination by the DOLE is beyond question or review. Suffice it to say, there are judicial remedies such as a petition for certiorari under
Rule 65 that may be availed of, should a party wish to dispute the findings of the DOLE.

It must also be remembered that the power of the DOLE to determine the existence of an employer-employee relationship need not necessarily result in an affirmative
finding. The DOLE may well make the determination that no employer-employee relationship exists, thus divesting itself of jurisdiction over the case. It must not be
precluded from being able to reach its own conclusions, not by the parties, and certainly not by this Court.

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a determination as to the existence of an employer-employee
relationship in the exercise of its visitorial and enforcement power, subject to judicial review, not review by the NLRC.

There is a view that despite Art. 128(b) of the Labor Code, as amended by RA 7730, there is still a threshold amount set by Arts. 129 and 217 of the Labor Code when
money claims are involved, i.e., that if it is for PhP 5,000 and below, the jurisdiction is with the regional director of the DOLE, under Art. 129, and if the amount involved
exceeds PhP 5,000, the jurisdiction is with the labor arbiter, under Art. 217. The view states that despite the wording of Art. 128(b), this would only apply in the course
of regular inspections undertaken by the DOLE, as differentiated from cases under Arts. 129 and 217, which originate from complaints. There are several cases,
however, where the Court has ruled that Art. 128(b) has been amended to expand the powers of the DOLE Secretary and his duly authorized representatives by RA
7730. In these cases, the Court resolved that the DOLE had the jurisdiction, despite the amount of the money claims involved. Furthermore, in these cases, the
inspection held by the DOLE regional director was prompted specifically by a complaint. Therefore, the initiation of a case through a complaint does not divest the DOLE
Secretary or his duly authorized representative of jurisdiction under Art. 128(b).

To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor legislation, and there is a
finding by the DOLE that there is an existing employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there
is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for
reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive
jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for
reinstatement. If a complaint is filed with the NLRC, and there is still an existing employer-employee relationship, the jurisdiction is properly with the DOLE. The findings
of the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court.
 38

In the present case, the finding of the DOLE Regional Director that there was an employer-employee relationship has been subjected to review by this Court, with the
finding being that there was no employer-employee relationship between petitioner and private respondent, based on the evidence presented. Private respondent
presented self-serving allegations as well as self-defeating evidence. [10] The findings of the Regional Director were not based on substantial evidence, and private
respondent failed to prove the existence of an employer-employee relationship. The DOLE had no jurisdiction over the case, as there was no employer-employee
relationship present. Thus, the dismissal of the complaint against petitioner is proper.

WHEREFORE, the Decision of this Court in G.R. No. 179652 is hereby AFFIRMED, with the MODIFICATION that in the exercise of the DOLEs visitorial and enforcement
power, the Labor Secretary or the latters authorized representative shall have the power to determine the existence of an employer-employee relationship, to the
exclusion of the NLRC.

SO ORDERED.
 39

G.R. No. 152396

EX-BATAAN VETERANS SECURITY AGENCY, INC., - versus - THE SECRETARY OF LABOR BIENVENIDO E. LAGUESMA, VELASCO

DECISION

CARPIO, J.:

The Case

This is a petition for review[1] with prayer for the issuance of a temporary restraining order or writ of preliminary injunction of the 29 May 2001 Decision [2] and the 26
February 2002 Resolution[3] of the Court of Appeals in CA-G.R. SP No. 57653. The 29 May 2001 Decision of the Court of Appeals affirmed the 4 October 1999 Order of
the Secretary of Labor in OS-LS-04-4-097-280. The 26 February 2002 Resolution denied the motion for reconsideration.

The Facts

Ex-Bataan Veterans Security Agency, Inc. (EBVSAI) is in the business of providing security services while private respondents are EBVSAIs employees assigned to the
National Power Corporation at Ambuklao Hydro Electric Plant, Bokod, Benguet (Ambuklao Plant).

On 20 February 1996, private respondents led by Alexander Pocding (Pocding) instituted a complaint[4] for underpayment of wages against EBVSAI before the Regional
Office of the Department of Labor and Employment (DOLE).
 40

On 7 March 1996, the Regional Office conducted a complaint inspection at the Ambuklao Plant where the following violations were noted: (1) non-presentation of
records; (2) non-payment of holiday pay; (3) non-payment of rest day premium; (4) underpayment of night shift differential pay; (5) non-payment of service incentive
leave; (6) underpayment of 13th month pay; (7) no registration; (8) no annual medical report; (9) no annual work accidental report; (10) no safety committee; and (11)
no trained first aider.[5] On the same date, the Regional Office issued a notice of hearing [6] requiring EBVSAI and private respondents to attend the hearing on 22 March
1996. Other hearings were set for 8 May 1996, 27 May 1996 and 10 June 1996.

On 19 August 1996, the Director of the Regional Office (Regional Director) issued an Order, the dispositive portion of which reads:

WHEREFORE, premises considered, respondent EX-BATAAN VETERANS SECURITY AGENCY is hereby ORDERED to pay the computed deficiencies owing to the affected
employees in the total amount of SEVEN HUNDRED SIXTY THREE THOUSAND NINE HUNDRED NINETY SEVEN PESOS and 85/PESOS within ten (10) calendar days upon
receipt hereof. Otherwise, a Writ of Execution shall be issued to enforce compliance of this Order.

NAME DEFICIENCY

1. ALEXANDER POCDING P 36,380.85

2. FIDEL BALANGAY 36,380.85

3. BUAGEN CLYDE 36,380.85

4. DENNIS EPI 36,380.85

5. DAVID MENDOZA, JR. 36,380.85

6. GABRIEL TAMULONG 36,380.85

7. ANTON PEDRO 36,380.85

8. FRANCISCO PINEDA 36,380.85

9. GASTON DUYAO 36,380.85

10. HULLARUB 36,380.85

11. NOLI D[EO]NIDA 36,380.85

12. ATONG CENON, JR. 36,380.85

 41

13. TOMMY BAUCAS 36,380.85

14. WILIAM PAPSONGAY 36,380.85

15. RICKY DORIA 36,380.85

16. GEOFREY MINO 36,380.85

17. ORLANDO R[IL]LASE 36,380.85

18. SIMPLICO TELLO 36,380.85

19. NOCES, M.G. 36,380.85

20. ALEJO, R.D. 36,380.85

21. D[I]NTAN, P.C. 36,380.85

------------------

TOTAL P 763,997.85

===========

xxxx

SO ORDERED.[7]

EBVSAI filed a motion for reconsideration[8] and alleged that the Regional Director does not have jurisdiction over the subject matter of the case because the money
claim of each private respondent exceeded P5,000. EBVSAI pointed out that the Regional Director should have endorsed the case to the Labor Arbiter.

In a supplemental motion for reconsideration,[9] EBVSAI questioned the Regional Directors basis for the computation of the deficiencies due to each private respondent.
 42

In an Order[10] dated 16 January 1997, the Regional Director denied EBVSAIs motion for reconsideration and supplemental motion for reconsideration. The Regional
Director stated that, pursuant to Republic Act No. 7730 (RA 7730), [11] the limitations under Articles 129 [12] and 217(6)[13] of the Labor Code no longer apply to the
Secretary of Labors visitorial and enforcement powers under Article 128(b). [14] The Secretary of Labor or his duly authorized representatives are now empowered to hear
and decide, in a summary proceeding, any matter involving the recovery of any amount of wages and other monetary claims arising out of employer-employee relations
at the time of the inspection.

EBVSAI appealed to the Secretary of Labor.

The Ruling of the Secretary of Labor

In an Order[15] dated 4 October 1999, the Secretary of Labor affirmed with modification the Regional Directors 19 August 1996 Order. The Secretary of Labor ordered
that the P1,000 received by private respondents Romeo Alejo, Atong Cenon, Jr., Geofrey Mino, Dennis Epi, and Ricky Doria be deducted from their respective
claims. The Secretary of Labor ruled that, pursuant to RA 7730, the Courts decision in the Servando[16] case is no longer controlling insofar as the restrictive effect of
Article 129 on the visitorial and enforcement power of the Secretary of Labor is concerned.

The Secretary of Labor also stated that there was no denial of due process because EBVSAI was accorded several opportunities to present its side but EBVSAI failed to
present any evidence to controvert the findings of the Regional Director. Moreover, the Secretary of Labor doubted the veracity and authenticity
of EBVSAIs documentary evidence. The Secretary of Labor noted that these documents were not presented at the initial stage of the hearing and that the payroll
documents did not indicate the periods covered by EBVSAIs alleged payments.

EVBSAI filed a motion for reconsideration which was denied by the Secretary of Labor in his 3 January 2000 Order.[17]

EBVSAI filed a petition for certiorari before the Court of Appeals.

The Ruling of the Court of Appeals

 43

In its 29 May 2001 Decision, the Court of Appeals dismissed the petition and affirmed the Secretary of Labors decision. The Court of Appeals adopted the Secretary of
Labors ruling that RA 7730 repealed the jurisdictional limitation imposed by Article 129 on Article 128 of the Labor Code. The Court of Appeals also agreed with the
Secretary of Labors finding that EBVSAI was accorded due process.

The Court of Appeals also denied EBVSAIs motion for reconsideration in its 26 February 2002 Resolution.

Hence, this petition.

The Issues

This case raises the following issues:

1. Whether the Secretary of Labor or his duly authorized representatives acquired jurisdiction over EBVSAI; and

2. Whether the Secretary of Labor or his duly authorized representatives have jurisdiction over the money claims of private respondents which exceed P5,000.

The Ruling of the Court

The petition has no merit.

On the Regional Directors Jurisdiction over EBVSAI

 44

EBVSAI claims that the Regional Director did not acquire jurisdiction over EBVSAI because he failed to comply with Section 11, Rule 14 of the 1997 Rules of Civil
Procedure.[18] EBVSAI points out that the notice of hearing was served at the Ambuklao Plant, not at EBVSAIs main office in Makati, and that it was addressed to
Leonardo Castro, Jr., EBVSAIs Vice-President.

The Rules on the Disposition of Labor Standards Cases in the Regional Offices [19] (rules) specifically state that notices and copies of orders shall be served on the parties
or their duly authorized representatives at their last known address or, if they are represented by counsel, through the latter. [20] The rules shall be liberally
construed[21] and only in the absence of any applicable provision will the Rules of Court apply in a suppletory character.[22]

In this case, EBVSAI does not deny having received the notices of hearing. In fact, on 29 March and 13 June 1996, Danilo Burgos and Edwina Manao, detachment
commander and bookkeeper of EBVSAI, respectively, appeared before the Regional Director. They claimed that the 22 March 1996 notice of hearing was received late
and manifested that the notices should be sent to the Manila office. Thereafter, the notices of hearing were sent to the Manila office. They were also informed
of EBVSAIs violations and were asked to present the employment records of the private respondents for verification. They were, moreover, asked to submit, within 10
days, proof of compliance or their position paper.The Regional Director validly acquired jurisdiction over EBVSAI. EBVSAI can no longer question the jurisdiction of the
Regional Director after receiving the notices of hearing and after appearing before the Regional Director.

On the Regional Directors Jurisdiction over the Money Claims

EBVSAI maintains that under Articles 129 and 217(6) of the Labor Code, the Labor Arbiter, not the Regional Director, has exclusive and original jurisdiction over the
case because the individual monetary claim of private respondents exceeds P5,000. EBVSAI also argues that the case falls under the exception clause in Article 128(b)
of the Labor Code. EBVSAI asserts that the Regional Director should have certified the case to the Arbitration Branch of the National Labor Relations Commission (NLRC)
for a full-blown hearing on the merits.

In Allied Investigation Bureau, Inc. v. Sec. of Labor, we ruled that:

While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each
employee exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized
representatives.

Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by R.A. No. 7730) thus:
 45

Art. 128 Visitorial and enforcement power. --- x x x

(b) Notwithstanding the provisions of Article[s] 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to [the labor standards
provisions of this Code and other] labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course
of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except
in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not
considered in the course of inspection.

xxxx

The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the Labor Code by the phrase (N)otwithstanding the provisions of Articles 129
and 217of this Code to the contrary x x x thereby retaining and further strengthening the power of the Secretary of Labor or his duly authorized representatives to issue
compliance orders to give effect to the labor standards provisions of said Code and other labor legislation based on the findings of labor employment and enforcement
officer or industrial safety engineer made in the course of inspection. [23] (Italics in the original)

This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v. Sensing,[24] where we sustained the jurisdiction of the DOLE Regional Director and held
that thevisitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even where the
individual claim exceeds P5,000.

However, if the labor standards case is covered by the exception clause in Article 128(b) of the Labor Code, then the Regional Director will have to endorse the case to
the appropriate Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present:
(a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine
evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. [25] The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time after receipt of the notice of inspection results. [26]
 46

In this case, the Regional Director validly assumed jurisdiction over the money claims of private respondents even if the claims exceeded P5,000 because such
jurisdiction was exercised in accordance with Article 128(b) of the Labor Code and the case does not fall under the exception clause.

The Court notes that EBVSAI did not contest the findings of the labor regulations officer during the hearing or after receipt of the notice of inspection results. It was only
in its supplemental motion for reconsideration before the Regional Director that EBVSAI questioned the findings of the labor regulations officer and presented
documentary evidence to controvert the claims of private respondents. But even if this was the case, the Regional Director and the Secretary of Labor still looked into
and considered EBVSAIsdocumentary evidence and found that such did not warrant the reversal of the Regional Directors order. The Secretary of Labor also doubted the
veracity and authenticity of EBVSAIs documentary evidence. Moreover, the pieces of evidence presented by EBVSAI were verifiable in the normal course of inspection
because all employment records of the employees should be kept and maintained in or about the premises of the workplace, which in this case is in Ambuklao Plant, the
establishment where private respondents were regularly assigned. [27]

WHEREFORE, we DENY the petition. We AFFIRM the 29 May 2001 Decision and the 26 February 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 57653.

SO ORDERED.

G.R. No. 185567

ARSENIO Z. LOCSIN, - versus - NISSAN CAR LEASE PHILS., INC. and LUIS BANSON

Through a petition for review on certiorari,[1] petitioner Arsenio Z. Locsin (Locsin) seeks the reversal of the Decision [2] of the Court of Appeals (CA) dated August 28,
2008,[3]in Arsenio Z. Locsin v. Nissan Car Lease Phils., Inc. and Luis Banson, docketed as CA-G.R. SP No. 103720 and the Resolution dated December 9, 2008, [4] denying
Locsins Motion for Reconsideration. The assailed ruling of the CA reversed and set aside the Decision [5] of the Hon. Labor Arbiter Thelma Concepcion (Labor Arbiter
Concepcion) which denied Nissan Lease Phils. Inc.s (NCLPI) and Luis T. Bansons (Banson) Motion to Dismiss.

THE FACTUAL ANTECEDENTS

On January 1, 1992, Locsin was elected Executive Vice President and Treasurer ( EVP/Treasurer) of NCLPI. As EVP/Treasurer, his duties and responsibilities included: (1)
the management of the finances of the company; (2) carrying out the directions of the President and/or the Board of Directors regarding financial management; and (3)
 47

the preparation of financial reports to advise the officers and directors of the financial condition of NCLPI. [6] Locsin held this position for 13 years, having been re-elected
every year since 1992, until January 21, 2005, when he was nominated and elected Chairman of NCLPIs Board of Directors. [7]

On August 5, 2005, a little over seven (7) months after his election as Chairman of the Board, the NCLPI Board held a special meeting at the Manila Polo Club. One of
the items of the agenda was the election of a new set of officers. Unfortunately, Locsin was neither re-elected Chairman nor reinstated to his previous position as
EVP/Treasurer.[8]

Aggrieved, on June 19, 2007, Locsin filed a complaint for illegal dismissal with prayer for reinstatement, payment of backwages, damages and attorneys fees before the
Labor Arbiter against NCLPI and Banson, who was then President of NCLPI. [9]

The Compulsory Arbitration Proceedings before the Labor Arbiter.

On July 11, 2007, instead of filing their position paper, NCLPI and Banson filed a Motion to Dismiss, [10] on the ground that the Labor Arbiter did not have jurisdiction over
the case since the issue of Locsins removal as EVP/Treasurer involves an intra-corporate dispute.

On August 16, 2007, Locsin submitted his opposition to the motion to dismiss, maintaining his position that he is an employee of NCLPI.

On March 10, 2008, Labor Arbiter Concepcion issued an Order denying the Motion to Dismiss, holding that her office acquired jurisdiction to arbitrate and/or decide the
instant complaint finding extant in the case an employer-employee relationship. [11]

NCLPI, on June 3, 2008, elevated the case to the CA through a Petition for Certiorari under Rule 65 of the Rules of Court. [12] NCLPI raised the issue on whether the Labor
Arbiter committed grave abuse of discretion by denying the Motion to Dismiss and holding that her office had jurisdiction over the dispute.

The CA Decision - Locsin was a corporate officer; the issue of his removal as EVP/Treasurer is an intra-corporate dispute under the RTCs jurisdiction.
 48

On August 28, 2008,[13] the CA reversed and set aside the Labor Arbiters Order denying the Motion to Dismiss and ruled that Locsin was a corporate officer.

Citing PD 902-A, the CA defined corporate officers as those officers of a corporation who are given that character either by the Corporation Code or by the corporations
by-laws. In this regard, the CA held:

Scrutinizing the records, We hold that petitioners successfully discharged their onus of establishing that private respondent was a corporate officer who held the position
of Executive Vice-President/Treasurer as provided in the by-laws of petitioner corporation and that he held such position by virtue of election by the Board of Directors.

That private respondent is a corporate officer cannot be disputed. The position of Executive Vice-President/Treasurer is specifically included in the roster of officers
provided for by the (Amended) By-Laws of petitioner corporation, his duties and responsibilities, as well as compensation as such officer are likewise set forth therein. [14]

Article 280 of the Labor Code, the receipt of salaries by Locsin, SSS deductions on that salary, and the element of control in the performance of work duties indicia used
by the Labor Arbiter to conclude that Locsin was a regular employee were held inapplicable by the CA. [15] The CA noted the Labor Arbiters failure to address the fact that
the position of EVP/Treasurer is specifically enumerated as an office in the corporations by-laws. [16]

Further, the CA pointed out Locsins failure to state any circumstance by which NCLPI engaged his services as a corporate officer that would make him an employee. The
CA found, in this regard, that Locsins assumption and retention as EVP/Treasurer was based on his election and subsequent re-elections from 1992 until 2005. Further,
he performed only those functions that were specifically set forth in the By-Laws or required of him by the Board of Directors. [17]

With respect to the suit Locsin filed with the Labor Arbiter, the CA held that:

Private respondent, in belatedly filing this suit before the Labor Arbiter, questioned the legality of his dismissal but in essence, he raises the issue of whether or not the
Board of Directors had the authority to remove him from the corporate office to which he was elected pursuant to the By-Laws of the petitioner corporation. Indeed, had
private respondent been an ordinary employee, an election conducted by the Board of Directors would not have been necessary to remove him as Executive Vice-
President/Treasurer. However, in an obvious attempt to preclude the application of settled jurisprudence that corporate officers whose position is provided in the by-
laws, their election, removal or dismissal is subject to Section 5 of P.D. No. 902-A (now R.A. No. 8799), private respondent would even claim in his Position Paper, that
since his responsibilities were akin to that of the companys Executive Vice-President/Treasurer, he was hired under the pretext that he was being elected into said post.
[18]
[Emphasis supplied.]
 49

As a consequence, the CA concluded that Locsin does not have any recourse with the Labor Arbiter or the NLRC since the removal of a corporate officer, whether elected
or appointed, is an intra-corporate controversy over which the NLRC has no jurisdiction. [19] Instead, according to the CA, Locsins complaint for illegal dismissal should
have been filed in the Regional Trial Court (RTC), pursuant to Rule 6 of the Interim Rules of Procedure Governing Intra-Corporate Controversies. [20]

Finally, the CA addressed Locsins invocation of Article 4 of the Labor Code. Dismissing the application of the provision, the CA cited Dean Cesar Villanueva of the Ateneo
School of Law, as follows:

x x x the non-coverage of corporate officers from the security of tenure clause under the Constitution is now well-established principle by numerous decisions upholding
such doctrine under the aegis of the 1987 Constitution in the face of contemporary decisions of the same Supreme Court likewise confirming that security of tenure
covers all employees or workers including managerial employees. [21]

THE PETITIONERS ARGUMENTS

Failing to obtain a reconsideration of the CAs decision, Locsin filed the present petition on January 28, 2009, raising the following procedural and substantive issues:

(1) Whether the CA has original jurisdiction to review decision of the Labor Arbiter under Rule 65?

(2) Whether he is a regular employee of NCLPI under the definition of Article 280 of the Labor Code? and

(3) Whether Locsins position as Executive Vice-President/Treasurer makes him a corporate officer thereby excluding him from the coverage of the Labor Code?

Procedurally, Locsin essentially submits that NCLPI wrongfully filed a petition for certiorari before the CA, as the latters remedy is to proceed with the arbitration, and to
appeal to the NLRC after the Labor Arbiter shall have ruled on the merits of the case. Locsin cites, in this regard, Rule V, Section 6 of the Revised Rules of the National
Labor Relations Commission (NLRC Rules), which provides that a denial of a motion to dismiss by the Labor Arbiter is not subject to an appeal. Locsin also argues that
even if the Labor Arbiter committed grave abuse of discretion in denying the NCLPI motion, a special civil action for certiorari, filed with the CA was not the appropriate
remedy, since this was a breach of the doctrine of exhaustion of administrative remedies.
 50

Substantively, Locsin submits that he is a regular employee of NCLPI since - as he argued before the Labor Arbiter and the CA - his relationship with the company meets
the four-fold test.

First, Locsin contends that NCLPI had the power to engage his services as EVP/Treasurer. Second, he received regular wages from NCLPI, from which his SSS and
Philhealth contributions, as well as his withholding taxes were deducted. Third, NCLPI had the power to terminate his employment. [22] Lastly, Nissan had control over the
manner of the performance of his functions as EVP/Treasurer, as shown by the 13 years of faithful execution of his job, which he carried out in accordance with the
standards and expectations set by NCLPI. [23] Further, Locsin maintains that even after his election as Chairman, he essentially performed the functions of EVP/Treasurer
handling the financial and administrative operations of the Corporation thus making him a regular employee. [24]

Under these claimed facts, Locsin concludes that the Labor Arbiter and the NLRC not the RTC (as NCLPI posits) has jurisdiction to decide the
controversy. Parenthetically, Locsin clarifies that he does not dispute the validity of his election as Chairman of the Board on January 1, 2005. Instead, he theorizes that
he never lost his position as EVP/Treasurer having continuously performed the functions appurtenant thereto. [25] Thus, he questions his unceremonious removal as
EVP/Treasurer during the August 5, 2005 special Board meeting.

THE RESPONDENTS ARGUMENTS

It its April 17, 2009 Comment, [26] Nissan prays for the denial of the petition for lack of merit. Nissan submits that the CA correctly ruled that the Labor Arbiter does not
have jurisdiction over Locsins complaint for illegal dismissal. In support, Nissan maintains that Locsin is a corporate officer and not an employee. In addressing the
procedural defect Locsin raised, Nissan brushes the issue aside, stating that (1) this issue was belatedly raised in the Motion for Reconsideration, and that (2) in any
case, Rule VI, Section 2(1) of the NLRC does not apply since only appealable decisions, resolutions and orders are covered under the rule.

THE COURTS RULING

We resolve to deny the petition for lack of merit.

At the outset, we stress that there are two (2) important considerations in the final determination of this case. On the one hand, Locsin raises a procedural issue that, if
proven correct, will require the Court to dismiss the instant petition for using an improper remedy. On the other hand, there is the substantive issue that will be
disregarded if a strict implementation of the rules of procedure is upheld.
 51

Prefatorily, we agree with Locsins submission that the NCLPI incorrectly elevated the Labor Arbiters denial of the Motion to Dismiss to the CA. Locsin is correct in
positing that the denial of a motion to dismiss is unappealable. As a general rule, an aggrieved partys proper recourse to the denial is to file his position paper, interpose
the grounds relied upon in the motion to dismiss before the labor arbiter, and actively participate in the proceedings. Thereafter, the labor arbiters decision can be
appealed to the NLRC, not to the CA.

As a rule, we strictly adhere to the rules of procedure and do everything we can, to the point of penalizing violators, to encourage respect for these rules. We take
exception to this general rule, however, when a strict implementation of these rules would cause substantial injustice to the parties.

We see it appropriate to apply the exception to this case for the reasons discussed below; hence, we are compelled to go beyond procedure and rule on the merits of
the case.In the context of this case, we see sufficient justification to rule on the employer-employee relationship issue raised by NCLPI, even though the Labor Arbiters
interlocutory order was incorrectly brought to the CA under Rule 65.

The NLRC Rules are clear: the denial by the labor arbiter of the motion to dismiss is not appealable because the denial is merely an interlocutory order.

In Metro Drug v. Metro Drug Employees,[27] we definitively stated that the denial of a motion to dismiss by a labor arbiter is not immediately appealable. [28]

We similarly ruled in Texon Manufacturing v. Millena,[29] in Sime Darby Employees Association v. National Labor Relations Commission [30] and in Westmont
Pharmaceuticals v. Samaniego.[31] In Texon, we specifically said:

The Order of the Labor Arbiter denying petitioners motion to dismiss is interlocutory. It is well-settled that a denial of a motion to dismiss a complaint is an interlocutory
order and hence, cannot be appealed, until a final judgment on the merits of the case is rendered. [Emphasis supplied.] [32]

and indicated the appropriate recourse in Metro Drug, as follows:[33]

 52

x x x The NLRC rule proscribing appeal from a denial of a motion to dismiss is similar to the general rule observed in civil procedure that an order denying a motion to
dismiss is interlocutory and, hence, not appealable until final judgment or order is rendered [1 Feria and Noche, Civil Procedure Annotated 453 (2001 ed.)]. The remedy
of the aggrieved party in case of denial of the motion to dismiss is to file an answer and interpose, as a defense or defenses, the ground or grounds relied upon in the
motion to dismiss, proceed to trial and, in case of adverse judgment, to elevate the entire case by appeal in due course [Mendoza v. Court of Appeals, G.R. No. 81909,
September 5, 1991, 201 SCRA 343]. In order to avail of the extraordinary writ of certiorari, it is incumbent upon petitioner to establish that the denial of the motion to
dismiss was tainted with grave abuse of discretion. [Macawiwili Gold Mining and Development Co., Inc. v. Court of Appeals , G.R. No. 115104, October 12, 1998, 297
SCRA 602]

In so citing Feria and Noche, the Court was referring to Sec. 1 (b), Rule 41 of the Rules of Court, which specifically enumerates interlocutory orders as one of the court
actions that cannot be appealed. In the same rule, as amended by A.M. No. 07-7-12-SC, the aggrieved party is allowed to file an appropriate special civil action under
Rule 65. The latter rule, however, also contains limitations for its application, clearly outlined in its Section 1 which provides:

Section 1. Petition for certiorari.

When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby
may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such
tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

In the labor law setting, a plain, speedy and adequate remedy is still open to the aggrieved party when a labor arbiter denies a motion to dismiss. This is Article 223 of
Presidential Decree No. 442, as amended (Labor Code), [34] which states:

ART. 223. APPEAL

Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar
days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds:

(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter; x x x [Emphasis supplied.]

Pursuant to this Article, we held in Metro Drug (citing Air Services Cooperative, et al. v. Court of Appeals [35]) that the NLRC is clothed with sufficient authority to correct
any claimed erroneous assumption of jurisdiction by labor arbiters:
 53

In Air Services Cooperative, et al. v. The Court of Appeals, et al., a case where the jurisdiction of the labor arbiter was put in issue and was assailed through a petition
for certiorari, prohibition and annulment of judgment before a regional trial court, this Court had the opportunity to expound on the nature of appeal as embodied in
Article 223 of the Labor Code, thus:

x x x Also, while the title of the Article 223 seems to provide only for the remedy of appeal as that term is understood in procedural law and as distinguished
from the office of certiorari, nonetheless, a closer reading thereof reveals that it is not as limited as understood by the petitioners x x x.

Abuse of discretion is admittedly within the ambit of certiorari and its grant of review thereof to the NLRC indicates the lawmakers intention to broaden the meaning of
appeal as that term is used in the Code. For this reason, petitioners cannot argue now that the NLRC is devoid of any corrective power to rectify a supposed erroneous
assumption of jurisdiction by the Labor Arbiter x x x. [Air Services Cooperative, et al. v. The Court of Appeals, et al. G.R. No. 118693, 23 July 1998, 293 SCRA 101]

Since the legislature had clothed the NLRC with the appellate authority to correct a claimed erroneous assumption of jurisdiction on the part of the labor arbiter a
case of grave abuse of discretion - the remedy availed of by petitioner in this case is patently erroneous as recourse in this case is lodged, under the law, with the NLRC.

In Metro Drug, as in the present case, the defect imputed through the NCLPI Motion to Dismiss is the labor arbiters lack of jurisdiction since Locsin is alleged to be a
corporate officer, not an employee. Parallelisms between the two cases is undeniable, as they are similar on the following points: (1) in Metro Drug, as in this case, the
Labor Arbiter issued an Order denying the Motion to Dismiss by one of the parties; (2) the basis of the Motion to Dismiss is also the alleged lack of jurisdiction by the
Labor Arbiter to settle the dispute; and (3) dissatisfied with the Order of the Labor Arbiter, the aggrieved party likewise elevated the case to the CA via Rule 65.

The similarities end there, however. Unlike in the present case, the CA denied the petition for certiorari and the subsequent Motion for Reconsideration in Metro Drug;
the CA correctly found that the proper appellate mechanism was an appeal to the NLRC and not a petition for certiorari under Rule 65. In the present case, the CA took
a different position despite our clear ruling in Metro Drug, and allowed, not only the use of Rule 65, but also ruled on the merits.

From this perspective, the CA clearly erred in the application of the procedural rules by disregarding the relevant provisions of the NLRC Rules, as well as the
requirements for a petition for certiorari under the Rules of Court. To reiterate, the proper action of an aggrieved party faced with the labor arbiters denial of his motion
to dismiss is to submit his position paper and raise therein the supposed lack of jurisdiction. The aggrieved party cannot immediately appeal the denial since it is an
interlocutory order; the appropriate remedial recourse is the procedure outlined in Article 223 of the Labor Code, not a petition for certiorari under Rule 65.
 54

A strict implementation of the NLRC Rules and the Rules of Court would cause injustice to the parties because the Labor Arbiter clearly has no jurisdiction over the
present intra-corporate dispute.

Our ruling in Mejillano v. Lucillo[36] stands for the proposition that we should strictly apply the rules of procedure. We said:

Time and again, we have ruled that procedural rules do not exist for the convenience of the litigants. Rules of Procedure exist for a purpose, and to disregard such rules
in the guise of liberal construction would be to defeat such purpose. Procedural rules were established primarily to provide order to and enhance the efficiency of our
judicial system. [Emphasis supplied.]

An exception to this rule is our ruling in Lazaro v. Court of Appeals [37] where we held that the strict enforcement of the rules of procedure may be relaxed
in exceptionally meritorious cases:

x x x Procedural rules are not to be belittled or dismissed simply because their non-observance may have resulted in prejudice to a party's substantive rights. Like all
rules, they are required to be followed except only for the most persuasive of reasons when they may be relaxed to relieve a litigant of an injustice not commensurate
with the degree of his thoughtlessness in not complying with the procedure prescribed. The Court reiterates that rules of procedure, especially those prescribing the time
within which certain acts must be done, "have oft been held as absolutely indispensable to the prevention of needless delays and to the orderly and speedy discharge of
business. x x x The reason for rules of this nature is because the dispatch of business by courts would be impossible, and intolerable delays would result, without rules
governing practice x x x. Such rules are a necessary incident to the proper, efficient and orderly discharge of judicial functions." Indeed, in no uncertain terms, the Court
held that the said rules may be relaxed only in exceptionally meritorious cases. [Emphasis supplied.]

Whether a case involves an exceptionally meritorious circumstance can be tested under the guidelines we established in Sanchez v. Court of Appeals,[38] as follows:

Aside from matters of life, liberty, honor or property which would warrant the suspension of the Rules of the most mandatory character and an examination and review
by the appellate court of the lower courts findings of fact, the other elements that should be considered are the following: (a) the existence of special or compelling
circumstances, (b) the merits of the case, (c) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules, (d) a lack of
any showing that the review sought is merely frivolous and dilatory, and (e) the other party will not be unjustly prejudiced thereby. [Emphasis supplied.]

Under these standards, we hold that exceptional circumstances exist in the present case to merit the relaxation of the applicable rules of procedure.

Due to existing exceptional circumstances, the ruling on the merits that Locsin is an officer and not an employee of Nissan must take precedence over procedural
considerations.

We arrived at the conclusion that we should go beyond the procedural rules and immediately take a look at the intrinsic merits of the case based on several
considerations.
 55

First, the parties have sufficiently ventilated their positions on the disputed employer-employee relationship and have, in fact, submitted the matter for the CAs
consideration.

Second, the CA correctly ruled that no employer-employee relationship exists between Locsin and Nissan.

Locsin was undeniably Chairman and President, and was elected to these positions by the Nissan board pursuant to its By-laws. [39] As such, he was a corporate officer,
not an employee. The CA reached this conclusion by relying on the submitted facts and on Presidential Decree 902-A, which defines corporate officers as those officers
of a corporation who are given that character either by the Corporation Code or by the corporations by-laws. Likewise, Section 25 of Batas Pambansa Blg. 69, or the
Corporation Code of the Philippines (Corporation Code) provides that corporate officers are the president, secretary, treasurer and such other officers as may be
provided for in the by-laws.

Third. Even as Executive Vice-President/Treasurer, Locsin already acted as a corporate officer because the position of Executive Vice-President/Treasurer is provided for
in Nissans By-Laws. Article IV, Section 4 of these By-Laws specifically provides for this position, as follows:

ARTICLE IV

Officers

Section 1. Election and Appointment The Board of Directors at their first meeting, annually thereafter, shall elect as officers of the Corporation a Chairman of the Board,
a President, an Executive Vice-President/Treasurer, a Vice-President/General Manager and a Corporate Secretary. The other Senior Operating Officers of the Corporation
shall be appointed by the Board upon the recommendation of the President.

xxxx

Section 4. Executive Vice-President/Treasurer The Executive Vice-President/Treasurer shall have such powers and perform such duties as are prescribed by these By-
Laws, and as may be required of him by the Board of Directors. As the concurrent Treasurer of the Corporation, he shall have the charge of the funds, securities,
receipts, and disbursements of the Corporation. He shall deposit, or cause to be deposited, the credit of the Corporation in such banks or trust companies, or with such
banks of other depositories, as the Board of Directors may from time to time designate. He shall tender to the President or to the Board of Directors whenever required
an account of the financial condition of the corporation and of all his transactions as Treasurer. As soon as practicable after the close of each fiscal year, he shall make
and submit to the Board of Directors a like report of such fiscal year. He shall keep correct books of account of all the business and transactions of the Corporation.

In Okol v. Slimmers World International,[40] citing Tabang v. National Labor Relations Commission,[41] we held that
 56

x x x an office is created by the charter of the corporation and the officer is elected by the directors or stockholders. On the other hand, an employee usually occupies
no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation
to be paid to such employee. [Emphasis supplied.]

In this case, Locsin was elected by the NCLPI Board, in accordance with the Amended By-Laws of the corporation. The following factual determination by the CA is
elucidating:

More important, private respondent failed to state any such circumstance by which the petitioner corporation engaged his services as corporate officer that would make
him an employee. In the first place, the Vice-President/Treasurer was elected on an annual basis as provided in the By-Laws, and no duties and responsibilities were
stated by private respondent which he discharged while occupying said position other than those specifically set forth in the By-Laws or required of him by the Board of
Directors. The unrebutted fact remains that private respondent held the position of Executive Vice-President/Treasurer of petitioner corporation, a position provided for
in the latters by-laws, by virtue of election by the Board of Directors, and has functioned as such Executive Vice-President/Treasurer pursuant to the provisions of the
said By-Laws. Private respondent knew very well that he was simply not re-elected to the said position during the August 5, 2005 board meeting, but he had objected to
the election of a new set of officers held at the time upon the advice of his lawyer that he cannot be terminated or replaced as Executive Vice-President/Treasurer as he
had attained tenurial security.[42]

We fully agree with this factual determination which we find to be sufficiently supported by evidence. We likewise rule, based on law and established jurisprudence,
that Locsin, at the time of his severance from NCLPI, was the latters corporate officer.

a. The Question of Jurisdiction

Given Locsins status as a corporate officer, the RTC, not the Labor Arbiter or the NLRC, has jurisdiction to hear the legality of the termination of his relationship with
Nissan. As we also held in Okol, a corporate officers dismissal from service is an intra-corporate dispute:

In a number of cases [Estrada v. National Labor Relations Commission, G.R. No. 106722, 4 October 1996, 262 SCRA 709; Lozon v. National Labor Relations
Commission, 310 Phil. 1 (1995); Espino v. National Labor Relations Commission, 310 Phil. 61 (1995); Fortune Cement Corporation v. National Labor Relations
Commission, G.R. No. 79762, 24 January 1991, 193 SCRA 258], we have held that a corporate officers dismissal is always a corporate act, or an intra-corporate
controversy which arises between a stockholder and a corporation.[43] [Emphasis supplied.]

so that the RTC should exercise jurisdiction based on the following legal reasoning:
 57

Prior to its amendment, Section 5(c) of Presidential Decree No. 902-A (PD 902-A) provided that intra-corporate disputes fall within the jurisdiction of the Securities and
Exchange Commission (SEC):

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of
associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

xxxx

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.

Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000, transferred to regional trial courts the SECs jurisdiction over all cases listed in
Section 5 of PD 902-A:

5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general
jurisdiction or the appropriate Regional Trial Court. [Emphasis supplied.]

b. Precedence of Substantive Merits;

Primacy of Element of Jurisdiction

Based on the above jurisdictional considerations, we would be forced to remand the case to the Labor Arbiter for further proceedings if we were to dismiss the petition
outright due to the wrongful use of Rule 65. [44] We cannot close our eyes, however, to the factual and legal reality, established by evidence already on record, that
Locsin is a corporate officer whose termination of relationship is outside a labor arbiters jurisdiction to rule upon.
 58

Under these circumstances, we have to give precedence to the merits of the case, and primacy to the element of jurisdiction. Jurisdiction is the power to hear and rule
on a case and is the threshold element that must exist before any quasi-judicial officer can act. In the context of the present case, the Labor Arbiter does not have
jurisdiction over the termination dispute Locsin brought, and should not be allowed to continue to act on the case after the absence of jurisdiction has become obvious,
based on the records and the law. In more practical terms, a contrary ruling will only cause substantial delay and inconvenience as well as unnecessary expenses, to the
point of injustice, to the parties. This conclusion, of course, does not go into the merits of termination of relationship and is without prejudice to the filing of an intra-
corporate dispute on this point before the appropriate RTC.

WHEREFORE, we DISMISS the petitioners petition for review on certiorari, and AFFIRM the Decision of the Court of Appeals, in CA-G.R. SP No. 103720, promulgated on
August 28, 2008, as well as its Resolution of December 9, 2008, which reversed and set aside the March 10, 2008 Order of Labor Arbiter Concepcion in NLRC NCR Case
No. 00-06-06165-07. This Decision is without prejudice to petitioner Locsins available recourse for relief through the appropriate remedy in the proper forum.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 165744

OSCAR REYES VS. HON. RTC MAKATI BRANCH 142

This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to set aside the Decision of the Court of Appeals ( CA)[1] promulgated on May 26, 2004 in
CA-G.R. SP No. 74970. The CA Decision affirmed the Order of the Regional Trial Court (RTC), Branch 142, Makati City dated November 29, 2002 [2] in Civil Case No. 00-
1553 (entitled "Accounting of All Corporate Funds and Assets, and Damages") which denied petitioner Oscar C. Reyes ( Oscar) Motion to Declare Complaint as Nuisance
or Harassment Suit.

BACKGROUND FACTS
 59

Oscar and private respondent Rodrigo C. Reyes (Rodrigo) are two of the four children of the spouses Pedro and Anastacia Reyes. Pedro, Anastacia, Oscar, and Rodrigo
each owned shares of stock of Zenith Insurance Corporation (Zenith), a domestic corporation established by their family. Pedro died in 1964, while Anastacia died in
1993. Although Pedros estate was judicially partitioned among his heirs sometime in the 1970s, no similar settlement and partition appear to have been made with
Anastacias estate, which included her shareholdings in Zenith. As of June 30, 1990, Anastacia owned 136,598 shares of Zenith; Oscar and Rodrigo owned 8,715,637
and 4,250 shares, respectively.[3]

On May 9, 2000, Zenith and Rodrigo filed a complaint [4] with the Securities and Exchange Commission (SEC) against Oscar, docketed as SEC Case No. 05-00-6615. The
complaint stated that it is a derivative suit initiated and filed by the complainant Rodrigo C. Reyes to obtain an accounting of the funds and assets of
ZENITH INSURANCE CORPORATION which are now or formerly in the control, custody, and/or possession of respondent [herein petitioner Oscar] and to determine the
shares of stock of deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated [by Oscar] for himself [and] which were not collated
and taken into account in the partition, distribution, and/or settlement of the estate of the deceased spouses, for which he should be ordered to account for all the
income from the time he took these shares of stock, and should now deliver to his brothers and sisters their just and respective shares. [5] [Emphasis supplied.]

In his Answer with Counterclaim,[6] Oscar denied the charge that he illegally acquired the shares of Anastacia Reyes. He asserted, as a defense, that he purchased the
subject shares with his own funds from the unissued stocks of Zenith, and that the suit is not a bona fide derivative suit because the requisites therefor have not been
complied with. He thus questioned the SECs jurisdiction to entertain the complaint because it pertains to the settlement of the estate of Anastacia Reyes.

When Republic Act (R.A.) No. 8799[7] took effect, the SECs exclusive and original jurisdiction over cases enumerated in Section 5 of Presidential Decree ( P.D.) No. 902-A
was transferred to the RTC designated as a special commercial court. [8] The records of Rodrigos SEC case were thus turned over to the RTC, Branch 142, Makati, and
docketed as Civil Case No. 00-1553.

On October 22, 2002, Oscar filed a Motion to Declare Complaint as Nuisance or Harassment Suit. [9] He claimed that the complaint is a mere nuisance or harassment suit
and should, according to the Interim Rules of Procedure for Intra-Corporate Controversies, be dismissed; and that it is not a bona fide derivative suit as it partakes of
the nature of a petition for the settlement of estate of the deceased Anastacia that is outside the jurisdiction of a special commercial court. The RTC, in its Order
dated November 29, 2002 (RTC Order), denied the motion in part and declared:

A close reading of the Complaint disclosed the presence of two (2) causes of action, namely: a) a derivative suit for accounting of the funds and assets of the
corporation which are in the control, custody, and/or possession of the respondent [herein petitioner Oscar] with prayer to appoint a management committee; and b) an
action for determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken by respondent, its accounting and the corresponding
delivery of these shares to the parties brothers and sisters. The latter is not a derivative suit and should properly be threshed out in a petition for settlement of estate.
 60

Accordingly, the motion is denied. However, only the derivative suit consisting of the first cause of action will be taken cognizance of by this Court. [10]

Oscar thereupon went to the CA on a petition for certiorari, prohibition, and mandamus[11] and prayed that the RTC Order be annulled and set aside and that the trial
court be prohibited from continuing with the proceedings. The appellate court affirmed the RTC Order and denied the petition in its Decision dated May 26, 2004. It
likewise denied Oscars motion for reconsideration in a Resolution dated October 21, 2004.

Petitioner now comes before us on appeal through a petition for review on certiorari under Rule 45 of the Rules of Court.

ASSIGNMENT OF ERRORS

Petitioner Oscar presents the following points as conclusions the CA should have made:

1. that the complaint is a mere nuisance or harassment suit that should be dismissed under the Interim Rules of Procedure of Intra-Corporate Controversies; and

2. that the complaint is not a bona fide derivative suit but is in fact in the nature of a petition for settlement of estate; hence, it is outside the jurisdiction of the RTC
acting as a special commercial court.

Accordingly, he prays for the setting aside and annulment of the CA decision and resolution, and the dismissal of Rodrigos complaint before the RTC.

THE COURTS RULING

We find the petition meritorious.

 61

The core question for our determination is whether the trial court, sitting as a special commercial court, has jurisdiction over the subject matter of Rodrigos
complaint. To resolve it, we rely on the judicial principle that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations of
the complaint, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein. [12]

JURISDICTION OF SPECIAL COMMERCIAL COURTS

P.D. No. 902-A enumerates the cases over which the SEC (now the RTC acting as a special commercial court) exercises exclusive jurisdiction:

SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnership, and other forms of
associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and
misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, members of associations or organizations registered with
the Commission.

b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of
them and the corporation, partnership or association of which they are stockholders, members, or associates, respectively; and between such corporation, partnership
or association and the State insofar as it concerns their individual franchise or right to exist as such entity; and

c) Controversies in the election or appointment of directors, trustees, officers, or managers of such corporations, partnerships, or associations.

The allegations set forth in Rodrigos complaint principally invoke Section 5, paragraphs (a) and (b) above as basis for the exercise of the RTCs special court
jurisdiction. Our focus in examining the allegations of the complaint shall therefore be on these two provisions.

Fraudulent Devices and Schemes

The rule is that a complaint must contain a plain, concise, and direct statement of the ultimate facts constituting the plaintiffs cause of action and must specify the relief
sought.[13]Section 5, Rule 8 of the Revised Rules of Court provides that in all averments of fraud or mistake, the circumstances constituting fraud or mistake must be
 62

stated with particularity.[14] These rules find specific application to Section 5(a) of P.D. No. 902-A which speaks of corporate devices or schemes that amount to fraud or
misrepresentation detrimental to the public and/or to the stockholders.

In an attempt to hold Oscar responsible for corporate fraud, Rodrigo alleged in the complaint the following:

3. This is a complaintto determine the shares of stock of the deceased spouses Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated for himself
[herein petitioner Oscar] which were not collated and taken into account in the partition, distribution, and/or settlement of the estate of the deceased Spouses Pedro
and Anastacia Reyes, for which he should be ordered to account for all the income from the time he took these shares of stock, and should now deliver to his brothers
and sisters their just and respective shares with the corresponding equivalent amount of P7,099,934.82 plus interest thereon from 1978 representing his obligations to
the Associated Citizens Bank that was paid for his account by his late mother, Anastacia C. Reyes. This amount was not collated or taken into account in the partition or
distribution of the estate of their late mother, Anastacia C. Reyes.

3.1. Respondent Oscar C. Reyes, through other schemes of fraud including misrepresentation, unilaterally, and for his own benefit, capriciously transferred and took
possession and control of the management of Zenith Insurance Corporation which is considered as a family corporation, and other properties and businesses belonging
to Spouses Pedro and Anastacia Reyes.

xxxx

4.1. During the increase of capitalization of Zenith Insurance Corporation, sometime in 1968, the property covered by TCT No. 225324 was illegally and fraudulently
used by respondent as a collateral.

xxxx

5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their deceased mother, Doa Anastacia C. Reyes, shares of
stocks and [sic] valued in the corporate books at P7,699,934.28, more or less, excluding interest and/or dividends, had been transferred solely in the name of
respondent. By such fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic]
and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which portion of said shares must be distributed equally amongst the brothers and sisters
of the respondent Oscar C. Reyes including the complainant herein.
 63

xxxx

9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28 were illegally and fraudulently transferred solely to the
respondents [herein petitioner Oscar] name and installed himself as a majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and
sisters of their respective equal shares thereof including complainant hereto.

xxxx

10.1 By refusal of the respondent to account of his [sic] shareholdings in the company, he illegally and fraudulently transferred solely in his name wherein [sic] the
shares of stock of the deceased Anastacia C. Reyes [which] must be properly collated and/or distributed equally amongst the children, including the complainant Rodrigo
C. Reyes herein, to their damage and prejudice.

xxxx

11.1 By continuous refusal of the respondent to account of his [sic] shareholding with Zenith Insurance Corporation[,] particularly the number of shares of stocks
illegally and fraudulently transferred to him from their deceased parents Sps. Pedro and Anastacia Reyes[,] which are all subject for collation and/or partition in equal
shares among their children. [Emphasis supplied.]

Allegations of deceit, machination, false pretenses, misrepresentation, and threats are largely conclusions of law that, without supporting statements of the facts to
which the allegations of fraud refer, do not sufficiently state an effective cause of action. [15] The late Justice Jose Feria, a noted authority in Remedial Law, declared that
fraud and mistake are required to be averred with particularity in order to enable the opposing party to controvert the particular facts allegedly constituting such fraud
or mistake.[16]

Tested against these standards, we find that the charges of fraud against Oscar were not properly supported by the required factual allegations. While the complaint
contained allegations of fraud purportedly committed by him, these allegations are not particular enough to bring the controversy within the special commercial courts
 64

jurisdiction; they are not statements of ultimate facts, but are mere conclusions of law: how and why the alleged appropriation of shares can be characterized as illegal
and fraudulent were not explained nor elaborated on.

Not every allegation of fraud done in a corporate setting or perpetrated by corporate officers will bring the case within the special commercial courts jurisdiction. To fall
within this jurisdiction, there must be sufficient nexus showing that the corporations nature, structure, or powers were used to facilitate the fraudulent device or
scheme. Contrary to this concept, the complaint presented a reverse situation. No corporate power or office was alleged to have facilitated the transfer of the shares;
rather, Oscar, as an individual and without reference to his corporate personality, was alleged to have transferred the shares of Anastacia to his name, allowing him to
become the majority and controlling stockholder of Zenith, and eventually, the corporations President. This is the essence of the complaint read as a whole and is
particularly demonstrated under the following allegations:

5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the shareholdings of their deceased mother, Doa Anastacia C. Reyes, shares of
stocks and [sic] valued in the corporate books at P7,699,934.28, more or less, excluding interest and/or dividends, had been transferred solely in the name of
respondent. By such fraudulent manipulations and misrepresentation, the shareholdings of said respondent Oscar C. Reyes abruptly increased to P8,715,637.00 [sic]
and becomes [sic] the majority stockholder of Zenith Insurance Corporation, which portion of said shares must be distributed equally amongst the brothers and sisters
of the respondent Oscar C. Reyes including the complainant herein.

xxxx

9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at P7,099,934.28 were illegally and fraudulently transferred solely to the
respondents [herein petitioner Oscar] name and installed himself as a majority stockholder of Zenith Insurance Corporation [and] thereby deprived his brothers and
sisters of their respective equal shares thereof including complainant hereto. [Emphasis supplied.]

In ordinary cases, the failure to specifically allege the fraudulent acts does not constitute a ground for dismissal since such defect can be cured by a bill of particulars. In
cases governed by the Interim Rules of Procedure on Intra-Corporate Controversies, however, a bill of particulars is a prohibited pleading. [17] It is essential, therefore,
for the complaint to show on its face what are claimed to be the fraudulent corporate acts if the complainant wishes to invoke the courts special commercial jurisdiction.

We note that twice in the course of this case, Rodrigo had been given the opportunity to study the propriety of amending or withdrawing the complaint, but he
consistently refused. The courts function in resolving issues of jurisdiction is limited to the review of the allegations of the complaint and, on the basis of these
allegations, to the determination of whether they are of such nature and subject that they fall within the terms of the law defining the courts jurisdiction. Regretfully, we
 65

cannot read into the complaint any specifically alleged corporate fraud that will call for the exercise of the courts special commercial jurisdiction. Thus, we cannot affirm
the RTCs assumption of jurisdiction over Rodrigos complaint on the basis of Section 5(a) of P.D. No. 902-A. [18]

Intra-Corporate Controversy

A review of relevant jurisprudence shows a development in the Courts approach in classifying what constitutes an intra-corporate controversy. Initially, the main
consideration in determining whether a dispute constitutes an intra-corporate controversy was limited to a consideration of the intra-corporate relationship existing
between or among the parties. [19] The types of relationships embraced under Section 5(b), as declared in the case of Union Glass & Container Corp. v. SEC,[20] were as
follows:

a) between the corporation, partnership, or association and the public;

b) between the corporation, partnership, or association and its stockholders, partners, members, or officers;

c) between the corporation, partnership, or association and the State as far as its franchise, permit or license to operate is concerned; and

d) among the stockholders, partners, or associates themselves. [Emphasis supplied.]

The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC, regardless of the subject matter of the dispute. This came to
be known as the relationship test.

However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc., [21] the Court introduced the nature of the controversy test. We declared in this
case that it is not the mere existence of an intra-corporate relationship that gives rise to an intra-corporate controversy; to rely on the relationship test alone will divest
the regular courts of their jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers, or stockholders. We saw that there is no legal
sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the dispute.
 66

Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of ascertaining whether the controversy itself is
intra-corporate.[22] The controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the
parties correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. If the relationship and its
incidents are merely incidental to the controversy or if there will still be conflict even if the relationship does not exist, then no intra-corporate controversy exists.

The Court then combined the two tests and declared that jurisdiction should be determined by considering not only the status or relationship of the parties, but also the
nature of the question under controversy.[23] This two-tier test was adopted in the recent case of Speed Distribution, Inc. v. Court of Appeals:[24]

To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the branches of the RTC specifically designated by the Court to
try and decide such cases, two elements must concur: (a) the status or relationship of the parties; and (2) the nature of the question that is the subject of their
controversy.

The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or all of the parties and the corporation,
partnership, or association of which they are stockholders, members or associates; between any or all of them and the corporation, partnership, or association of which
they are stockholders, members, or associates, respectively; and between such corporation, partnership, or association and the State insofar as it concerns their
individual franchises. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of
the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy.

Given these standards, we now tackle the question posed for our determination under the specific circumstances of this case:

Application of the Relationship Test

Is there an intra-corporate relationship between the parties that would characterize the case as an intra-corporate dispute?

We point out at the outset that while Rodrigo holds shares of stock in Zenith, he holds them in two capacities: in his own right with respect to the 4,250 shares
registered in his name, and as one of the heirs of Anastacia Reyes with respect to the 136,598 shares registered in her name. What is material in resolving the issues of
this case under the allegations of the complaint is Rodrigos interest as an heir since the subject matter of the present controversy centers on the shares of stocks
belonging to Anastacia, not on Rodrigos personally-owned shares nor on his personality as shareholder owning these shares. In this light, all reference to shares of
stocks in this case shall pertain to the shareholdings of the deceased Anastacia and the parties interest therein as her heirs.
 67

Article 777 of the Civil Code declares that the successional rights are transmitted from the moment of death of the decedent. Accordingly, upon Anastacias death, her
children acquired legal title to her estate (which title includes her shareholdings in Zenith), and they are, prior to the estates partition, deemed co-owners thereof.
[25]
This status as co-owners, however, does not immediately and necessarily make them stockholders of the corporation. Unless and until there is compliance with
Section 63 of the Corporation Code on the manner of transferring shares, the heirs do not become registered stockholders of the corporation. Section 63 provides:

Section 63. Certificate of stock and transfer of shares. The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or
vice-president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-laws. Shares
of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact or other person
legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation
so as to show the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates, and the number of shares
transferred. [Emphasis supplied.]

No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the corporation.

Simply stated, the transfer of title by means of succession, though effective and valid between the parties involved ( i.e., between the decedents estate and her heirs),
does not bind the corporation and third parties. The transfer must be registered in the books of the corporation to make the transferee-heir a stockholder entitled to
recognition as such both by the corporation and by third parties. [26]

We note, in relation with the above statement, that in Abejo v. Dela Cruz[27] and TCL Sales Corporation v. Court of Appeals [28] we did not require the registration of the
transfer before considering the transferee a stockholder of the corporation (in effect upholding the existence of an intra-corporate relation between the parties and
bringing the case within the jurisdiction of the SEC as an intra-corporate controversy). A marked difference, however, exists between these cases and the present one.

In Abejo and TCL Sales, the transferees held definite and uncontested titles to a specific number of shares of the corporation; after the transferee had established prima
facie ownership over the shares of stocks in question, registration became a mere formality in confirming their status as stockholders. In the present case, each of
Anastacias heirs holds only an undivided interest in the shares. This interest, at this point, is still inchoate and subject to the outcome of a settlement proceeding; the
right of the heirs to specific, distributive shares of inheritance will not be determined until all the debts of the estate of the decedent are paid. In short, the heirs are
only entitled to what remains after payment of the decedents debts; [29] whether there will be residue remains to be seen. Justice Jurado aptly puts it as follows:

No succession shall be declared unless and until a liquidation of the assets and debts left by the decedent shall have been made and all his creditors are fully paid. Until
a final liquidation is made and all the debts are paid, the right of the heirs to inherit remains inchoate. This is so because under our rules of procedure, liquidation is
necessary in order to determine whether or not the decedent has left any liquid assets which may be transmitted to his heirs. [30] [Emphasis supplied.]
 68

Rodrigo must, therefore, hurdle two obstacles before he can be considered a stockholder of Zenith with respect to the shareholdings originally belonging to
Anastacia. First, he must prove that there are shareholdings that will be left to him and his co-heirs, and this can be determined only in a settlement of the decedents
estate. No such proceeding has been commenced to date. Second, he must register the transfer of the shares allotted to him to make it binding against the
corporation. He cannot demand that this be done unless and until he has established his specific allotment (and prima facie ownership) of the shares. Without the
settlement of Anastacias estate, there can be no definite partition and distribution of the estate to the heirs. Without the partition and distribution, there can be no
registration of the transfer. And without the registration, we cannot consider the transferee-heir a stockholder who may invoke the existence of an intra-corporate
relationship as premise for an intra-corporate controversy within the jurisdiction of a special commercial court.

In sum, we find that insofar as the subject shares of stock (i.e., Anastacias shares) are concerned Rodrigo cannot be considered a stockholder of Zenith. Consequently,
we cannot declare that an intra-corporate relationship exists that would serve as basis to bring this case within the special commercial courts jurisdiction under Section
5(b) of PD 902-A, as amended. Rodrigos complaint, therefore, fails the relationship test.

Application of the Nature of Controversy Test

The body rather than the title of the complaint determines the nature of an action. [31] Our examination of the complaint yields the conclusion that, more than anything
else, the complaint is about the protection and enforcement of successional rights. The controversy it presents is purely civil rather than corporate, although it is
denominated as a complaint for accounting of all corporate funds and assets.

Contrary to the findings of both the trial and appellate courts, we read only one cause of action alleged in the complaint. The derivative suit for accounting of the funds
and assets of the corporation which are in the control, custody, and/or possession of the respondent [herein petitioner Oscar] does not constitute a separate cause of
action but is, as correctly claimed by Oscar, only an incident to the action for determination of the shares of stock of deceased spouses Pedro and Anastacia Reyes
allegedly taken by respondent, its accounting and the corresponding delivery of these shares to the parties brothers and sisters. There can be no mistake of the
relationship between the accounting mentioned in the complaint and the objective of partition and distribution when Rodrigo claimed in paragraph 10.1 of the complaint
that:

10.1 By refusal of the respondent to account of [sic] his shareholdings in the company, he illegally and fraudulently transferred solely in his name wherein [sic] the
shares of stock of the deceased Anastacia C. Reyes [which] must be properly collated and/or distributed equally amongst the children including the complainant Rodrigo
C. Reyes herein to their damage and prejudice.

We particularly note that the complaint contained no sufficient allegation that justified the need for an accounting other than to determine the extent of Anastacias
shareholdings for purposes of distribution.
 69

Another significant indicator that points us to the real nature of the complaint are Rodrigos repeated claims of illegal and fraudulent transfers of Anastacias shares by
Oscar to the prejudice of the other heirs of the decedent; he cited these allegedly fraudulent acts as basis for his demand for the collation and distribution of Anastacias
shares to the heirs.These claims tell us unequivocally that the present controversy arose from the parties relationship as heirs of Anastacia and not as shareholders of
Zenith. Rodrigo, in filing the complaint, is enforcing his rights as a co-heir and not as a stockholder of Zenith. The injury he seeks to remedy is one suffered by an heir
(for the impairment of his successional rights) and not by the corporation nor by Rodrigo as a shareholder on record.

More than the matters of injury and redress, what Rodrigo clearly aims to accomplish through his allegations of illegal acquisition by Oscar is the distribution of
Anastacias shareholdings without a prior settlement of her estate an objective that, by law and established jurisprudence, cannot be done. The RTC of Makati, acting as
a special commercial court, has no jurisdiction to settle, partition, and distribute the estate of a deceased. A relevant provision Section 2 of Rule 90 of the Revised Rules
of Court that contemplates properties of the decedent held by one of the heirs declares:

Questions as to advancement made or alleged to have been made by the deceased to any heir may be heard and determined by the court having jurisdiction of the
estate proceedings; and the final order of the court thereon shall be binding on the person raising the questions and on the heir. [Emphasis supplied.]

Worth noting are this Courts statements in the case of Natcher v. Court of Appeals:[32]

Matters which involve settlement and distribution of the estate of the decedent fall within the exclusive province of the probate court in the exercise of its limited
jurisdiction.

xxxx

It is clear that trial courts trying an ordinary action cannot resolve to perform acts pertaining to a special proceeding because it is subject to specific prescribed rules.
[Emphasis supplied.]
 70

That an accounting of the funds and assets of Zenith to determine the extent and value of Anastacias shareholdings will be undertaken by a probate court and not by a
special commercial court is completely consistent with the probate courts limited jurisdiction. It has the power to enforce an accounting as a necessary means to its
authority to determine the properties included in the inventory of the estate to be administered, divided up, and distributed. Beyond this, the determination of title or
ownership over the subject shares (whether belonging to Anastacia or Oscar) may be conclusively settled by the probate court as a question of collation or
advancement. We had occasion to recognize the courts authority to act on questions of title or ownership in a collation or advancement situation in Coca v.
Pangilinan[33] where we ruled:

It should be clarified that whether a particular matter should be resolved by the Court of First Instance in the exercise of its general jurisdiction or of its limited probate
jurisdiction is in reality not a jurisdictional question. In essence, it is a procedural question involving a mode of practice "which may be waived."

As a general rule, the question as to title to property should not be passed upon in the testate or intestate proceeding. That question should be ventilated in a separate
action. That general rule has qualifications or exceptions justified by expediency and convenience.

Thus, the probate court may provisionally pass upon in an intestate or testate proceeding the question of inclusion in, or exclusion from, the inventory of a piece of
property without prejudice to its final determination in a separate action.

Although generally, a probate court may not decide a question of title or ownership, yet if the interested parties are all heirs, or the question is one of collation or
advancement, or the parties consent to the assumption of jurisdiction by the probate court and the rights of third parties are not impaired, the probate court is
competent to decide the question of ownership. [Citations omitted. Emphasis supplied.]

In sum, we hold that the nature of the present controversy is not one which may be classified as an intra-corporate dispute and is beyond the jurisdiction of the special
commercial court to resolve. In short, Rodrigos complaint also fails the nature of the controversy test.

DERIVATIVE SUIT
 71

Rodrigos bare claim that the complaint is a derivative suit will not suffice to confer jurisdiction on the RTC (as a special commercial court) if he cannot comply with the
requisites for the existence of a derivative suit. These requisites are:

a. the party bringing suit should be a shareholder during the time of the act or transaction complained of, the number of shares not being material;

b. the party has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the appropriate relief, but the latter has failed or
refused to heed his plea; and

c. the cause of action actually devolves on the corporation; the wrongdoing or harm having been or being caused to the corporation and not to the particular
stockholder bringing the suit.[34]

Based on these standards, we hold that the allegations of the present complaint do not amount to a derivative suit.

First, as already discussed above, Rodrigo is not a shareholder with respect to the shareholdings originally belonging to Anastacia; he only stands as a transferee-heir
whose rights to the share are inchoate and unrecorded. With respect to his own individually-held shareholdings, Rodrigo has not alleged any individual cause or basis as
a shareholder on record to proceed against Oscar.

Second, in order that a stockholder may show a right to sue on behalf of the corporation, he must allege with some particularity in his complaint that he has exhausted
his remedies within the corporation by making a sufficient demand upon the directors or other officers for appropriate relief with the expressed intent to sue if relief is
denied.[35]Paragraph 8 of the complaint hardly satisfies this requirement since what the rule contemplates is the exhaustion of remedies within the corporate setting:

8. As members of the same family, complainant Rodrigo C. Reyes has resorted [to] and exhausted all legal means of resolving the dispute with the end view of amicably
settling the case, but the dispute between them ensued.

Lastly, we find no injury, actual or threatened, alleged to have been done to the corporation due to Oscars acts. If indeed he illegally and fraudulently transferred
Anastacias shares in his own name, then the damage is not to the corporation but to his co-heirs; the wrongful transfer did not affect the capital stock or the assets of
Zenith. As already mentioned, neither has Rodrigo alleged any particular cause or wrongdoing against the corporation that he can champion in his capacity as a
shareholder on record.[36]
 72

In summary, whether as an individual or as a derivative suit, the RTC sitting as special commercial court has no jurisdiction to hear Rodrigos complaint since what is
involved is the determination and distribution of successional rights to the shareholdings of Anastacia Reyes. Rodrigos proper remedy, under the circumstances, is to
institute a special proceeding for the settlement of the estate of the deceased Anastacia Reyes, a move that is not foreclosed by the dismissal of his present complaint.

WHEREFORE, we hereby GRANT the petition and REVERSE the decision of the Court of Appeals dated May 26, 2004 in CA-G.R. SP No. 74970. The complaint before the
Regional Trial Court, Branch 142, Makati, docketed as Civil Case No. 00-1553, is ordered DISMISSED for lack of jurisdiction.

SO ORDERED.
 73

SLIE OKOL, G.R. No. 160146

Petitioner,

Present:

- versus - CARPIO, J., Chairperson,

CARPIO MORALES,*

LEONARDO-DE CASTRO,**

DEL CASTILLO, and

ABAD, JJ.

SLIMMERS WORLD INTERNATIONAL, BEHAVIOR

MODIFICATIONS, INC., and RONALD JOSEPH MOY,
 74

Respondents.

Promulgated:

December 11, 2009

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review on certiorari [1] assailing the Decision[2] dated 18 October 2002 and Resolution dated 22 September 2003 of the Court of Appeals
in CA-G.R. SP No. 69893, which set aside the Resolutions dated 29 May 2001 and 21 December 2001 of the National Labor Relations Commission (NLRC).

The Facts

Respondent Slimmers World International operating under the name Behavior Modifications, Inc. (Slimmers World) employed petitioner Leslie Okol (Okol) as a
management trainee on 15 June 1992. She rose up the ranks to become Head Office Manager and then Director and Vice President from 1996 until her dismissal on 22
September 1999.
 75

On 28 July 1999, prior to Okols dismissal, Slimmers World preventively suspended Okol. The suspension arose from the seizure by the Bureau of Customs of seven
Precor elliptical machines and seven Precor treadmills belonging to or consigned to Slimmers World. The shipment of the equipment was placed under the names of Okol
and two customs brokers for a value less than US$500. For being undervalued, the equipment were seized.

On 2 September 1999, Okol received a memorandum that her suspension had been extended from 2 September until 1 October 1999 pending the outcome of the
investigation on the Precor equipment importation.

On 17 September 1999, Okol received another memorandum from Slimmers World requiring her to explain why no disciplinary action should be taken against her in
connection with the equipment seized by the Bureau of Customs.

On 19 September 1999, Okol filed her written explanation. However, Slimmers World found Okols explanation to be unsatisfactory. Through a letter dated 22
September 1999 signed by its president Ronald Joseph Moy (Moy), Slimmers World terminated Okols employment.

Okol filed a complaint [3] with the Arbitration branch of the NLRC against Slimmers World, Behavior Modifications, Inc. and Moy (collectively called respondents) for illegal
suspension, illegal dismissal, unpaid commissions, damages and attorneys fees, with prayer for reinstatement and payment of backwages.

On 22 February 2000, respondents filed a Motion to Dismiss [4] the case with a reservation of their right to file a Position Paper at the proper time. Respondents asserted
that the NLRC had no jurisdiction over the subject matter of the complaint.

In an Order,[5] dated 20 March 2000, the labor arbiter granted the motion to dismiss. The labor arbiter ruled that Okol was the vice-president of Slimmers World at the
time of her dismissal. Since it involved a corporate officer, the dispute was an intra-corporate controversy falling outside the jurisdiction of the Arbitration branch.

Okol filed an appeal with the NLRC. In a Resolution[6] dated 29 May 2001, the NLRC reversed and set aside the labor arbiters order. The dispositive portion of the
resolution states:

WHEREFORE, the Order appealed from is SET ASIDE and REVERSED. A new one is hereby ENTERED ordering respondent Behavior Modification, Inc./Slimmers World
International to reinstate complainant Leslie F. Okol to her former position with full back wages which to date stood in the amount of P10,000,000.00 computed from
July 28, 1999 to November 28, 2000 until fully reinstated; and the further sum of P1,250,000.00 as indemnity pay plus attorneys fee equivalent to ten (10%) of the
 76

total monetary award. However, should reinstatement be not feasible separation pay equivalent to one month pay per year of service is awarded, a fraction of at least
six months considered one whole year.

All other claims are dismissed for lack of factual or legal basis.

SO ORDERED.[7]

Respondents filed a Motion for Reconsideration with the NLRC. Respondents contended that the relief prayed for was confined only to the question of
jurisdiction. However, the NLRC not only decided the case on the merits but did so in the absence of position papers from both parties. In a Resolution[8] dated 21
December 2001, the NLRC denied the motion for lack of merit.

Respondents then filed an appeal with the Court of Appeals, docketed as CA-G.R. SP No. 69893.

The Ruling of the Court of Appeals

In a Decision[9] dated 18 October 2002, the appellate court set aside the NLRCs Resolution dated 29 May 2001 and affirmed the labor arbiters Order dated 20 March
2000. The Court of Appeals ruled that the case, being an intra-corporate dispute, falls within the jurisdiction of the regular courts pursuant to Republic Act No. 8799.
[10]
The appellate court added that the NLRC had acted without jurisdiction in giving due course to the complaint and deprived respondents of their right to due process
in deciding the case on the merits.

Okol filed a Motion for Reconsideration which was denied in a Resolution [11] dated 22 September 2003.

Hence, the instant petition.

The Issue

The issue is whether or not the NLRC has jurisdiction over the illegal dismissal case filed by petitioner.
 77

The Courts Ruling

The petition lacks merit.

Petitioner insists that the Court of Appeals erred in ruling that she was a corporate officer and that the case is an intra-corporate dispute falling within the jurisdiction of
the regular courts. Petitioner asserts that even as vice-president, the work that she performed conforms to that of an employee rather than a corporate officer. Mere
title or designation in a corporation will not, by itself, determine the existence of an employer-employee relationship. It is the four-fold test, namely (1) the power to
hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to control, which must be applied.

Petitioner enumerated the instances that she was under the power and control of Moy, Slimmers Worlds president: (1) petitioner received salary evidenced by pay slips,
(2) Moy deducted Medicare and SSS benefits from petitioners salary, and (3) petitioner was dismissed from employment not through a board resolution but by virtue of
a letter from Moy.Thus, having shown that an employer-employee relationship exists, the jurisdiction to hear and decide the case is vested with the labor arbiter and the
NLRC.

Respondents, on the other hand, maintain that petitioner was a corporate officer at the time of her dismissal from Slimmers World as supported by the General
Information Sheet and Directors Affidavit attesting that petitioner was an officer. Also, the factors cited by petitioner that she was a mere employee do not prove that
she was not an officer of Slimmers World. Even the alleged absence of any resolution of the Board of Directors approving petitioners termination does not constitute
proof that petitioner was not an officer. Respondents assert that petitioner was not only an officer but also a stockholder and director; which facts provide further basis
that petitioners separation from Slimmers World does not come under the NLRCs jurisdiction.

The issue revolves mainly on whether petitioner was an employee or a corporate officer of Slimmers World. Section 25 of the Corporation Code enumerates corporate
officers as the president, secretary, treasurer and such other officers as may be provided for in the by-laws. In Tabang v. NLRC,[12] we held that an office is created by
the charter of the corporation and the officer is elected by the directors or stockholders. On the other hand, an employee usually occupies no office and generally is
employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such
employee.

In the present case, the respondents, in their motion to dismiss filed before the labor arbiter, questioned the jurisdiction of the NLRC in taking cognizance of petitioners
complaint. In the motion, respondents attached the General Information Sheet [13] (GIS) dated 14 April 1998, Minutes[14] of the meeting of the Board of Directors dated
14 April 1997 and Secretarys Certificate, [15] and the Amended By-Laws[16] dated 1 August 1994 of Slimmers World as submitted to the SEC to show that petitioner was a
corporate officer whose rights do not fall within the NLRCs jurisdiction. The GIS and minutes of the meeting of the board of directors indicated that petitioner was a
member of the board of directors, holding one subscribed share of the capital stock, and an elected corporate officer.

The relevant portions of the Amended By-Laws of Slimmers World which enumerate the power of the board of directors as well as the officers of the corporation state:
 78

Article II

The Board of Directors

1. Qualifications and Election The general management of the corporation shall be vested in a board of five directors who shall be stockholders and who shall be elected
annually by the stockholders and who shall serve until the election and qualification of their successors.

xxx

Article III

Officers

xxx

4. Vice-President Like the Chairman of the Board and the President, the Vice-President shall be elected by the Board of Directors from [its] own members.

The Vice-President shall be vested with all the powers and authority and is required to perform all the duties of the President during the absence of the latter for any
cause.

The Vice-President will perform such duties as the Board of Directors may impose upon him from time to time.

xxx

Clearly, from the documents submitted by respondents, petitioner was a director and officer of Slimmers World. The charges of illegal suspension, illegal dismissal,
unpaid commissions, reinstatement and back wages imputed by petitioner against respondents fall squarely within the ambit of intra-corporate disputes. In a number of
cases,[17] we have held that a corporate officers dismissal is always a corporate act, or an intra-corporate controversy which arises between a stockholder and a
 79

corporation. The question of remuneration involving a stockholder and officer, not a mere employee, is not a simple labor problem but a matter that comes within the
area of corporate affairs and management and is a corporate controversy in contemplation of the Corporation Code. [18]

Prior to its amendment, Section 5(c) of Presidential Decree No. 902-A[19] (PD 902-A) provided that intra-corporate disputes fall within the jurisdiction of the Securities
and Exchange Commission (SEC):

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of
associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

xxx

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.

Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000, transferred to regional trial courts the SECs jurisdiction over all cases listed in
Section 5 of PD 902-A:

5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction
or the appropriate Regional Trial Court.

xxx

It is a settled rule that jurisdiction over the subject matter is conferred by law. [20] The determination of the rights of a director and corporate officer dismissed from his
employment as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction of the regular courts. Thus, the
appellate court correctly ruled that it is not the NLRC but the regular courts which have jurisdiction over the present case.
 80

WHEREFORE, we DENY the petition. We AFFIRM the 18 October 2002 Decision and 22 September 2003 Resolution of the Court of Appeals in CA-G.R. SP No. 69893. This
Decision is without prejudice to petitioner Leslie Okols taking recourse to and seeking relief through the appropriate remedy in the proper forum.

SO ORDERED.
 81

G.R. No. 164888 December 6, 2006

RURAL BANK OF CORON (PALAWAN), INC., EMPIRE COLD STORAGE AND DEVELOPMENT CORPORATION, CITIZENS DEVELOPMENT INCOPRORATED, CARIDAD B.
GARCIA, SANDRA G. ESCAT, LORNA GARCIA, and OLGA G. ESCAT, petitioners,
vs.
ANNALISA CORTES, respondent.

DECISION

CARPIO MORALES, J.:

In 1987, Virgilio Garcia, "founder" of petitioner corporations (the corporations), hired the then still single Annalisa Cortes (respondent) as clerk of the Rural Bank of
Coron (Manila Office).
 82

After Virgilio died, his son Victor took over the management of the corporations.

Anita Cortes (Anita), the wife of Victor Garcia, was also involved in the management of the corporations. Respondent later married Anita’s brother Eduardo Cortes.

Anita soon assumed the position of Vice President of petitioner Citizens Development Incorporated (CDI) and practically controlled the financial operations of almost all
of the other corporations in the course of which she allowed some of her relatives and in-laws, including respondent, to hold several key sensitive positions thereat.

Respondent later became the Financial Assistant, Personnel Officer and Corporate Secretary of The Rural Bank of Coron, Personnel Officer of CDI, and also Personnel
Officer and Disbursing Officer of The Empire Cold Storage Development Corporation (ECSDC). She simultaneously received salaries from these corporations.

On examination of the financial books of the corporations by petitioner Sandra Garcia Escat, a daughter of Virgilio Garcia who was previously residing in Spain, she
found out that respondent was involved in several anomalies, 1drawing petitioners to terminate respondent’s services on November 23, 1998 in petitioner corporations. 2

By letter of November 25, 1998 3 addressed to individual petitioners Caridad B. Garcia (widow of Virgilio Garcia), Sandra G. Escat, and Olga G. Escat (another daughter
of Virgilio Garcia), respondent’s counsel conveyed respondent’s willingness to abide by the decision to terminate her but reminded them that she was entitled to
separation pay equivalent to 11 months salary as well as to the other benefits provided by law in her favor.

Respondent’s counsel thus demanded the payment of respondent’s unpaid salary for the months of October and November 1998, separation pay equivalent to 12
months salary,4 13th month pay and other benefits.

As the demand remained unheeded, respondent filed a complaint 5 for illegal dismissal and non-payment of salaries and other benefits, docketed as NLRC-NCR Case No.
00-05-05738-99.

Petitioners moved for the dismissal of the complaint on the ground of lack of jurisdiction, contending that the case was an intra-corporate controversy involving the
removal of a corporate officer, respondent being the Corporate Secretary of the Rural Bank of Coron, Inc., hence, cognizable by the Securities and Exchange
Commission (SEC) pursuant to Section 5 of PD 902-A.6

In resolving the issue of jurisdiction, the Labor Arbiter noted as follows:

It is to be noted that complainant, aside from her being Corporate Secretary of Rural Bank of Coron, complainant was likewise appointed as Financial Assistant &
Personnel Officer of all respondents herein, whose services w[ere] terminated on 23 November 1998, hence, the instant complaint.

Verily, a Financial Assistant & Personnel Officer is not a Corporate Officer of the [petitioners’] corporation, thus, pursuant to Article 217 of the Labor Code, as amended,
the instant case falls within the ambit of original and exclusive jurisdiction of this Office. 7 (Emphasis and underscoring supplied).

Eventually, the Labor Arbiter found for respondent, computing the monetary award due her as follows:

Backwages P658,000.00

13th Month Pay for 1998, 1999 & 63,000.00

2000
 83

P721,000.00

Separation Pay 315,000.00

Unpaid Salary 25,900.00

Attorney’s fees 106,190.00

P1,168,090.00

Thus, the Labor Arbiter, by Decision of July 18, 2001, disposed:

WHEREFORE, in view of all the foregoing, respondents are hereby ordered to jointly and severally pay complainant the total amount of ONE MILLION ONE HUNDRED
SIXTY-EIGHT THOUSAND NINETY (P1,168,090.00) PESOS as discussed above.8

On August 13, 2001, the tenth or last day of the period of appeal, 9 petitioners filed a Notice of Appeal and Motion for Reduction of Bond 10 to which they attached
a Memorandum on Appeal.11 In their Motion for Reduction of Bond, petitioners alleged that the corporations were under financial distress and the Rural Bank of Coron
was under receivership. They thus prayed that the amount of bond be substantially reduced, preferably to one half thereof or even lower. 12

By Resolution of October 16, 200113, the National Labor Relations Commission (NLRC), while noting that petitioners timely filed the appeal, held that the same was not
accompanied by an appeal bond, a mandatory requirement under Article 223 14 of the Labor Code and Section 6, Rule VI of the NLRC New Rules of Procedure. It also
noted that the Motion for Reduction of Bond was "premised on self-serving allegations." It accordingly dismissed the appeal.

Petitioners’ Motion for Reconsideration 15 was denied by the NLRC by November 26, 2001 Resolution, 16 hence, they filed a Petition for Certiorari 17 before the Court of
Appeals.

By Decision dated May 26, 2004 18, the appellate court dismissed the petition for lack of merit. Petitioners’ motion for reconsideration was also denied by Resolution of
August 13, 2004.19

Hence, this petition,20 petitioners faulting the appellate court for:

. . . FAIL[URE] TO RULE THAT THE NLRC’S RULE OF PROCEDURE WHICH PROVIDES FOR THE POSTING OF A BOND AS A CONDITION PRECEDENT FOR PERFECTING AN
APPEAL AS A CONDITION PRECEDENT FOR PERFECTING AN APPEAL IS CONTRARY TO LAW AND ESTABLISHED JURISPRUDENCE.

II

. . . DISMISS[ING] PETITIONERS[’] PETITION FOR [CERTIORARI] BASED ON TECHNICALITY AND FAIL[URE] TO DECIDE THE SAME BASED ON ITS MERIT.

III

. . . DISMISSING PETITIONERS’ PETITION FOR CERTIORARI FROM THE DECISION OF THE NLRC FOR NON-PERFECTION THEREOF.
 84

IV

. . . DISMISSING PETITIONERS’ PETITION FOR [CERTIORARI] FROM THE DECISION OF THE NLRC WITHOUT RESOLVING THE CASE BASED ON ITS MERITS.

. . . FAIL[URE] TO DECLARE THAT INDIVIDUAL PETITIONERS ARE NOT SOLIDARY LIABLE TO PAY THE RESPONDENT FOR HER MONETARY CLAIM IN VIEW OF THE
ABSENCE OF ANY EVIDENCE SHOWING THAT THEY WERE MOTIVATED BY ILL-WILL OR MALICE IN SEVERING HER EMPLOYMENT.

VI

. . . FAIL[URE] TO RESOLVE THE ISSUE OF JURISDICTION. 21

While, indeed, respondent was the Corporate Secretary of the Rural Bank of Coron, she was also its Financial Assistant and the Personnel Officer of the two other
petitioner corporations.22

Mainland Construction Co., Inc. v. Movilla 23 instructs that a corporation can engage its corporate officers to perform services under a circumstance which would make
them employees.24

The Labor Arbiter has thus jurisdiction over respondent’s complaint.

On the first three assigned errors which bear on whether petitioners’ appeal before the NLRC was perfected:

As before the Court of Appeals, petitioners cite Cosico, Jr. v. NLRC[25] and Taberrah v. NLRC[26] in support of their contention that their appeal before the NLRC was
perfected. As correctly ruled by the Court of Appeals, however, the cited cases are not in point.

… The appellant in Taberrah filed a motion to fix appeal bond instead of posting an appeal bond; and the Supreme Court relaxed the requirement considering that
the labor arbiter’s decision did not contain a computation of the monetary award. In Cosico, the appeal bond posted was of insufficient amount but the Supreme Court
ruled that provisions of the Labor Code on requiring a bond on appeal involving monetary awards must be given liberal interpretation in line with the desired objective of
resolving controversies on their merits. Herein, no appeal bond, whether sufficient or not, was ever filed by the petitioners. 27 (Italics in the original; emphasis and
underscoring supplied)

Petitioners additionally cite Star Angel Handicraft v. NLRC[28] to support their position that there is a distinction between the filing of an appeal within the reglementary
period and its perfection. In the parallel case of Computer Innovations Center v. National Labor Relations Commission,29 this Court hesitated to reiterate the doctrine
in Star Angel in this wise:

Petitioners invoke the aforementioned holding in Star Angel that there is a distinction between the filing of an appeal within the reglementary period and its perfection,
and that the appeal may be perfected after the said reglementary period. Indeed, Star Angel held that the filing of a motion for reduction of appeal bond necessarily
stays the reglementary period for appeal. However, in this case, the motion for reduction of appeal bond, which was incorporated in the appeal memorandum, was filed
only on the tenth or final day of the reglementary period. Under such circumstance, the motion for reduction of appeal bond can no longer be deemed to have stayed
the appeal, and the petitioner faces the risk, as had happened in this case, of summary dismissal of the appeal for non-perfection.
 85

Moreover, the reference in Star Angel to the distinction between the period to file the appeal and to perfect the appeal has been pointedly made only once by this Court
in Gensoli v. NLRC thus, it has not acquired the sheen of venerability reserved for repeatedly-cited cases. The distinction, if any, is not particularly evident or material in
the Labor Code; hence, the reluctance of the Court to adopt such doctrine. Moreover, the present provision in the NLRC Rules of Procedure, that "the filing of a motion
to reduce bond shall not stop the running of the period to perfect appeal" flatly contradicts the notion expressed in Star Angel that there is a distinction between the
filing an appeal and perfecting an appeal.

Ultimately, the disposition of Star Angel was premised on the ruling that a motion for reduction of the appeal bond necessarily stays the period for perfecting the appeal,
and that the employer cannot be expected to perfect the appeal by posting the proper bond until such time the said motion for reduction is resolved. The unduly
stretched-out distinction between the period to file an appeal and to perfect an appeal was not material to the resolution of Star Angel, and this could be properly
considered as obiter dictum.30(Italics in the original; emphasis and underscoring supplied)

The appellate court did not thus err in dismissing the petition before it. And contrary to petitioners’ assertion, the appellate court dismissed its petition not "on a mere
technicality." For the non-posting of an appeal bond within the reglementary period divests the NLRC of its jurisdiction to entertain the appeal. Thus, in the same case
of Computer Innovations Center, this Court held:

Petitioners also characterize the appeal bond requirement as a technical rule, and that the dismissal of an appeal on purely technical grounds is frowned upon.
However, Article 223, which prescribes the appeal bond requirement, is a rule of jurisdiction and not of procedure. There is a little leeway for condoning a liberal
interpretation thereof, and certainly none premised on the ground that its requirements are mere technicalities. It must be emphasized that there is no inherent right to
an appeal in a labor case, as it arises solely from grant of statute, namely the Labor Code.

We have indeed held that the requirement for posting the surety bond is not merely procedural but jurisdictional and cannot be trifled with. Non-compliance with such
legal requirements is fatal and has the effect of rendering the judgment final and executory. The petitioners cannot be allowed to seek refuge in a liberal application of
rules for their act of negligence.31 (Emphasis and underscoring supplied)

It bears emphasis that all that is required to perfect the appeal is the posting of a bond to ensure that the award is eventually paid should the appeal be dismissed.
Petitioners should thus have posted a bond, even if it were only partial, but they did not. No relaxation of the Rule may thus be considered. 32

In the case at bar, petitioner did not post a full or partial appeal bond within the prescribed period, thus, no appeal was perfected from the decision of the Labor Arbiter.
For this reason, the decision sought to be appealed to the NLRC had become final and executory and therefore immutable. Clearly then, the NLRC has no authority to
entertain the appeal, much less to reverse the decision of the Labor Arbiter. Any amendment or alteration made which substantially affects the final and executory
judgment is null and void for lack of jurisdiction, including the entire proceeding held for that purpose. 33 (Emphasis and underscoring supplied)

As the decision of the Labor Arbiter had become final and executory, a discussion of the fourth and fifth assigned errors is no longer necessary.

WHEREFORE, the petition is DENIED.

86
 87

PATRICIA HALAGUEA, MA. ANGELITA L. PULIDO, MA. G.R. No. 172013

TERESITA P. SANTIAGO,

MARIANNE V. KATINDIG,
Present:
BERNADETTE A. CABALQUINTO,

LORNA B. TUGAS, MARY CHRISTINE A. VILLARETE,

CYNTHIA A. STEHMEIER, ROSE ANNA G. VICTA, NOEMI YNARES-SANTIAGO, J.,
R. CRESENCIO, and other flight attendants of
PHILIPPINE AIRLINES, Chairperson,

Petitioners, CHICO-NAZARIO,

VELASCO, JR.,

- versus - NACHURA, and

PERALTA, JJ.

PHILIPPINE AIRLINES INCORPORATED,

Respondent.

Promulgated:

October 2, 2009

x--------------------------------------------------x
 88

DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the Decision [1] and the Resolution[2] of the Court
of Appeals (CA) in CA-G.R. SP. No. 86813.

Petitioners were employed as female flight attendants of respondent Philippine Airlines (PAL) on different dates prior to November 22, 1996. They are members of the
Flight Attendants and Stewards Association of the Philippines (FASAP), a labor organization certified as the sole and exclusive certified as the sole and exclusive
bargaining representative of the flight attendants, flight stewards and pursers of respondent.

On July 11, 2001, respondent and FASAP entered into a Collective Bargaining Agreement [3] incorporating the terms and conditions of their agreement for the years 2000
to 2005, hereinafter referred to as PAL-FASAP CBA.

Section 144, Part A of the PAL-FASAP CBA, provides that:

A. For the Cabin Attendants hired before 22 November 1996:

xxxx

3. Compulsory Retirement

Subject to the grooming standards provisions of this Agreement, compulsory retirement shall be fifty-five (55) for females and sixty (60) for males. x x x.
 89

In a letter dated July 22, 2003, [4] petitioners and several female cabin crews manifested that the aforementioned CBA provision on compulsory retirement is
discriminatory, and demanded for an equal treatment with their male counterparts. This demand was reiterated in a letter [5] by petitioners' counsel addressed to
respondent demanding the removal of gender discrimination provisions in the coming re-negotiations of the PAL-FASAP CBA.

On July 12, 2004, Robert D. Anduiza, President of FASAP submitted their 2004-2005 CBA proposals [6] and manifested their willingness to commence the collective
bargaining negotiations between the management and the association, at the soonest possible time.

On July 29, 2004, petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the Issuance of Temporary Restraining Order and Writ of Preliminary
Injunction[7] with the Regional Trial Court (RTC) of Makati City, Branch 147, docketed as Civil Case No. 04-886, against respondent for the invalidity of Section 144, Part
A of the PAL-FASAP CBA. The RTC set a hearing on petitioners' application for a TRO and, thereafter, required the parties to submit their respective memoranda.

On August 9, 2004, the RTC issued an Order[8] upholding its jurisdiction over the present case. The RTC reasoned that:

In the instant case, the thrust of the Petition is Sec. 144 of the subject CBA which is allegedly discriminatory as it discriminates against female flight attendants, in
violation of the Constitution, the Labor Code, and the CEDAW. The allegations in the Petition do not make out a labor dispute arising from employer-employee
relationship as none is shown to exist. This case is not directed specifically against respondent arising from any act of the latter, nor does it involve a claim against the
respondent. Rather, this case seeks a declaration of the nullity of the questioned provision of the CBA, which is within the Court's competence, with the allegations in
the Petition constituting the bases for such relief sought.

The RTC issued a TRO on August 10, 2004,[9] enjoining the respondent for implementing Section 144, Part A of the PAL-FASAP CBA.

The respondent filed an omnibus motion [10] seeking reconsideration of the order overruling its objection to the jurisdiction of the RTC the lifting of the TRO. It further
prayed that the (1) petitioners' application for the issuance of a writ of preliminary injunction be denied; and (2) the petition be dismissed or the proceedings in this
case be suspended.

On September 27, 2004, the RTC issued an Order [11] directing the issuance of a writ of preliminary injunction enjoining the respondent or any of its agents and
representatives from further implementing Sec. 144, Part A of the PAL-FASAP CBA pending the resolution of the case.
 90

Aggrieved, respondent, on October 8, 2004, filed a Petition for Certiorari and Prohibition with Prayer for a Temporary Restraining Order and Writ of Preliminary
Injunction[12]with the Court of Appeals (CA) praying that the order of the RTC, which denied its objection to its jurisdiction, be annuled and set aside for having been
issued without and/or with grave abuse of discretion amounting to lack of jurisdiction.

The CA rendered a Decision, dated August 31, 2005, granting the respondent's petition, and ruled that:

WHEREFORE, the respondent court is by us declared to have NO JURISDICTION OVER THE CASE BELOW and, consequently, all the proceedings, orders and processes it
has so far issued therein are ANNULED and SET ASIDE. Respondent court is ordered to DISMISS its Civil Case No. 04-886.

SO ORDERED.

Petitioner filed a motion for reconsideration,[13] which was denied by the CA in its Resolution dated March 7, 2006.

Hence, the instant petition assigning the following error:

THE COURT OF APPEALS' CONCLUSION THAT THE SUBJECT MATTER IS A LABOR DISPUTE OR GRIEVANCE IS CONTRARY TO LAW AND JURISPRUDENCE.

The main issue in this case is whether the RTC has jurisdiction over the petitioners' action challenging the legality or constitutionality of the provisions on the
compulsory retirement age contained in the CBA between respondent PAL and FASAP.

Petitioners submit that the RTC has jurisdiction in all civil actions in which the subject of the litigation is incapable of pecuniary estimation and in all cases not within the
exclusive jurisdiction of any court, tribunal, person or body exercising judicial or quasi-judicial functions. The RTC has the power to adjudicate all controversies except
those expressly witheld from the plenary powers of the court. Accordingly, it has the power to decide issues of constitutionality or legality of the provisions of Section
144, Part A of the PAL-FASAP CBA. As the issue involved is constitutional in character, the labor arbiter or the National Labor Relations Commission (NLRC) has no
jurisdiction over the case and, thus, the petitioners pray that judgment be rendered on the merits declaring Section 144, Part A of the PAL-FASAP CBA null and void.
 91

Respondent, on the other hand, alleges that the labor tribunals have jurisdiction over the present case, as the controversy partakes of a labor dispute. The dispute
concerns the terms and conditions of petitioners' employment in PAL, specifically their retirement age. The RTC has no jurisdiction over the subject matter of petitioners'
petition for declaratory relief because the Voluntary Arbitrator or panel of Voluntary Arbitrators have original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the CBA. Regular courts have no power to set and fix the terms and conditions of employment. Finally,
respondent alleged that petitioners' prayer before this Court to resolve their petition for declaratory relief on the merits is procedurally improper and baseless.

The petition is meritorious.

Jurisdiction of the court is determined on the basis of the material allegations of the complaint and the character of the relief prayed for irrespective of whether plaintiff
is entitled to such relief.[14]

In the case at bar, the allegations in the petition for declaratory relief plainly show that petitioners' cause of action is the a nnulment of Section 144, Part A of the PAL-
FASAP CBA. The pertinent portion of the petition recites:

CAUSE OF ACTION

24. Petitioners have the constitutional right to fundamental equality with men under Section 14, Article II, 1987 of the Constitution and, within the specific context of
this case, with the male cabin attendants of Philippine Airlines.

26. Petitioners have the statutory right to equal work and employment opportunities with men under Article 3, Presidential Decree No. 442, The Labor Code and, within
the specific context of this case, with the male cabin attendants of Philippine Airlines.

27. It is unlawful, even criminal, for an employer to discriminate against women employees with respect to terms and conditions of employment solely on account of
their sex under Article 135 of the Labor Code as amended by Republic Act No. 6725 or the Act Strengthening Prohibition on Discrimination Against Women.

28. This discrimination against Petitioners is likewise against the Convention on the Elimination of All Forms of Discrimination Against Women (hereafter, CEDAW), a
multilateral convention that the Philippines ratified in 1981. The Government and its agents, including our courts, not only must condemn all forms of discrimination
against women, but must also implement measures towards its elimination.
 92

29. This case is a matter of public interest not only because of Philippine Airlines' violation of the Constitution and existing laws, but also because it highlights the fact
that twenty-three years after the Philippine Senate ratified the CEDAW, discrimination against women continues.

31. Section 114, Part A of the PAL-FASAP 2000-20005 CBA on compulsory retirement from service is invidiously discriminatory against and manifestly prejudicial to
Petitioners because, they are compelled to retire at a lower age (fifty-five (55) relative to their male counterparts (sixty (60).

33. There is no reasonable, much less lawful, basis for Philippine Airlines to distinguish, differentiate or classify cabin attendants on the basis of sex and thereby
arbitrarily set a lower compulsory retirement age of 55 for Petitioners for the sole reason that they are women.

37. For being patently unconstitutional and unlawful, Section 114, Part A of the PAL-FASAP 2000-2005 CBA must be declared invalid and stricken down to the extent
that it discriminates against petitioner.

38. Accordingly, consistent with the constitutional and statutory guarantee of equality between men and women, Petitioners should be adjudged and declared entitled,
like their male counterparts, to work until they are sixty (60) years old.

PRAYER

WHEREFORE, it is most respectfully prayed that the Honorable Court:

c. after trial on the merits:

(I) declare Section 114, Part A of the PAL-FASAP 2000-2005 CBA INVALID, NULL and VOID to the extent that it discriminates against Petitioners; x x x x
 93

From the petitioners' allegations and relief prayed for in its petition, it is clear that the issue raised is whether Section 144, Part A of the PAL-FASAP CBA is unlawful and
unconstitutional. Here, the petitioners' primary relief in Civil Case No. 04-886 is the annulment of Section 144, Part A of the PAL-FASAP CBA, which allegedly
discriminates against them for being female flight attendants. The subject of litigation is incapable of pecuniary estimation, exclusively cognizable by the RTC, pursuant
to Section 19 (1) of Batas Pambansa Blg. 129, as amended.[15] Being an ordinary civil action, the same is beyond the jurisdiction of labor tribunals.

The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the application of the Constitution, labor statutes, law on contracts and the
Convention on the Elimination of All Forms of Discrimination Against Women, [16] and the power to apply and interpret the constitution and CEDAW is within the
jurisdiction of trial courts, a court of general jurisdiction. In Georg Grotjahn GMBH & Co. v. Isnani,[17] this Court held that not every dispute between an employer and
employee involves matters that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor
arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by
reference to the Labor Code, other labor statutes, or their collective bargaining agreement.

Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter. Actions between
employees and employer where the employer-employee relationship is merely incidental and the cause of action precedes from a different source of obligation is within
the exclusive jurisdiction of the regular court. [18] Here, the employer-employee relationship between the parties is merely incidental and the cause of action ultimately
arose from different sources of obligation, i.e., the Constitution and CEDAW.

Thus, where the principal relief sought is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by
the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the labor arbiter and the NLRC. In such situations, resolution of
the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of employment, but rather in the application of
the general civil law. Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to labor arbiters and the NLRC and the rationale for
granting jurisdiction over such claims to these agencies disappears. [19]

If We divest the regular courts of jurisdiction over the case, then which tribunal or forum shall determine the constitutionality or legality of the assailed CBA provision?

This Court holds that the grievance machinery and voluntary arbitrators do not have the power to determine and settle the issues at hand. They have no jurisdiction and
competence to decide constitutional issues relative to the questioned compulsory retirement age. Their exercise of jurisdiction is futile, as it is like vesting power to
someone who cannot wield it.

In Gonzales v. Climax Mining Ltd.,[20] this Court affirmed the jurisdiction of courts over questions on constitutionality of contracts, as the same involves the exercise of
judicial power. The Court said:
 94

Whether the case involves void or voidable contracts is still a judicial question. It may, in some instances, involve questions of fact especially with regard to the
determination of the circumstances of the execution of the contracts. But the resolution of the validity or voidness of the contracts remains a legal or judicial question
as it requires the exercise of judicial function. It requires the ascertainment of what laws are applicable to the dispute, the interpretation and application of those laws,
and the rendering of a judgment based thereon. Clearly, the dispute is not a mining conflict. It is essentially judicial. The complaint was not merely for the
determination of rights under the mining contracts since the very validity of those contracts is put in issue.

In Saura v. Saura, Jr.,[21] this Court emphasized the primacy of the regular court's judicial power enshrined in the Constitution that is true that the trend is towards
vesting administrative bodies like the SEC with the power to adjudicate matters coming under their particular specialization, to insure a more knowledgeable solution of
the problems submitted to them. This would also relieve the regular courts of a substantial number of cases that would otherwise swell their already clogged
dockets. But as expedient as this policy may be, it should not deprive the courts of justice of their power to decide ordinary cases in accordance with the general laws
that do not require any particularexpertise or training to interpret and apply. Otherwise, the creeping take-over by the administrative agencies of the judicial power
vested in the courts would render the judiciary virtually impotent in the discharge of the duties assigned to it by the Constitution.

To be sure, in Rivera v. Espiritu,[22] after Philippine Airlines (PAL) and PAL Employees Association (PALEA) entered into an agreement, which includes the provision to
suspend the PAL-PALEA CBA for 10 years, several employees questioned its validity via a petition for certiorari directly to the Supreme Court. They said that the
suspension was unconstitutional and contrary to public policy. Petitioners submit that the suspension was inordinately long, way beyond the maximum statutory life of 5
years for a CBA provided for in Article 253-A of the Labor Code. By agreeing to a 10-year suspension, PALEA, in effect, abdicated the workers' constitutional right to
bargain for another CBA at the mandated time.

In that case, this Court denied the petition for certiorari, ruling that there is available to petitioners a plain, speedy, and adequate remedy in the ordinary course of law.
The Court said that while the petition was denominated as one for certiorari and prohibition, its object was actually the nullification of the PAL-PALEA agreement. As
such, petitioners' proper remedy is an ordinary civil action for annulment of contract, an action which properly falls under the jurisdiction of the regional trial courts.

The change in the terms and conditions of employment, should Section 144 of the CBA be held invalid, is but a necessary and unavoidable consequence of the principal
relief sought, i.e., nullification of the alleged discriminatory provision in the CBA. Thus, it does not necessarily follow that a resolution of controversy that would bring
about a change in the terms and conditions of employment is a labor dispute, cognizable by labor tribunals. It is unfair to preclude petitioners from invoking the trial
court's jurisdiction merely because it may eventually result into a change of the terms and conditions of employment. Along that line, the trial court is not asked to set
and fix the terms and conditions of employment, but is called upon to determine whether CBA is consistent with the laws.

Although the CBA provides for a procedure for the adjustment of grievances, such referral to the grievance machinery and thereafter to voluntary arbitration would be
inappropriate to the petitioners, because the union and the management have unanimously agreed to the terms of the CBA and their interest is unified.
 95

In Pantranco North Express, Inc., v. NLRC,[23] this Court held that:

x x x Hence, only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators.

In the instant case, both the union and the company are united or have come to an agreement regarding the dismissal of private respondents. No grievance between
them exists which could be brought to a grievance machinery. The problem or dispute in the present case is between the union and the company on the one hand and
some union and non-union members who were dismissed, on the other hand. The dispute has to be settled before an impartial body. The grievance machinery with
members designated by the union and the company cannot be expected to be impartial against the dismissed employees. Due process demands that the dismissed
workers grievances be ventilated before an impartial body. x x x .

Applying the same rationale to the case at bar, it cannot be said that the "dispute" is between the union and petitioner company because both have previously agreed
upon the provision on "compulsory retirement" as embodied in the CBA. Also, it was only private respondent on his own who questioned the compulsory retirement. x x
x.

In the same vein, the dispute in the case at bar is not between FASAP and respondent PAL, who have both previously agreed upon the provision on the compulsory
retirement of female flight attendants as embodied in the CBA. The dispute is between respondent PAL and several female flight attendants who questioned the
provision on compulsory retirement of female flight attendants. Thus, applying the principle in the aforementioned case cited, referral to the grievance machinery and
voluntary arbitration would not serve the interest of the petitioners.

Besides, a referral of the case to the grievance machinery and to the voluntary arbitrator under the CBA would be futile because respondent already implemented
Section 114, Part A of PAL-FASAP CBA when several of its female flight attendants reached the compulsory retirement age of 55.

Further, FASAP, in a letter dated July 12, 2004, addressed to PAL, submitted its association's bargaining proposal for the remaining period of 2004-2005 of the PAL-
FASAP CBA, which includes the renegotiation of the subject Section 144. However, FASAP's attempt to change the questioned provision was shallow and superficial, to
say the least, because it exerted no further efforts to pursue its proposal. When petitioners in their individual capacities questioned the legality of the compulsory
retirement in the CBA before the trial court, there was no showing that FASAP, as their representative, endeavored to adjust, settle or negotiate with PAL for the
removal of the difference in compulsory age retirement between its female and male flight attendants, particularly those employed before November 22, 1996. Without
FASAP's active participation on behalf of its female flight attendants, the utilization of the grievance machinery or voluntary arbitration would be pointless.

The trial court in this case is not asked to interpret Section 144, Part A of the PAL-FASAP CBA. Interpretation, as defined in Black's Law Dictionary, is the art of or
process of discovering and ascertaining the meaning of a statute, will, contract, or other written document. [24] The provision regarding the compulsory retirement of
flight attendants is not ambiguous and does not require interpretation. Neither is there any question regarding the implementation of the subject CBA provision, because
the manner of implementing the same is clear in itself. The only controversy lies in its intrinsic validity.
 96

Although it is a rule that a contract freely entered between the parties should be respected, since a contract is the law between the parties, said rule is not absolute.

In Pakistan International Airlines Corporation v. Ople,[25] this Court held that:

The principle of party autonomy in contracts is not, however, an absolute principle. The rule in Article 1306, of our Civil Code is that the contracting parties may
establish such stipulations as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. Thus, counter-
balancing the principle of autonomy of contracting parties is the equally general rule that provisions of applicable law, especially provisions relating to matters affected
with public policy, are deemed written into the contract. Put a little differently, the governing principle is that parties may not contract away applicable provisions of law
especially peremptory provisions dealing with matters heavily impressed with public interest. The law relating to labor and employment is clearly such an area and
parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.

Moreover, the relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common
good.x x x [26] The supremacy of the law over contracts is explained by the fact that labor contracts are not ordinary contracts; these are imbued with public interest and
therefore are subject to the police power of the state. [27] It should not be taken to mean that retirement provisions agreed upon in the CBA are absolutely beyond the
ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual in nature but impressed with public interest. If the retirement provisions in
the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided. [28]

Finally, the issue in the petition for certiorari brought before the CA by the respondent was the alleged exercise of grave abuse of discretion of the RTC in taking
cognizance of the case for declaratory relief. When the CA annuled and set aside the RTC's order, petitioners sought relief before this Court through the instant petition
for review under Rule 45. A perusal of the petition before Us, petitioners pray for the declaration of the alleged discriminatory provision in the CBA against its female
flight attendants.

This Court is not persuaded. The rule is settled that pure questions of fact may not be the proper subject of an appeal by certiorari under Rule 45 of the Revised Rules of
Court. This mode of appeal is generally limited only to questions of law which must be distinctly set forth in the petition. The Supreme Court is not a trier of facts.[29]

The question as to whether said Section 114, Part A of the PAL-FASAP CBA is discriminatory or not is a question of fact. This would require the presentation and
reception of evidence by the parties in order for the trial court to ascertain the facts of the case and whether said provision violates the Constitution, statutes and
treaties. A full-blown trial is necessary, which jurisdiction to hear the same is properly lodged with the the RTC. Therefore, a remand of this case to the RTC for the
proper determination of the merits of the petition for declaratory relief is just and proper.
 97

WHEREFORE, the petition is PARTLY GRANTED. The Decision and Resolution of the Court of Appeals, dated August 31, 2005 and March 7, 2006, respectively, in CA-G.R.
SP. No. 86813 are REVERSED and SET ASIDE. The Regional Trial Court of Makati City, Branch 147 is DIRECTED to continue the proceedings in Civil Case No. 04-886
with deliberate dispatch.

SO ORDERED.
 98

G.R. No. 162419 July 10, 2007

PAUL V. SANTIAGO, petitioner,

vs.
CF SHARP CREW MANAGEMENT, INC., respondent.

DECISION

TINGA, J.:

At the heart of this case involving a contract between a seafarer, on one hand, and the manning agent and the foreign principal, on the other, is this erstwhile unsettled
legal quandary: whether the seafarer, who was prevented from leaving the port of Manila and refused deployment without valid reason but whose POEA-approved
employment contract provides that the employer-employee relationship shall commence only upon the seafarer’s actual departure from the port in the point of hire, is
entitled to relief?
 99

This treats of the petition for review filed by Paul V. Santiago (petitioner) assailing the Decision and Resolution of the Court of Appeals dated 16 October 2003 and 19
February 2004, respectively, in CA-G.R. SP No. 68404.1

Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for about five (5) years. 2On 3 February 1998, petitioner signed a new contract
of employment with respondent, with the duration of nine (9) months. He was assured of a monthly salary of US$515.00, overtime pay and other benefits. The following
day or on 4 February 1998, the contract was approved by the Philippine Overseas Employment Administration (POEA). Petitioner was to be deployed on board the "MSV
Seaspread" which was scheduled to leave the port of Manila for Canada on 13 February 1998.

A week before the scheduled date of departure, Capt. Pacifico Fernandez, respondent’s Vice President, sent a facsimile message to the captain of "MSV Seaspread,"
which reads:

I received a phone call today from the wife of Paul Santiago in Masbate asking me not to send her husband to MSV Seaspread anymore. Other callers who did not reveal
their identity gave me some feedbacks that Paul Santiago this time if allowed to depart will jump ship in Canada like his brother Christopher Santiago, O/S who jumped
ship from the C.S. Nexus in Kita-kyushu, Japan last December, 1997.

We do not want this to happen again and have the vessel penalized like the C.S. Nexus in Japan.

Forewarned is forearmed like his brother when his brother when he was applying he behaved like a Saint but in his heart he was a serpent. If you agree with me then
we will send his replacement.

Kindly advise.3

To this message the captain of "MSV Seaspread" replied:

Many thanks for your advice concerning P. Santiago, A/B. Please cancel plans for him to return to Seaspread. 4

On 9 February 1998, petitioner was thus told that he would not be leaving for Canada anymore, but he was reassured that he might be considered for deployment at
some future date.

Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against respondent and its foreign principal, Cable and Wireless (Marine) Ltd. 5 The case
was raffled to Labor Arbiter Teresita Castillon-Lora, who ruled that the employment contract remained valid but had not commenced since petitioner was not deployed.
According to her, respondent violated the rules and regulations governing overseas employment when it did not deploy petitioner, causing petitioner to suffer actual
damages representing lost salary income for nine (9) months and fixed overtime fee, all amounting to US$7, 209.00.

The labor arbiter held respondent liable. The dispositive portion of her Decision dated 29 January 1999 reads:

WHEREFORE, premises considered, respondent is hereby Ordered to pay complainant actual damages in the amount of US$7,209.00 plus 10% attorney's fees, payable
in Philippine peso at the rate of exchange prevailing at the time of payment.

All the other claims are hereby DISMISSED for lack of merit.

SO ORDERED.6
 100

On appeal by respondent, the National Labor Relations Commission (NLRC) ruled that there is no employer-employee relationship between petitioner and respondent
because under the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels (POEA Standard Contract), the
employment contract shall commence upon actual departure of the seafarer from the airport or seaport at the point of hire and with a POEA-approved contract. In the
absence of an employer-employee relationship between the parties, the claims for illegal dismissal, actual damages, and attorney’s fees should be dismissed. 7 On the
other hand, the NLRC found respondent’s decision not to deploy petitioner to be a valid exercise of its management prerogative. 8 The NLRC disposed of the appeal in
this wise:

WHEREFORE, in the light of the foregoing, the assailed Decision dated January 29, 1999 is hereby AFFIRMED in so far as other claims are concerned and with
MODIFICATION by VACATING the award of actual damages and attorney’s fees as well as excluding Pacifico Fernandez as party respondent.

SO ORDERED.9

Petitioner moved for the reconsideration of the NLRC’s Decision but his motion was denied for lack of merit. 10 He elevated the case to the Court of Appeals through a
petition for certiorari.

In its Decision11 dated 16 October 2003, the Court of Appeals noted that there is an ambiguity in the NLRC’s Decision when it affirmed with modification the labor
arbiter’s Decision, because by the very modification introduced by the Commission (vacating the award of actual damages and attorney’s fees), there is nothing more
left in the labor arbiter’s Decision to affirm.12

According to the appellate court, petitioner is not entitled to actual damages because damages are not recoverable by a worker who was not deployed by his agency
within the period prescribed in

the POEA Rules.13 It agreed with the NLRC’s finding that petitioner’s non-deployment was a valid exercise of respondent’s management prerogative. 14 It added that since
petitioner had not departed from the Port of Manila, no employer-employee relationship between the parties arose and any claim for damages against the so-called
employer could have no leg to stand on.15

Petitioner’s subsequent motion for reconsideration was denied on 19 February 2004. 16

The present petition is anchored on two grounds, to wit:

A. The Honorable Court of Appeals committed a serious error of law when it ignored [S]ection 10 of Republic Act [R.A.] No. 8042 otherwise known as the Migrant
Worker’s Act of 1995 as well as Section 29 of the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessels (which
is deemed incorporated under the petitioner’s POEA approved Employment Contract) that the claims or disputes of the Overseas Filipino Worker by virtue of a contract
fall within the jurisdiction of the Labor Arbiter of the NLRC.

B. The Honorable Court of Appeals committed a serious error when it disregarded the required quantum of proof in labor cases, which is substantial evidence, thus a
total departure from established jurisprudence on the matter. 17

Petitioner maintains that respondent violated the Migrant Workers Act and the POEA Rules when it failed to deploy him within thirty (30) calendar days without a valid
reason. In doing so, it had unilaterally and arbitrarily prevented the consummation of the POEA- approved contract. Since it prevented his deployment without valid
basis, said deployment being a condition to the consummation of the POEA contract, the contract is deemed consummated, and therefore he should be awarded actual
damages, consisting of the stipulated salary and fixed overtime pay. 18Petitioner adds that since the contract is deemed consummated, he should be considered an
employee for all intents and purposes, and thus the labor arbiter and/or the NLRC has jurisdiction to take cognizance of his claims. 19
 101

Petitioner additionally claims that he should be considered a regular employee, having worked for five (5) years on board the same vessel owned by the same principal
and manned by the same local agent. He argues that respondent’s act of not deploying him was a scheme designed to prevent him from attaining the status of a regular
employee.20

Petitioner submits that respondent had no valid and sufficient cause to abandon the employment contract, as it merely relied upon alleged phone calls from his wife and
other unnamed callers in arriving at the conclusion that he would jump ship like his brother. He points out that his wife had executed an affidavit 21 strongly denying
having called respondent, and that the other alleged callers did not even disclose their identities to respondent. 22 Thus, it was error for the Court of Appeals to adopt the
unfounded conclusion of the NLRC, as the same was not based on substantial evidence. 23

On the other hand, respondent argues that the Labor Arbiter has no jurisdiction to award petitioner’s monetary claims. His employment with respondent did not
commence because his deployment was withheld for a valid reason. Consequently, the labor arbiter and/or the NLRC cannot entertain adjudication of petitioner’s case
much less award damages to him. The controversy involves a breach of contractual obligations and as such is cognizable by civil courts. 24 On another matter,
respondent claims that the second issue posed by petitioner involves a recalibration of facts which is outside the jurisdiction of this Court. 25

There is some merit in the petition.

There is no question that the parties entered into an employment contract on 3 February 1998, whereby petitioner was contracted by respondent to render services on
board "MSV Seaspread" for the consideration of US$515.00 per month for nine (9) months, plus overtime pay. However, respondent failed to deploy petitioner from the
port of Manila to Canada. Considering that petitioner was not able to depart from the airport or seaport in the point of hire, the employment contract did not commence,
and no employer-employee relationship was created between the parties. 26

However, a distinction must be made between the perfection of the employment contract and the commencement of the employer-employee relationship. The perfection
of the contract, which in this case coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as
the rest of the terms and conditions therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken place had petitioner
been actually deployed from the point of hire. Thus, even before the start of any employer-employee relationship, contemporaneous with the perfection of the
employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party. Thus, if the reverse
had happened, that is the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.

Moreover, while the POEA Standard Contract must be recognized and respected, neither the manning agent nor the employer can simply prevent a seafarer from being
deployed without a valid reason.

Respondent’s act of preventing petitioner from departing the port of Manila and boarding "MSV Seaspread" constitutes a breach of contract, giving rise to petitioner’s
cause of action. Respondent unilaterally and unreasonably reneged on its obligation to deploy petitioner and must therefore answer for the actual damages he suffered.

We take exception to the Court of Appeals’ conclusion that damages are not recoverable by a worker who was not deployed by his agency. The fact that the POEA
Rules27 are silent as to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. The sanctions provided
for non-deployment do not end with the suspension or cancellation of license or fine and the return of all documents at no cost to the worker. They do not forfend a
seafarer from instituting an action for damages against the employer or agency which has failed to deploy him.

The POEA Rules only provide sanctions which the POEA can impose on erring agencies. It does not provide for damages and money claims recoverable by aggrieved
employees because it is not the POEA, but the NLRC, which has jurisdiction over such matters.
 102

Despite the absence of an employer-employee relationship between petitioner and respondent, the Court rules that the NLRC has jurisdiction over petitioner’s complaint.
The jurisdiction of labor arbiters is not limited to claims arising from employer-employee relationships. Section 10 of R.A. No. 8042 (Migrant Workers Act), provides that:

Sec. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of
damages. x x x [Emphasis supplied]

Since the present petition involves the employment contract entered into by petitioner for overseas employment, his claims are cognizable by the labor arbiters of the
NLRC.

Article 2199 of the Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Respondent
is thus liable to pay petitioner actual damages in the form of the loss of nine (9) months’ worth of salary as provided in the contract. He is not, however, entitled to
overtime pay. While the contract indicated a fixed overtime pay, it is not a guarantee that he would receive said amount regardless of whether or not he rendered
overtime work. Even though petitioner was "prevented without valid reason from rendering regular much less overtime service," 28 the fact remains that there is no
certainty that petitioner will perform overtime work had he been allowed to board the vessel. The amount of US$286.00 stipulated in the contract will be paid only if and
when the employee rendered overtime work. This has been the tenor of our rulings in the case of Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor Relations
Commission29 where we discussed the matter in this light:

The contract provision means that the fixed overtime pay of 30% would be the basis for computing the overtime pay if and when overtime work would be rendered.
Simply stated, the rendition of overtime work and the submission of sufficient proof that said work was actually performed are conditions to be satisfied before a
seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the
right to overtime pay but the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays on board a ship
or vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his
personal chores or even just lulling away his time would be extremely unfair and unreasonable. 30

The Court also holds that petitioner is entitled to attorney’s fees in the concept of damages and expenses of litigation. Attorney's fees are recoverable when the
defendant's act or omission has compelled the plaintiff to incur expenses to protect his interest. 31 We note that respondent’s basis for not deploying petitioner is the
belief that he will jump ship just like his brother, a mere suspicion that is based on alleged phone calls of several persons whose identities were not even confirmed.
Time and again, this Court has upheld management prerogatives so long as they 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. 32 Respondent’s failure to deploy petitioner is
unfounded and unreasonable, forcing petitioner to institute the suit below. The award of attorney’s fees is thus warranted.

However, moral damages cannot be awarded in this case. While respondent’s failure to deploy petitioner seems baseless and unreasonable, we cannot qualify such
action as being tainted with bad faith, or done deliberately to defeat petitioner’s rights, as to justify the award of moral damages. At most, respondent was being
overzealous in protecting its interest when it became too hasty in making its conclusion that petitioner will jump ship like his brother.

We likewise do not see respondent’s failure to deploy petitioner as an act designed to prevent the latter from attaining the status of a regular employee. Even if
petitioner was able to depart the port of Manila, he still cannot be considered a regular employee, regardless of his previous contracts of employment with respondent.
In Millares v. National Labor Relations Commission,33 the Court ruled that seafarers are considered contractual employees and cannot be considered as regular
employees under the Labor Code. Their employment is governed by the contracts they sign every time they are rehired and their employment is terminated when the
contract expires. The exigencies of their work necessitates that they be employed on a contractual basis. 34
 103

WHEREFORE, petition is GRANTED IN PART. The Decision dated 16 October 2003 and the Resolution dated 19 February 2004 of the Court of Appeals are REVERSED and
SET ASIDE. The Decision of Labor Arbiter Teresita D. Castillon-Lora dated 29 January 1999 is REINSTATED with the MODIFICATION that respondent CF Sharp Crew
Management, Inc. is ordered to pay actual or compensatory damages in the amount of US$4,635.00

representing salary for nine (9) months as stated in the contract, and attorney’s fees at the reasonable rate of 10% of the recoverable amount.

SO ORDERED.

ATLAS FARMS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, JAIME O. DELA PEA and MARCIAL I. ABION, respondents.

DECISION

QUISUMBING, J.:

Petitioner seeks the reversal of the decision [1] dated January 10, 2000 of the Court of Appeals in CA-G.R. SP No. 52780, dismissing its petition for certiorari against the
NLRC, as well as the resolution[2] dated February 24, 2000, denying its motion for reconsideration.

The antecedent facts of the case, as found by the Court of Appeals, [3] are as follows:

Private respondent Jaime O. dela Pea was employed as a veterinary aide by petitioner in December 1975. He was among several employees terminated in July 1989. On
July 8, 1989, he was re-hired by petitioner and given the additional job of feedmill operator. He was instructed to train selected workers to operate the feedmill.

On March 13, 1993,[4] Pea was allegedly caught urinating and defecating on company premises not intended for the purpose. The farm manager of petitioner issued a
formal notice directing him to explain within 24 hours why disciplinary action should not be taken against him for violating company rules and regulations. Pea refused,
however, to receive the formal notice. He never bothered to explain, either verbally or in writing, according to petitioner. Thus, on March 20, 1993, a notice of
termination with payment of his monetary benefits was sent to him. He duly acknowledged receipt of his separation pay of P13,918.67.

From the start of his employment on July 8, 1989, until his termination on March 20, 1993, Pea had worked for seven days a week, including holidays, without overtime,
holiday, rest day pay and service incentive leave. At the time of his dismissal from employment, he was receiving P180 pesos daily wage, or an average monthly salary
of P5,402.

Co-respondent Marcial I. Abion [5] was a carpenter/mason and a maintenance man whose employment by petitioner commenced on October 8, 1990. Allegedly, he
caused the clogging of the fishpond drainage resulting in damages worth several hundred thousand pesos when he improperly disposed of the cut grass and other waste
materials into the ponds drainage system. Petitioner sent a written notice to Abion, requiring him to explain what happened, otherwise, disciplinary action would be
taken against him. He refused to receive the notice and give an explanation, according to petitioner. Consequently, the company terminated his services on October 27,
1992. He acknowledged receipt of a written notice of dismissal, with his separation pay.

Like Pea, Abion worked seven days a week, including holidays, without holiday pay, rest day pay, service incentive leave pay and night shift differential pay. When
terminated on October 27, 1992, Abion was receiving a monthly salary of P4,500.
 104

Pea and Abion filed separate complaints for illegal dismissal that were later consolidated. Both claimed that their termination from service was due to petitioners
suspicion that they were the leaders in a plan to form a union to compete and replace the existing management-dominated union.

On November 9, 1993, the labor arbiter dismissed their complaints on the ground that the grievance machinery in the collective bargaining agreement (CBA) had not
yet been exhausted. Private respondents availed of the grievance process, but later on refiled the case before the NLRC in Region IV. They alleged lack of sympathy on
petitioners part to engage in conciliation proceedings.

Their cases were consolidated in the NLRC. At the initial mandatory conference, petitioner filed a motion to dismiss, on the ground of lack of jurisdiction, alleging private
respondents themselves admitted that they were members of the employees union with which petitioner had an existing CBA. This being the case, according to
petitioner, jurisdiction over the case belonged to the grievance machinery and thereafter the voluntary arbitrator, as provided in the CBA.

In a decision dated January 30, 1996, the labor arbiter dismissed the complaint for lack of merit, finding that the case was one of illegal dismissal and did not involve
the interpretation or implementation of any CBA provision. He stated that Article 217 (c) of the Labor Code [6] was inapplicable to the case. Further, the labor arbiter
found that although both complainants did not substantiate their claims of illegal dismissal, there was proof that private respondents voluntarily accepted their
separation pay and petitioners financial assistance.

Thus, private respondents brought the case to the NLRC, which reversed the labor arbiters decision. Dissatisfied with the NLRC ruling, petitioner went to the Court of
Appeals by way of a petition for review on certiorari under Rule 65, seeking reinstatement of the labor arbiters decision. The appellate court denied the petition and
affirmed the NLRC resolution with some modifications, thus:

WHEREFORE, the petition is DENIED. The resolution in NLRC CA No. 010520-96 is AFFIRMED with the following modifications:

1) The private respondents can not be reinstated, due to their acceptance of the separation pay offered by the petitioner;

2) The private respondents are entitled to their full back wages; and,

3) The amount of the separation pay received by private respondents from petitioner shall not be deducted from their full back wages.

Costs against petitioner.

SO ORDERED.[7]

Petitioner forthwith filed its motion for reconsideration, which was denied in a resolution dated February 24, 2000, which reads:

Acting on the Motion for Reconsideration filed by petitioner[s] which drew an opposition from private respondents, the Court resolved to DENY the aforesaid motion for
reconsideration, as the issues raised therein have been passed upon by the Court in its questioned decision and no substantial arguments were presented to warrant its
reversal, let alone modification.

SO ORDERED.[8]

In this petition now before us, petitioner alleges that the appellate court erred in:
 105

I. DENYING THE PETITION FOR CERTIORARI AND IN EFFECT AFFIRMING THE RULINGS OF THE PUBLIC RESPONDENT NLRC THAT THE PRIVATE RESPONDENTS WERE
ILLEGALLY DISMISSED;

II. RULING THAT THE PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY AND FULL BACKWAGES;

III. RULING THAT PETITIONER IS LIABLE FOR COSTS OF SUIT. [9]

Petitioner contends that the dismissal of private respondents was for a just and valid cause, pursuant to the provisions of the companys rules and regulations. It also
alleges lack of jurisdiction on the part of the labor arbiter, claiming that the cases should have been resolved through the grievance machinery, and eventually referred
to voluntary arbitration, as prescribed in the CBA.

For their part, private respondents contend that they were illegally dismissed from employment because management discovered that they intended to form another
union, and because they were vocal in asserting their rights. In any case, according to private respondents, the petition involves factual issues that cannot be properly
raised in a petition for review on certiorari under Rule 45 of the Revised Rules of Court. [10]

In fine, there are three issues to be resolved: 1) whether private respondents were legally and validly dismissed; 2) whether the labor arbiter and the NLRC had
jurisdiction to decide complaints for illegal dismissal; and 3) whether petitioner is liable for costs of the suit.

The first issue primarily involves questions of fact, which can serve as basis for the conclusion that private respondents were legally and validly dismissed. The burden of
proving that the dismissal of private respondents was legal and valid falls upon petitioner. The NLRC found that petitioner failed to substantiate its claim that both
private respondents committed certain acts that violated company rules and regulations, [11] hence we find no factual basis to say that private respondents dismissal was
in order. We see no compelling reason to deviate from the NLRC ruling that their dismissal was illegal, absent a showing that it reached its conclusion arbitrarily.
[12]
Moreover, factual findings of agencies exercising quasi-judicial functions are accorded not only respect but even finality, aside from the consideration here that this
Court is not a trier of facts. [13]

Anent the second issue, Article 217 of the Labor Code provides that labor arbiters have original and exclusive jurisdiction over termination disputes. A possible exception
is provided in Article 261 of the Labor Code, which provides that-

The Voluntary Arbitrator or panel of voluntary arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred
to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be
treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement.For purposes of this article, gross violations of Collective
Bargaining Agreement shall mean flagrant and or malicious refusal to comply with the economic provisions of such agreement.

The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under
the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the grievance
Machinery or Arbitration provided in the Collective Bargaining Agreement.

But as held in Vivero vs. CA,[14] petitioner cannot arrogate into the powers of Voluntary Arbitrators the original and exclusive jurisdiction of Labor Arbiters over unfair
labor practices, termination disputes, and claims for damages, in the absence of an express agreement between the parties in order for Article 262 of the Labor Code
[Jurisdiction over other labor disputes] to apply in the case at bar.

Moreover, per Justice Bellosillo:

 106

It may be observed that under Policy Instruction No. 56 of the Secretary of Labor, dated 6 April 1993, Clarifying the Jurisdiction Between Voluntary Arbitrators and
Labor Arbiters Over Termination Cases and Providing Guidelines for the Referral of Said Cases Originally Filed with the NLRC to the NCMB, termination cases arising in or
resulting from the interpretation and implementation of collective bargaining agreements and interpretation and enforcement of company personnel policies which were
initially processed at the various steps of the plant-level Grievance Procedures under the parties collective bargaining agreements fall within the original and exclusive
jurisdiction of the voluntary arbitrator pursuant to Art. 217 (c) and Art. 261 of the Labor Code; and, if filed before the Labor Arbiter, these cases shall be dismissed by
the Labor Arbiter for lack of jurisdiction and referred to the concerned NCMB Regional Branch for appropriate action towards an expeditious selection by the parties of a
Voluntary Arbitrator or Panel of Arbitrators based on the procedures agreed upon in the CBA.

As earlier stated, the instant case is a termination dispute falling under the original and exclusive jurisdiction of the Labor Arbiter, and does not specifically involve the
application, implementation or enforcement of company personnel policies contemplated in Policy Instruction No. 56. Consequently, Policy Instruction No. 56 does not
apply in the case at bar.[15] x x x

Records show, however, that private respondents sought without success to avail of the grievance procedure in their CBA. [16] On this point, petitioner maintains that by
so doing, private respondents recognized that their cases still fell under the grievance machinery. According to petitioner, without having exhausted said machinery, the
private respondents filed their action before the NLRC, in a clear act of forum-shopping. [17] However, it is worth pointing out that private respondents went to the NLRC
only after the labor arbiter dismissed their original complaint for illegal dismissal. Under these circumstances private respondents had to find another avenue for
redress. We agree with the NLRC that it was petitioner who failed to show proof that it took steps to convene the grievance machinery after the labor arbiter first
dismissed the complaints for illegal dismissal and directed the parties to avail of the grievance procedure under Article VII of the existing CBA. They could not now be
faulted for attempting to find an impartial forum, after petitioner failed to listen to them and after the intercession of the labor arbiter proved futile. The NLRC had aptly
concluded in part that private respondents had already exhausted the remedies under the grievance procedure. [18] It erred only in finding that their cause of action was
ripe for arbitration.

In the case of Maneja vs. NLRC,[19] we held that the dismissal case does not fall within the phrase grievances arising from the interpretation or implementation of the
collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies. In Maneja, the hotel employee was dismissed
without hearing. We ruled that her dismissal was unjustified, and her right to due process was violated, absent the twin requirements of notice and hearing. We also
held that the labor arbiter had original and exclusive jurisdiction over the termination case, and that it was error to give the voluntary arbitrator jurisdiction over the
illegal dismissal case.

In Vivero vs. CA,[20] private respondents attempted to justify the jurisdiction of the voluntary arbitrator over a termination dispute alleging that the issue involved the
interpretation and implementation of the grievance procedure in the CBA. There, we held that since what was challenged was the legality of the employees dismissal for
lack of cause and lack of due process, the case was primarily a termination dispute. The issue of whether there was proper interpretation and implementation of the CBA
provisions came into play only because the grievance procedure in the CBA was not observed, after he sought his unions assistance. Since the real issue then was
whether there was a valid termination, there was no reason to invoke the need to interpret nor question an implementation of any CBA provision.

One significant fact in the present petition also needs stressing. Pursuant to Article 260[21] of the Labor Code, the parties to a CBA shall name or designate their
respective representatives to the grievance machinery and if the grievance is unsettled in that level, it shall automatically be referred to the voluntary arbitrators
designated in advance by the parties to a CBA. Consequently only disputes involving the union and the company shall be referred to the grievance machinery or
voluntary arbitrators. In these termination cases of private respondents, the union had no participation, it having failed to object to the dismissal of the employees
concerned by the petitioner. It is obvious that arbitration without the unions active participation on behalf of the dismissed employees would be pointless, or even
prejudicial to their cause.
 107

Coming to the merits of the petition, the NLRC found that petitioner did not comply with the requirements of a valid dismissal. For a dismissal to be valid, the employer
must show that: (1) the employee was accorded due process, and (2) the dismissal must be for any of the valid causes provided for by law. [22] No evidence was shown
that private respondents refused, as alleged, to receive the notices requiring them to show cause why no disciplinary action should be taken against them. Without proof
of notice, private respondents who were subsequently dismissed without hearing were also deprived of a chance to air their side at the level of the grievance
machinery. Given the fact of dismissal, it can be said that the cases were effectively removed from the jurisdiction of the voluntary arbitrator, thus placing them within
the jurisdiction of the labor arbiter. Where the dispute is just in the interpretation, implementation or enforcement stage, it may be referred to the grievance machinery
set up in the CBA, or brought to voluntary arbitration. But, where there was already actual termination, with alleged violation of the employees rights, it is already
cognizable by the labor arbiter.[23]

In sum, we conclude that the labor arbiter and then the NLRC had jurisdiction over the cases involving private respondents dismissal, and no error was committed by
the appellate court in upholding their assumption of jurisdiction.

However, we find that a modification of the monetary awards is in order. As a consequence of their illegal dismissal, private respondents are entitled to reinstatement to
their former positions. But since reinstatement is no longer feasible because petitioner had already closed its shop, separation pay in lieu of reinstatement shall be
awarded.[24] A terminated employees receipt of his separation pay and other monetary benefits does not preclude reinstatement or full benefits under the law, should
reinstatement be no longer possible.[25] As held in Cario vs. ACCFA:[26]

Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and employee, obviously, do not stand on the same footing. The employer
drove the employee to the wall. The latter must have to get hold of the money. Because out of job, he had to face the harsh necessities of life. He thus found himself in
no position to resist money proffered. His, then, is a case of adherence, not of choice. One thing sure, however, is that petitioners did not relent their claim. They
pressed it. They are deemed not to have waived their rights. Renuntiato non praesumitur.

Conformably, private respondents are entitled to separation pay equivalent to one months salary for every year of service, in lieu of reinstatement. [27] As regards the
award of damages, in order not to further delay the disposition of this case, we find it necessary to expressly set forth the extent of the backwages as awarded by the
appellate court. Pursuant to R.A. 6715, as amended, private respondents shall be entitled to full backwages computed from the time of their illegal dismissal up to the
date of promulgation of this decision without qualification, considering that reinstatement is no longer practicable under the circumstances. [28]

Having found private respondents dismissal to be illegal, and the labor arbiter and the NLRC duly vested with jurisdiction to hear and decide their cases, we agree with
the appellate court that petitioner should pay the costs of suit.

WHEREFORE, the petition is DENIED for lack of merit. The decision of the Court of Appeals in CA-G.R. SP No. 52780 is AFFIRMED with the MODIFICATION that petitioner
is ordered to pay private respondents (a) separation pay, in lieu of their reinstatement, equivalent to one months salary for every year of service, (b) full backwages
from the date of their dismissal up to the date of the promulgation of this decision, together with (c) the costs of suit.

SO ORDERED.
 108

PERPETUAL HELP CREDIT COOPERATIVE, INC., petitioner, vs. BENEDICTO FABURADA, SISINITA VILLAR, IMELDA TAMAYO, HAROLD CATIPAY, and the NATIONAL LABOR
RELATIONS COMMISSION, Fourth Division, Cebu City, respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:

On January 3, 1990, Benedicto Faburada, Sisinita Vilar, Imelda Tamayo and Harold Catipay, private respondents, filed a complaint against the Perpetual Help Credit
Cooperative, Inc. (PHCCI), petitioner, with the Arbitration Branch, Department of Labor and Employment (DOLE), Dumaguete City, for illegal dismissal, premium pay on
holidays and rest days, separation pay, wage differential, moral damages, and attorneys fees.

Forthwith, petitioner PHCCI filed a motion to dismiss the complaint on the ground that there is no employer-employee relationship between them as private respondents
are all members and co-owners of the cooperative. Furthermore, private respondents have not exhausted the remedies provided in the cooperative by-laws.

On September 3, 1990, petitioner filed a supplemental motion to dismiss alleging that Article 121 of R.A. No. 6939, otherwise known as the Cooperative Development
Authority Law which took effect on March 26, 1990, requires conciliation or mediation within the cooperative before a resort to judicial proceeding.

On the same date, the Labor Arbiter denied petitioner's motion to dismiss, holding that the case is impressed with employer-employee relationship and that the law on
cooperatives is subservient to the Labor Code.

On November 23, 1993, the Labor Arbiter rendered a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring complainants illegally dismissed, thus respondent is directed to pay Complainants backwages
computed from the time they were illegally dismissed up to the actual reinstatement but subject to the three year backwages rule, separation pay for one month for
every year of service since reinstatement is evidently not feasible anymore, to pay complainants 13th month pay, wage differentials and Ten Percent (10%) attorneys
 109

fees from the aggregate monetary award. However, complainant Benedicto Faburada shall only be awarded what are due him in proportion to the nine and a half
months that he had served the respondent, he being a part-time employee.

All other claims are hereby dismissed for lack of merit.

The computation of the foregoing awards is hereto attached and forms an integral part of this decision.

On appeal[1], the NLRC affirmed the Labor Arbiter's decision.

Hence, this petition by the PHCCI.

The issue for our resolution is whether or not respondent judge committed grave abuse of discretion in ruling that there is an employer-employee relationship between
the parties and that private respondents were illegally dismissed.

Petitioner PHCCI contends that private respondents are its members and are working for it as volunteers. Not being regular employees, they cannot sue petitioner.

In determining the existence of an employer-employee relationship, the following elements are considered: (1) the selection and engagement of the worker or the
power to hire; (2) the power to dismiss; (3) the payment of wages by whatever means; and (4) the power to control the workers conduct, with the latter assuming
primacy in the overall consideration. No particular form of proof is required to prove the existence of an employer-employee relationship. Any competent and relevant
evidence may show the relationship. [2]

The above elements are present here. Petitioner PHCCI, through Mr. Edilberto Lantaca, Jr., its Manager, hired private respondents to work for it. They worked regularly
on regular working hours, were assigned specific duties, were paid regular wages and made to accomplish daily time records just like any other regular employee. They
worked under the supervision of the cooperative manager. But unfortunately, they were dismissed.

That an employer-employee exists between the parties is shown by the averments of private respondents in their respective affidavits, carefully considered by
respondent NLRC in affirming the Labor Arbiter's decision, thus:

Benedicto Faburada -Regular part-time Computer programmer/ operator. Worked with the Cooperative since June 1, 1988 up to December 29, 1989. Work schedule:
Tuesdays and Thursdays, from 1:00 p.m. to 5:30 p.m. and every Saturday from 8:00 to 11:30 a.m. and 1:00 to 4:00 p.m. and for at least three (3 ) hours during
Sundays. Monthly salary: P1,000.00 -from June to December 1988; P1,350.00 - from January to June 1989; and P1,500.00 from July to December
1989. Duties: Among others, Enter data into the computer; compute interests on savings deposits, effect mortuary deductions and dividends on fixed deposits; maintain
the masterlist of the cooperative members; perform various forms for mimeographing; and perform such other duties as may be assigned from time to time.

Sisinita Vilar -Clerk. Worked with the Cooperative since December 1, 1987 up to December 29, 1989. Work schedule: Regular working hours. Monthly salary: P500.00 -
from December 1, 1987 to December 31, 1988; P1,000.00 - from January 1, 1989 to June 30, 1989; and P1,150.00 - from July 1, 1989 to December 31, 1989. Duties:
Among others, Prepare summary of salary advances, journal vouchers, daily summary of disbursements to respective classifications; schedule loans; prepare checks
and cash vouchers for regular and emergency loans; reconcile bank statements to the daily summary of disbursements; post the monthly balance of fixed and savings
deposits in preparation for the computation of interests, dividends, mortuary and patronage funds; disburse checks during regular and emergency loans; and perform
such other bookkeeping and accounting duties as may be assigned to her from time to time.

Imelda C. Tamayo - Clerk. Worked with the Cooperative since October 19, 1987 up to December 29, 1989. Work schedule: Monday to Friday - 8:00 to 11:30 a.m and
2:00 to 5:30 p.m.; every Saturday - 8:00 to 11:30 a.m and 1:00 to 4:00 p.m; and for one Sunday each month - for at least three (3) hours. Monthly salary: P60.00 -
 110

from October to November 1987; P250.00 for December 1987; P500.00 - from January to December 1988; P950 - from January to June 1989; and P1,000.00 from July
to December 1989. Duties: Among others, pick up balances for the computation of interests on savings deposit, mortuary, dividends and patronage funds; prepare cash
vouchers; check petty cash vouchers; take charge of the preparation of new passbooks and ledgers for new applicants; fill up members logbook of regular depositors,
junior depositors and special accounts; take charge of loan releases every Monday morning; assist in the posting and preparation of deposit slips; receive deposits from
members; and perform such other bookkeeping and accounting duties as may be assigned her from time to time.

Harold D. Catipay - Clerk. Worked with the Cooperative since March 3 to December 29, 1989. Work schedule: - Monday to Friday - 8:00 to 11:30 a.m. and 2:00 to 5:30
p.m.; Saturday - 8:00 to 11:30 a.m. and 1:00 to 4:00 p.m.; and one Sunday each month - for at least three (3) hours. Monthly salary: P900.00 - from March to June
1989; P1,050.00 - from July to December 1989. Duties: Among others, Bookkeeping, accounting and collecting duties, such as, post daily collections from the two (2)
collectors in the market; reconcile passbooks and ledgers of members in the market; and assist the other clerks in their duties.

All of them were given a memorandum of termination on January 2, 1990, effective December 29, 1989.

We are not prepared to disregard the findings of both the Labor Arbiter and respondent NLRC, the same being supported by substantial evidence, that quantum of
evidence required in quasi-judicial proceedings, like this one..

Necessarily, this leads us to the issue of whether or not private respondents are regular employees. Article 280 of the Labor Code provides for three kinds of employees:
(1) regular employees or those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer;
(2) project employees or those whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season;
and (3) casual employees or those who are neither regular nor project employees. [3] The employees who are deemed regular are: (a) those who have been engaged to
perform activities which are usually necessary or desirable in the usual trade or business of the employer; and (b) those casual employees who have rendered at least
one (1) year of service, whether such service is continuous or broken, with respect to the activity in which they are employed. [4] Undeniably, private respondents were
rendering services necessary to the day-to-day operations of petitioner PHCCI. This fact alone qualified them as regular employees.

All of them, except Harold D. Catipay, worked with petitioner for more than one (1) year: Benedicto Faburada, for one and a half (1 1/2) years; Sisinita Vilar, for two
(2) years; and Imelda C. Tamayo, for two (2) years and two (2) months. That Benedicto Faburada worked only on a part-time basis, does not mean that he is not a
regular employee. Ones regularity of employment is not determined by the number of hours one works but by the nature and by the length of time one has been in that
particular job.[5] Petitioner's contention that private respondents are mere volunteer workers, not regular employees, must necessarily fail. Its invocation of San Jose
City Electric Cooperative vs. Ministry of Labor and Employment (173 SCRA 697, 703 (1989 ) is misplaced. The issue in this case is whether or not the employees-
members of a cooperative can organize themselves for purposes of collective bargaining, not whether or not the members can be employees. Petitioner missed the
point.

As regular employees or workers, private respondents are entitled to security of tenure. Thus, their services may be terminated only for a valid cause, with observance
of due process.

The valid causes are categorized into two groups: the just causes under Articles 282 of the Labor Code and the authorized causes under Articles 283 and 284 of the
same Code. The just causes are: (1) serious misconduct or willful disobedience of lawful orders in connection with the employees work; (2) gross or habitual neglect of
duties; (3) fraud or willful breach of trust; (4) commission of a crime or an offense against the person of the employer or his immediate family member or
representative; and, analogous cases. The authorized causes are: (1) the installation of labor-saving devices; (2) redundancy; (3) retrenchment to prevent losses; and
(4) closing or cessation of operations of the establishment or undertaking, unless the closing is for the purpose of circumventing the provisions of law. Article 284
 111

provides that an employer would be authorized to terminate the services of an employee found to be suffering from any disease if the employees continued employment
is prohibited by law or is prejudicial to his health or to the health of his fellow employees [6]

Private respondents were dismissed not for any of the above causes. They were dismissed because petitioner considered them to be mere voluntary workers, being its
members, and as such work at its pleasure. Petitioner thus vehemently insists that their dismissal is not against the law.

Procedural due process requires that the employer serve the employees to be dismissed two (2) written notices before the termination of their employment is effected:
(a) the first, to apprise them of the particular acts or omissions for which their dismissal is sought and (b) the second, to inform them of the decision of the employer
that they are being dismissed.[7] In this case, only one notice was served upon private respondents by petitioner. It was in the form of a Memorandum signed by the
Manager of the Cooperative dated January 2, 1990 terminating their services effective December 29, 1989. Clearly, petitioner failed to comply with the twin requisites of
a valid notice.

We hold that private respondents have been illegally dismissed.

Petitioner contends that the labor arbiter has no jurisdiction to take cognizance of the complaint of private respondents considering that they failed to submit their
dispute to the grievance machinery as required by P.D 175 (strengthening the Cooperative Movement) [8] and its implementing rules and regulations under LOI
23. Likewise, the Cooperative Development Authority did not issue a Certificate of Non-Resolution pursuant to Section 8 of R.A. 6939 or the Cooperative Development
Authority Law.

As aptly stated by the Solicitor General in his comment, P.D. 175 does not provide for a grievance machinery where a dispute or claim may first be submitted. LOI 23
refers to instructions to the Secretary of Public Works and Communications to implement immediately the recommendation of the Postmaster General for the dismissal
of some employees of the Bureau of Post. Obviously, this LOI has no relevance to the instant case.

Article 121 of Republic Act No. 6938 (Cooperative Code of the Philippines) provides the procedure how cooperative disputes are to be resolved, thus:

ART. 121. Settlement of Disputes.- Disputes among members, officers, directors, and committee members, and intra-cooperative disputes shall, as far as practicable,
be settled amicably in accordance with the conciliation or mediation mechanisms embodied in the bylaws of the cooperative, and in applicable laws.

Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of competent jurisdiction.

Complementing this Article is Section 8 of R.A. No. 6939 (Cooperative Development Authority Law) which reads:

SEC. 8 Mediation and Conciliation.- Upon request of either or both parties, the Authority shall mediate and conciliate disputes within a cooperative or between
cooperatives: Provided, That if no mediation or conciliation succeeds within three (3) months from request thereof, a certificate of non-resolution shall be issued by the
Commission prior to the filing of appropriate action before the proper courts.

The above provisions apply to members, officers and directors of the cooperative involved in disputes within a cooperative or between cooperatives.

There is no evidence that private respondents are members of petitioner PHCCI and even if they are, the dispute is about payment of wages, overtime pay, rest day and
termination of employment. Under Art. 217 of the Labor Code, these disputes are within the original and exclusive jurisdiction of the Labor Arbiter.

As illegally dismissed employees, private respondents are therefore entitled to reinstatement without loss of seniority rights and other privileges and to full backwages,
inclusive of allowances, plus other benefits or their monetary equivalent computed from the time their compensation was witheld from them up to the time of their
 112

actual reinstatement.[9] Since they were dismissed after March 21, 1989, the effectivity date of R.A. 6715 [10] they are granted full backwages, meaning, without
deducting from their backwages the earnings derived by them elsewhere during the period of their illegal dismissal. [11] If reinstatement is no longer feasible, as when the
relationship between petitioner and private respondents has become strained, payment of their separation pay in lieu of reinstatement is in order. [12]

WHEREFORE, the petition is hereby DENIED. The decision of respondent NLRC is AFFIRMED, with modification in the sense that the backwages due private respondents
shall be paid in full, computed from the time they were illegally dismissed up to the time of the finality of this Decision. [13]

SO ORDERED.

PASTOR DIONISIO V. AUSTRIA, petitioner, vs. HON. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), CEBU CITY, CENTRAL PHILIPPINE UNION MISSION
CORPORATION OF THE SEVENTH-DAY ADVENTIST, ELDER HECTOR V. GAYARES, PASTORS REUBEN MORALDE, OSCAR L. ALOLOR, WILLIAM U. DONATO, JOEL WALES,
ELY SACAY, GIDEON BUHAT, ISACHAR GARSULA, ELISEO DOBLE, PROFIRIO BALACY, DAVID RODRIGO, LORETO MAYPA, MR. RUFO GASAPO, MR. EUFRONIO IBESATE,
MRS. TESSIE BALACY, MR. ZOSIMO KARA-AN, and MR. ELEUTERIO LOBITANA, respondents.

DECISION

KAPUNAN, J.:

Subject to the instant petition for certiorari under Rule 65 of the Rules of Court is the Resolution [1] of public respondent National Labor Relations Commission (the NLRC),
rendered on 23 January 1996, in NLRC Case No. V-0120-93, entitled Pastor Dionisio V. Austria vs. Central Philippine Union Mission Corporation of Seventh Day
Adventists, et. al., which dismissed the case for illegal dismissal filed by the petitioner against private respondents for lack of jurisdiction.

Private Respondent Central Philippine Union Mission Corporation of the Seventh-Day Adventists (hereinafter referred to as the SDA) is a religious corporation duly
organized and existing under Philippine law and is represented in this case by the other private respondents, officers of the SDA. Petitioner, on the other hand, was a
Pastor of the SDA until 31 October 1991, when his services were terminated.

The records show that petitioner Pastor Dionisio V. Austria worked with the SDA for twenty eight (28) years from 1963 to 1991. [2] He began his work with the SDA on 15
July 1963 as a literature evangelist, selling literature of the SDA over the island of Negros. From then on, petitioner worked his way up the ladder and got promoted
several times. In January, 1968, petitioner became the Assistant Publishing Director in the West Visayan Mission of the SDA. In July, 1972, he was elevated to the
position of Pastor in the West Visayan Mission covering the island of Panay, and the provinces of Romblon and Guimaras. Petitioner held the same position up to
1988. Finally, in 1989, petitioner was promoted as District Pastor of the Negros Mission of the SDA and was assigned at Sagay, Balintawak and Toboso, Negros
Occidental, with twelve (12) churches under his jurisdiction. In January, 1991, petitioner was transferred to Bacolod City. He held the position of district pastor until his
services were terminated on 31 October 1991.

On various occasions from August up to October, 1991, petitioner received several communications [3] from Mr. Eufronio Ibesate, the treasurer of the Negros Mission
asking him to admit accountability and responsibility for the church tithes and offerings collected by his wife, Mrs. Thelma Austria, in his district which amounted to
P15,078.10, and to remit the same to the Negros Mission.

In his written explanation dated 11 October 1991, [4] petitioner reasoned out that he should not be made accountable for the unremitted collections since it was private
respondents Pastor Gideon Buhat and Mr. Eufronio Ibesate who authorized his wife to collect the tithes and offerings since he was very sick to do the collecting at that
time.
 113

Thereafter, on 16 October 1991, at around 7:30 a.m., petitioner went to the office of Pastor Buhat, the president of the Negros Mission. During said call, petitioner tried
to persuade Pastor Buhat to convene the Executive Committee for the purpose of settling the dispute between him and the private respondent, Pastor David
Rodrigo. The dispute between Pastor Rodrigo and petitioner arose from an incident in which petitioner assisted his friend, Danny Diamada, to collect from Pastor Rodrigo
the unpaid balance for the repair of the latters motor vehicle which he failed to pay to Diamada. [5] Due to the assistance of petitioner in collecting Pastor Rodrigos debt,
the latter harbored ill-feelings against petitioner. When news reached petitioner that Pastor Rodrigo was about to file a complaint against him with the Negros Mission,
he immediately proceeded to the office of Pastor Buhat on the date abovementioned and asked the latter to convene the Executive Committee. Pastor Buhat denied the
request of petitioner since some committee members were out of town and there was no quorum. Thereafter, the two exchanged heated arguments. Petitioner then left
the office of Pastor Buhat. While on his way out, petitioner overheard Pastor Buhat saying, Pastor daw inisog na ina iya (Pastor you are talking tough). [6] Irked by such
remark, petitioner returned to the office of Pastor Buhat, and tried to overturn the latters table, though unsuccessfully, since it was heavy. Thereafter, petitioner banged
the attache case of Pastor Buhat on the table, scattered the books in his office, and threw the phone. [7] Fortunately, private respondents Pastors Yonilo Leopoldo and
Claudio Montao were around and they pacified both Pastor Buhat and petitioner.

On 17 October 1991, petitioner received a letter [8] inviting him and his wife to attend the Executive Committee meeting at the Negros Mission Conference Room on 21
October 1991, at nine in the morning. To be discussed in the meeting were the non-remittance of church collection and the events that transpired on 16 October
1991. A fact-finding committee was created to investigate petitioner. For two (2) days, from October 21 and 22, the fact-finding committee conducted an investigation
of petitioner. Sensing that the result of the investigation might be one-sided, petitioner immediately wrote Pastor Rueben Moralde, president of the SDA and chairman of
the fact-finding committee, requesting that certain members of the fact-finding committee be excluded in the investigation and resolution of the case. [9]Out of the six (6)
members requested to inhibit themselves from the investigation and decision-making, only two (2) were actually excluded, namely: Pastor Buhat and Pastor
Rodrigo. Subsequently, on 29 October 1991, petitioner received a letter of dismissal [10] 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 employers duly authorized representative, as grounds for the
termination of his services.

Reacting against the adverse decision of the SDA, petitioner filed a complaint [11] on 14 November 1991, before the Labor Arbiter for illegal dismissal against the SDA and
its officers and prayed for reinstatement with backwages and benefits, moral and exemplary damages and other labor law benefits.

On 15 February 1993, Labor Arbiter Cesar D. Sideo rendered a decision in favor of petitioner, the dispositive portion of which reads thus:

WHEREFORE, PREMISES CONSIDERED, respondents CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTH-DAY ADVENTISTS (CPUMCSDA) and its
officers, respondents herein, are hereby ordered to immediately reinstate complainant Pastor Dionisio Austria to his former position as Pastor of Brgy. Taculing, Progreso
and Banago, Bacolod City, without loss of seniority and other rights and backwages in the amount of ONE HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED THIRTY
PESOS (P115,830.00) without deductions and qualificatioons.

Respondent CPUMCSDA is further ordered to pay complainant the following:

A. 13th month pay - P21,060.00

B. Allowance - P 4,770.83

C. Service Incentive

Leave Pay - P 3,461.85

 114

D. Moral Damages - P50,000.00

E. Exemplary

Damages - P25,000.00

F. Attorneys Fee - P22,012.27

SO ORDERED.[12]

The SDA, through its officers, appealed the decision of the Labor Arbiter to the National Labor Relations Commission, Fourth Division, Cebu City. In a decision, dated 26
August 1994, the NLRC vacated the findings of the Labor Arbiter. The decretal portion of the NLRC decision states:

WHEREFORE, the Decision appealed from is hereby VACATED and a new one ENTERED dismissing this case for want of merit.

SO ORDERED.[13]

Petitioner filed a motion for reconsideration of the above-named decision. On 18 July 1995, the NLRC issued a Resolution reversing its original decision. The dispositive
portion of the resolution reads:

WHEREFORE, premises considered, Our decision dated August 26, 1994 is VACATED and the decision of the Labor Arbiter dated February 15, 1993 is REINSTATED.

SO ORDERED.[14]

In view of the reversal of the original decision of the NLRC, the SDA filed a motion for reconsideration of the above resolution. Notable in the motion for reconsideration
filed by private respondents is their invocation, for the first time on appeal, that the Labor Arbiter has no jurisdiction over the complaint filed by petitioner due to the
constitutional provision on the separation of church and state since the case allegedly involved and ecclesiastical affair to which the State cannot interfere.

The NLRC, without ruling on the merits of the case, reversed itself once again, sustained the argument posed by private respondents and, accordingly, dismissed the
complaint of petitioner. The dispositive portion of the NLRC resolution dated 23 January 1996, subject of the present petition, is as follows:

WHEREFORE, in view of all the foregoing, the instant motion for reconsideration is hereby granted. Accordingly, this case is hereby DISMISSED for lack of jurisdiction.

SO ORDERED.[15]

Hence, the recourse to this Court by petitioner.

After the filing of the petition, the Court ordered the Office of the Solicitor General (the OSG) to file its comment on behalf of public respondent NLRC. Interestingly, the
OSG filed a manifestation and motion in lieu of comment [16] setting forth its stand that it cannot sustain the resolution of the NLRC. In its manifestation, the OSG
submits that the termination of petitioner of his employment may be questioned before the NLRC as the same is secular in nature, not ecclesiastical. After the
submission of memoranda of all the parties, the case was submitted for decision.

The issues to be resolved in this petition are:

 115

1) Whether or not the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint filed by petitioner against the SDA;

2) Whether or not the termination of the services of petitioner is an ecclesiastical affair, and, as such, involves the separation of church and state; and

3) Whether or not such termination is valid.

The first two issues shall be resolved jointly, since they are related.

Private respondents contend that by virtue of the doctrine of separation of church and state, the Labor Arbiter and the NLRC have no jurisdiction to entertain the
complaint filed by petitioner. Since the matter at bar allegedly involves the discipline of a religious minister, it is to be considered a purely ecclesiastical affair to which
the State has no right to interfere.

The contention of private respondents deserves scant consideration. 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. [17] 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. [18] The demarcation line calls on the entities to render therefore unto Ceasar the things that are Ceasars and unto God
the things that are Gods.[19] While the State is prohibited from interfering in purely ecclesiastical affairs, the Church is likewise barred from meddling in purely secular
matters.[20]

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 or 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. [21] Based on this definition, an ecclesiastical
affair involves the relationship between the church and its members and relate to matters of faith, religious doctrines, worship and governance of the congregation. To
be concrete, examples of this so-called ecclesiastical affairs to which the State cannot meddle are proceedings for excommunication, ordinations of religious ministers,
administration of sacraments and other activities with which attached religious significance. The case at bar does not even remotely concern any of the abovecited
examples. While the matter at hand relates to the church and its religious minister it does not ipso facto give the case a religious significance. Simply stated, 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. In this case, petitioner was not excommunicated or expelled from the membership of the SDA but was terminated from
employment. Indeed, 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.

As pointed out by the OSG in its memorandum, the grounds invoked for petitioners dismissal, namely: 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 his employers duly authorize representative, are all based
on Article 282 of the Labor Code which enumerates the just causes for termination of employment. [22] By this alone, it is palpable that the reason for petitioners
dismissal from the service is not religious in nature. Coupled with this is the act of the SDA in furnishing NLRC with a copy of petitioners letter of termination. As aptly
stated by the OSG, this again is an eloquent admission by private respondents that NLRC has jurisdiction over the case. Aside from these, SDA admitted in a
certification[23] issued by its officer, Mr. Ibesate, that petitioner has been its employee for twenty-eight (28) years. SDA even registered petitioner with the Social
Security System (SSS) as its employee. As a matter of fact, the workers records of petitioner have been submitted by private respondents as part of their exhibits. From
all of these it is clear that when the SDA terminated the services of petitioner, it was merely exercising its management prerogative to fire an employee which it believes
to be unfit for the job. As such, the State, through the Labor Arbiter and the NLRC, has the right to take cognizance of the case and to determine whether the SDA, as
 116

employer, rightfully exercised its management prerogative to dismiss an employee. This is in consonance with the mandate of the Constitution to afford full protection to
labor.

Under the Labor Code, the provision which governs the dismissal of employees, is comprehensive enough to include religious corporations, such as the SDA, in its
coverage. Article 278 of the Labor Code on post-employment states that the provisions of this Title shall apply to all establishments or undertakings, whether for profit
or not. Obviously, the cited article does not make any exception in favor of a religious corporation. This is made more evident by the fact that the Rules Implementing
the Labor Code, particularly, Section 1, Rule 1, Book VI on the Termination of Employment and Retirement, categorically includes religious institutions in the coverage of
the law, to wit:

Section 1. Coverage. This Rule shall apply to all establishments and undertakings, whether operated for profit or not, including educational, medical, charitable
and religious institutions and organizations, in cases of regular employment with the exception of the Government and its political subdivisions including government-
owned or controlled corporations.[24]

With this clear mandate, the SDA cannot hide behind the mantle of protection of the doctrine of separation of church and state to avoid its responsibilities as an
employer under the Labor Code.

Finally, as correctly pointed out by petitioner, private respondents are estopped from raising the issue of lack of jurisdiction for the first time on appeal. It is already too
late in the day for private respondents to question the jurisdiction of the NLRC and the Labor Arbiter since the SDA had fully participated in the trials and hearings of the
case from start to finish. The Court has already ruled that the active participation of a party against whom the action was brought, coupled with his failure to object to
the jurisdiction of the court or quasi-judicial body where the action is pending, is tantamount to an invocation of that jurisdiction and a willingness to abide by the
resolution of the case and will bar said party from later on impugning the court or bodys jurisdiction. [25] Thus, the active participation of private respondents in the
proceedings before the Labor Arbiter and the NLRC mooted the question on jurisdiction.

The jurisdictional question now settled, we shall now proceed to determine whether the dismissal of petitioner was valid.

At the outset, we note that as a general rule, findings of fact of administrative bodies like the NLRC are binding upon this Court. A review of such findings is justified,
however, in instances when the findings of the NLRC differ from those of the labor arbiter, as in this case. [26] When the findings of NLRC do not agree with those of the
Labor Arbiter, this Court must of necessity review the records to determine which findings should be preferred as more comformable to the evidentiary facts. [27]

We turn now to the crux of the matter. In termination cases, the settled rule is that the burden of proving that the termination was for a valid or authorized cause rests
on the employer.[28] Thus, private respondents must not merely rely on the weaknesses of petitioners evidence but must stand on the merits of their own defense.

The issue being the legality of petitioners dismissal, the same must be measured against the requisites for a valid dismissal, namely: (a) the employee must be afforded
due process, i.e., he must be given an opportunity to be heard and to defend himself, and; (b) the dismissal must be for a valid cause as provided in Article 282 of the
Labor Code.[29] Without the concurrence of this twin requirements, the termination would, in the eyes of the law, be illegal. [30]

Before the services of an employee can be validly terminated, Article 277 (b) of the Labor Code and Section 2, Rule XXIII, Book V of the Rules Implementing the Labor
Code further require the employer to furnish the employee with two (2) written notices, to wit: (a) a written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; and, (b) a written notice of termination served on the
employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.
 117

The first notice, which may be considered as the proper charge, serves to apprise the employee of the particular acts or omissions for which his dismissal is sought.
[31]
The second notice on the other hand seeks to inform the employee of the employers decision to dismiss him. [32] This decision, however, must come only after the
employee is given a reasonable period from receipt of the first notice within which to answer the charge and ample opportunity to be heard and defend himself with the
assistance of a representative, if he so desires. [33] This is in consonance with the express provision of the law on the protection to labor and the broader dictates of
procedural due process.[34] Non-compliance therewith is fatal because these requirements are conditions sine quo non before dismissal may be validly effected.[35]

Private respondent failed to substantially comply with the above requirements. With regard to the first notice, the letter, [36] dated 17 October 1991, which notified
petitioner and his wife to attend the meeting on 21 October 1991, cannot be construed as the written charge required by law. A perusal of the said letter reveals that it
never categorically stated the particular acts or omissions on which petitioners impending termination was grounded. In fact, the letter never even mentioned that
petitioner would be subject to investigation. The letter merely mentioned that petitioner and his wife were invited to a meeting wherein what would be discussed were
the alleged unremitted church tithes and the events that transpired on 16 October 1991. Thus, petitioner was surprised to find out that the alleged meeting turned out
to be an investigation. From the tenor of the letter, it cannot be presumed that petitioner was actually on the verge of dismissal. The alleged grounds for the dismissal
of petitioner from the service were only revealed to him when the actual letter of dismissal was finally issued. For this reason, it cannot be said that petitioner was given
enough opportunity to properly prepare for his defense. While admittedly, private respondents complied with the second requirement, the notice of termination, this
does not cure the initial defect of lack of the proper written charge required by law.

In the letter of termination,[37] dated 29 October 1991, private respondents enumerated the following as grounds for the dismissal of petitioner,
namely: 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 employers duly authorized representative. Breach of trust and misappropriation of denominational funds refer to the alleged failure of petitioner to
remit to the treasurer of the Negros Mission tithes, collections and offerings amounting to P15,078.10 which were collected by his wife, Mrs. Thelma Austria, in the
churches under his jurisdiction. On the other hand, serious misconduct and commission of an offense against the person of the employers duly authorized representative
pertain to the 16 October 1991 incident wherein petitioner allegedly committed an act of violence in the office of Pastor Gideon Buhat. The final ground invoked by
private respondents is gross and habitual neglect of duties allegedly committed by petitioner.

We cannot sustain the validity of dismissal based on the ground of breach of trust. Private respondents allege that they have lost their confidence in petitioner for his
failure, despite demands, to remit the tithes and offerings amounting to P15,078.10, which were collected in his district. A careful study of the voluminous records of the
case reveals that there is simply no basis for the alleged loss of confidence and breach of trust. Settled is the rule that under Article 282 (c) of the Labor Code, the
breach of trust must be willful. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. [38] It must rest on substantial grounds and not on the employers arbitrariness, whims, caprices or suspicion;
otherwise, the employee would eternally remain at the mercy of the employer. [39] It should be genuine and not simulated. [40] This ground has never been intended to
afford an occasion for abuse, because of its subjective nature. The records show that there were only six (6) instances when petitioner personally collected and received
from the church treasurers the tithes, collections, and donations for the church. [41] The stenographic notes on the testimony of Naomi Geniebla, the Negros Mission
Church Auditor and a witness for private respondents, show that Pastor Austria was able to remit all his collections to the treasurer of the Negros Mission. [42]

Though private respondents were able to establish that petitioner collected and received tithes and donations several times, they were not able to establish that
petitioner failed to remit the same to the Negros Mission, and that he pocketed the amount and used it for his personal purpose. In fact, as admitted by their own
witness, Naomi Geniebla, petitioner remitted the amounts which he collected to the Negros Mission for which corresponding receipts were issued to him. Thus, the
allegations of private respondents that petitioner breached their trust have no leg to stand on.

In a vain attempt to support their claim of breach of trust, private respondents try to pin on petitioner the alleged non-remittance of the tithes collected by his wife. This
argument deserves little consideration. First of all, as proven by convincing and substantial evidence consisting of the testimonies of the witnesses for private
respondents who are church treasurers, it was Mrs. Thelma Austria who actually collected the tithes and donations from them, and, who failed to remit the same to the
 118

treasurer of the Negros Mission. The testimony of these church treasurers were corroborated and confirmed by Ms. Geniebla and Mr. Ibesate, officers of the SDA. Hence,
in the absence of conspiracy and collusion, which private respondents failed to demonstrate, between petitioner and his wife, petitioner cannot be made accountable for
the alleged infraction committed by his wife. After all, they still have separate and distinct personalities. For this reason, the Labor Arbiter found it difficult to see the
basis for the alleged loss of confidence and breach of trust. The Court does not find any cogent reason, therefore, to digress from the findings of the Labor Arbiter which
is fully supported by the evidence on record.

With respect to the grounds of serious misconduct and commission of an offense against the person of the employers duly authorized representative, we find the same
unmeritorious and, as such, do not warrant petitioners dismissal from the service.

Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not mere error in judgment. [43] For misconduct to be considered serious it must be of such grave and aggravated
character and not merely trivial or unimportant. [44] Based on this standard, we believe that the act of petitioner in banging the attache case on the table, throwing the
telephone and scattering the books in the office of Pastor Buhat, although improper, cannot be considered as grave enough to be considered as serious
misconduct. After all, as correctly observed by the Labor Arbiter, though petitioner committed damage to property, he did not physically assault Pastor Buhat or any
other pastor present during the incident of 16 October 1991. In fact, the alleged offense committed upon the person of the employers representatives was never really
established or proven by private respondents.Hence, there is no basis for the allegation that petitioners act constituted serious misconduct or that the same was an
offense against the person of the employers duly authorized representative. As such, the cited actuation of petitioner does not justify the ultimate penalty of dismissal
from employment. While the Constitution does not condone wrongdoing by the employee, it nevertheless urges a moderation of the sanctions that may be applied to
him in light of the many disadvantages that weigh heavily on him like an albatross on his neck. [45] Where a penalty less punitive would suffice, whatever missteps may
have been committed by the worker ought not be visited with a consequence so severe such as dismissal from employment. [46] For the foregoing reasons, we believe
that the minor infraction committed by petitioner does not merit the ultimate penalty of dismissal.

The final ground alleged by private respondents in terminating petitioner, gross and habitual neglect of duties, does not requires an exhaustive discussion. Suffice it to
say that all private respondents had were allegations but not proof. Aside from merely citing the said ground, private respondents failed to prove culpability on the part
of petitioner. In fact, the evidence on record shows otherwise. Petitioners rise from the ranks disclose that he was actually a hard-worker. Private respondents evidence,
[47]
which consisted of petitioners Workers Reports, revealed how petitioner travelled to different churches to attend to the faithful under his care. Indeed, he labored
hard for the SDA, but, in return, he was rewarded with a dismissal from the service for a non-existent cause.

In view of the foregoing, we sustain the finding of the Labor Arbiter that petitioner was terminated from service without just or lawful cause. Having been illegally
dismissed, petitioner is entitled to reinstatement to his former position without loss of seniority right [48] and the payment of full backwages without any deduction
corresponding to the period from his illegal dismissal up to actual reinstatement. [49]

WHEREFORE, the petition for certiorari is GRANTED. The challenged Resolution of public respondent National Labor Relations Commission, rendered on 23 January 1996,
is NULLIFIED and SET ASIDE. The Decision of the Labor Arbiter, dated 15 February 1993, is reinstated and hereby AFFIRMED.

SO ORDERED.
119
 120

DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER NIEVES V. DE CASTRO and JOSE C.
MAGNAYI, respondents.

DECISION

VITUG, J.:

The questions raised in the petition for certiorari are a few coincidental matters relative to the diplomatic immunity extended to the Asian Development Bank ("ADB").

On 27 January 1993, private respondent initiated NLRC-NCR Case No. 00-01-0690-93 for his alleged illegal dismissal by ADB and the latter's violation of the "labor-only"
contracting law. Two summonses were served, one sent directly to the ADB and the other through the Department of Foreign Affairs ("DFA"), both with a copy of the
complaint. Forthwith, the ADB and the DFA notified respondent Labor Arbiter that the ADB, as well as its President and Officers, were covered by an immunity from legal
process except for borrowings, guaranties or the sale of securities pursuant to Article 50(1) and Article 55 of the Agreement Establishing the Asian Development
 121

Bank (the "Charter") in relation to Section 5 and Section 44 of the Agreement Between The Bank And The Government Of The Philippines Regarding The Bank's
Headquarters (the "Headquarters Agreement").

The Labor Arbiter took cognizance of the complaint on the impression that the ADB had waived its diplomatic immunity from suit. In time, the Labor Arbiter rendered his
decision, dated 31 August 1993, that concluded:

"WHEREFORE, above premises considered, judgment is hereby rendered declaring the complainant as a regular employee of respondent ADB, and the termination of his
services as illegal. Accordingly, respondent Bank is hereby ordered:

"1. To immediately reinstate the complainant to his former position effective September 16, 1993;

"2. To pay complainant full backwages from December 1, 1992 to September 15, 1993 in the amount of P42,750.00 (P4,500.00 x 9 months);

"3. And to pay complainants other benefits and without loss of seniority rights and other privileges and benefits due a regular employee of Asian Development Bank
from the time he was terminated on December 31, 1992;

"4. To pay 10% attorney's fees of the total entitlements." [1]

The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA referred the matter to the National Labor Relations Commission ("NLRC"); in its referral,
the DFA sought a "formal vacation of the void judgment." Replying to the letter, the NLRC Chairman, wrote:

"The undersigned submits that the request for the 'investigation' of Labor Arbiter Nieves de Castro, by the National Labor Relations Commission, has been erroneously
premised on Art. 218(c) of the Labor Code, as cited in the letter of Secretary Padilla, considering that the provision deals with 'a question, matter or controversy within
its (the Commission) jurisdiction' obviously referring to a labor dispute within the ambit of Art. 217 (on jurisdiction of Labor Arbiters and the Commission over labor
cases).

"The procedure, in the adjudication of labor cases, including raising of defenses, is prescribed by law. The defense of immunity could have been raised before the Labor
Arbiter by a special appearance which, naturally, may not be considered as a waiver of the very defense being raised. Any decision thereafter is subject to legal
remedies, including appeals to the appropriate division of the Commission and/or a petition for certiorari with the Supreme Court, under Rule 65 of the Rules of
Court. Except where an appeal is seasonably and properly made, neither the Commission nor the undersigned may review, or even question, the propriety of any
decision by a Labor Arbiter. Incidentally, the Commission sits en banc (all fifteen Commissioners) only to promulgate rules of procedure or to formulate policies (Art.
213, Labor Code).

"On the other hand, while the undersigned exercises 'administrative supervision over the Commission and its regional branches and all its personnel, including the
Executive Labor Arbiters and Labor Arbiters' (penultimate paragraph, Art. 213, Labor Code), he does not have the competence to investigate or review any decision of a
Labor Arbiter. However, on the purely administrative aspect of the decision-making process, he may cause that an investigation be made of any misconduct,
malfeasance or misfeasance, upon complaint properly made.

"If the Department of Foreign Affairs feels that the action of Labor Arbiter Nieves de Castro constitutes misconduct, malfeasance or misfeasance, it is suggested that an
appropriate complaint be lodged with the Office of the Ombudsman.

"Thank you for your kind attention."[2]

 122

Dissatisfied, the DFA lodged the instant petition for certiorari. In this Court's resolution of 31 January 1994, respondents were required to comment. Petitioner was later
constrained to make an application for a restraining order and/or writ of preliminary injunction following the issuance, on 16 March 1994, by the Labor Arbiter of a writ
of execution. In a resolution, dated 07 April 1994, the Court issued the temporary restraining order prayed for.

The Office of the Solicitor General (OSG), in its comment of 26 May 1994, initially assailed the claim of immunity by the ADB. Subsequently, however, it submitted a
Manifestation (dated 20 June 1994) stating, among other things, that "after a thorough review of the case and the records," it became convinced that ADB, indeed, was
correct in invoking its immunity from suit under the Charter and the Headquarters Agreement.

The Court is of the same view.

Article 50(1) of the Charter provides:

The Bank shall enjoy immunity from every form of legal process, except in cases arising out of or in connection with the exercise of its powers to borrow money, to
guarantee obligations, or to buy and sell or underwrite the sale of securities. [3]

Under Article 55 thereof -

All Governors, Directors, alternates, officers and employees of the Bank, including experts performing missions for the Bank:

(1) shall be immune from legal process with respect of acts performed by them in their official capacity, except when the Bank waives the immunity. [4]

Like provisions are found in the Headquarters Agreement. Thus, its Section 5 reads:

"The Bank shall enjoy immunity from every form of legal process, except in cases arising out of, or in connection with, the exercise of its powers to borrow money, to
guarantee obligations, or to buy and sell or underwrite the sale of securities. [5]

And, with respect to certain officials of the bank, Section 44 of the agreement states:

Governors, other representatives of Members, Directors, the President, Vice-President and executive officers as may be agreed upon between the Government and the
Bank shall enjoy, during their stay in the Republic of the Philippines in connection with their official duties with the Bank:

xxxxxxxxx

(b) Immunity from legal process of every kind in respect of words spoken or written and all acts done by them in their official capacity. [6]

The above stipulations of both the Charter and Headquarters Agreement should be able, nay well enough, to establish that, except in the specified cases of borrowing
and guarantee operations, as well as the purchase, sale and underwriting of securities, the ADB enjoys immunity from legal process of every form. The Banks officers,
on their part, enjoy immunity in respect of all acts performed by them in their official capacity. The Charter and the Headquarters Agreement granting these immunities
and privileges are treaty covenants and commitments voluntarily assumed by the Philippine government which must be respected.

In World Health Organization vs. Aquino,[7] we have declared:

 123

It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is essentially a political question and courts
should refuse to look beyond a determination by the executive branch of the government, and where the plea of diplomatic immunity is recognized and affirmed by the
executive branch of the government x x x it is then the duty of the courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of the
government, x x x or other officer acting under his direction. Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction x x x as to
embarrass the executive arm of the government in conducting foreign relations, it is accepted doctrine that `in such cases the judicial department of government
follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdiction.'" [8]

To the same effect is the decision in International Catholic Migration Commission vs. Calleja, [9] which has similarly deemed the Memoranda of the Legal Adviser of the
Department of Foreign Affairs to be "a categorical recognition by the Executive Branch of Government that ICMC x x x enjoy(s) immunities accorded to international
organizations" and which determination must be held "conclusive upon the Courts in order not to embarrass a political department of Government. In the instant case,
the filing of the petition by the DFA, in behalf of ADB, is itself an affirmance of the government's own recognition of ADB's immunity.

Being an international organization that has been extended a diplomatic status, the ADB is independent of the municipal law. [10] In Southeast Asian Fisheries
Development Center vs. Acosta,[11] the Court has cited with approval the opinion[12] of the then Minister of Justice; thus -

"One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs and processes issued by the
tribunals of the country where it is found. (See Jenks, Id., pp. 37-44). The obvious reason for this is that the subjection of such an organization to the authority of the
local courts would afford a convenient medium thru which the host government may interfere in their operations or even influence or control its policies and decisions of
the organization; besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its
member-states."[13]

Contrary to private respondent's assertion, the claim of immunity is not here being raised for the first time; it has been invoked before the forum of origin through
communications sent by petitioner and the ADB to the Labor Arbiter, as well as before the NLRC following the rendition of the questioned judgment by the Labor Arbiter,
but evidently to no avail.

In its communication of 27 May 1993, the DFA, through the Office of Legal Affairs, has advised the NLRC:

"Respectfully returned to the Honorable Domingo B. Mabazza, Labor Arbitration Associate, National Labor Relations Commission, National Capital Judicial Region,
Arbitration Branch, Associated bank Bldg., T.M. Kalaw St., Ermita, Manila, the attached Notice of Hearing addressed to the Asian Development Bank, in connection with
the aforestated case, for the reason stated in the Department's 1st Indorsement dated 23 March 1993, copy attached, which is self-explanatory.

"In view of the fact that the Asian Development Bank (ADB) invokes its immunity which is sustained by the Department of Foreign Affairs, a continuous hearing of this
case erodes the credibility of the Philippine government before the international community, let alone the negative implication of such a suit on the official relationship of
the Philippine government with the ADB.

"For the Secretary of Foreign Affairs

(Sgd.)

"SIME D. HIDALGO

Assistant Secretary"[14]
 124

The Office of the President, likewise, has issued on 18 May 1993 a letter to the Secretary of Labor, viz:

"Dear Secretary Confesor,

"I am writing to draw your attention to a case filed by a certain Jose C. Magnayi against the Asian Development Bank and its President, Kimimasa Tarumizu, before the
National Labor Relations Commission, National Capital Region Arbitration Board (NLRC NCR Case No. 00-01690-93).

"Last March 8, the Labor Arbiter charged with the case, Ms. Nieves V. de Castro, addressed a Notice of Resolution/Order to the Bank which brought it to the attention of
the Department of Foreign Affairs on the ground that the service of such notice was in violation of the RP-ADB Headquarters Agreement which provided, inter-alia, for
the immunity of the Bank, its President and officers from every form of legal process, except only, in cases of borrowings, guarantees or the sale of securities.

"The Department of Foreign Affairs, in turn, informed Labor Arbiter Nieves V. de Castro of this fact by letter dated March 22, copied to you.

"Despite this, the labor arbiter in question persisted to send summons, the latest dated May 4, herewith attached, regarding the Magnayi case.

"The Supreme Court has long settled the matter of diplomatic immunities. In WHO vs. Aquino, SCRA 48, it ruled that courts should respect diplomatic immunities of
foreign officials recognized by the Philippine government. Such decision by the Supreme Court forms part of the law of the land.

"Perhaps you should point out to Labor Arbiter Nieves V. de Castro that ignorance of the law is a ground for dismissal.

"Very truly yours,

(Sgd.)

JOSE B. ALEJANDRINO

Chairman, PCC-ADB"[15]

Private respondent argues that, by entering into service contracts with different private companies, ADB has descended to the level of an ordinary party to a commercial
transaction giving rise to a waiver of its immunity from suit. In the case of Holy See vs. Hon. Rosario, Jr., [16] the Court has held:

There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or absolute theory, a sovereign cannot,
without its consent, be made a respondent in the Courts of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized
only with regard to public acts or acts jure imperii of a state, but not with regard to private act or acts jure gestionis.

xxxxxxxxx

Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The
logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or
trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure
imperii, especially when it is not undertaken for gain or profit.[17]
 125

The service contracts referred to by private respondent have not been intended by the ADB for profit or gain but are official acts over which a waiver of immunity would
not attach.

With regard to the issue of whether or not the DFA has the legal standing to file the present petition, and whether or not petitioner has regarded the basic rule
that certiorari can be availed of only when there is no appeal nor plain, speedy and adequate remedy in the ordinary course of law, we hold both in the affirmative.

The DFA's function includes, among its other mandates, the determination of persons and institutions covered by diplomatic immunities, a determination which, when
challenged, entitles it to seek relief from the court so as not to seriously impair the conduct of the country's foreign relations. The DFA must be allowed to plead its case
whenever necessary or advisable to enable it to help keep the credibility of the Philippine government before the international community. When international
agreements are concluded, the parties thereto are deemed to have likewise accepted the responsibility of seeing to it that their agreements are duly regarded. In our
country, this task falls principally on the DFA as being the highest executive department with the competence and authority to so act in this aspect of the international
arena.[18] In Holy See vs. Hon. Rosario, Jr.,[19] this Court has explained the matter in good detail; viz:

"In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of
the state where it is sued to convey to the court that said defendant is entitled to immunity.

"In the United States, the procedure followed is the process of 'suggestion,' where the foreign state or the international organization sued in an American court requests
the Secretary of State to make a determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in
turn, asks the Attorney General to submit to the court a 'suggestion' that the defendant is entitled to immunity. In England, a similar procedure is followed, only the
Foreign Office issues a certification to that effect instead of submitting a 'suggestion' (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of Foreign
Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941]).

"In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or
diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission vs. Calleja, 190
SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-
employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization vs. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs
sent the trial court a telegram to that effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor
General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a 'suggestion' to respondent Judge. The Solicitor General
embodied the 'suggestion' in a manifestation and memorandum as amicus curiae.

"In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of
petitioner. The Court allowed the said Department to file its memorandum in support of petitioner's claim of sovereign immunity.

"In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels (Raquiza vs. Bradford,
75 Phil. 50 [1945]; Miquiabas vs. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America vs. Guinto, 182 SCRA 644 [1990] and companion
cases). In cases where the foreign states bypass the Foreign Office, the courts can inquire into the facts and make their own determination as to the nature of the acts
and transactions involved."[20]

Relative to the propriety of the extraordinary remedy of certiorari, the Court has, under special circumstances, so allowed and entertained such a petition when (a) the
questioned order or decision is issued in excess of or without jurisdiction, [21] or (b) where the order or decision is a patent nullity, [22] which, verily, are the circumstances
that can be said to obtain in the present case. When an adjudicator is devoid of jurisdiction on a matter before him, his action that assumes otherwise would be a clear
nullity.
 126

WHEREFORE, the petition for certiorari is GRANTED, and the decision of the Labor Arbiter, dated 31 August 1993 is VACATED for being NULL AND VOID. The temporary
restraining order issued by this Court on 07 April 1994 is hereby made permanent. No costs.

SO ORDERED.
 127

PHILIPPINE NATIONAL BANK, petitioner, vs. FLORENCE O. CABANSAG, respondent.

DECISION

PANGANIBAN, J.:

The Court reiterates the basic policy that all Filipino workers, whether employed locally or overseas, enjoy the protective mantle of Philippine labor and social
legislations. Our labor statutes may not be rendered ineffective by laws or judgments promulgated, or stipulations agreed upon, in a foreign country.

The Case

Before us is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, seeking to reverse and set aside the July 16, 2002 Decision [2] and the January 29,
2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 68403. The assailed Decision dismissed the CA Petition (filed by herein petitioner), which had sought to
reverse the National Labor Relations Commission (NLRC)s June 29, 2001 Resolution, [4] affirming Labor Arbiter Joel S. Lustrias January 18, 2000 Decision.[5]

The assailed CA Resolution denied herein petitioners Motion for Reconsideration.

The Facts

The facts are narrated by the Court of Appeals as follows:

In late 1998, [herein Respondent Florence Cabansag] arrived in Singapore as a tourist. She applied for employment, with the Singapore Branch of the Philippine National
Bank, a private banking corporation organized and existing under the laws of the Philippines, with principal offices at the PNB Financial Center, Roxas Boulevard, Manila.
At the time, the Singapore PNB Branch was under the helm of Ruben C. Tobias, a lawyer, as General Manager, with the rank of Vice-President of the Bank. At the time,
too, the Branch Office had two (2) types of employees: (a) expatriates or the regular employees, hired in Manila and assigned abroad including Singapore, and (b)
locally (direct) hired. She applied for employment as Branch Credit Officer, at a total monthly package of $SG4,500.00, effective upon assumption of duties after
 128

approval. Ruben C. Tobias found her eminently qualified and wrote on October 26, 1998, a letter to the President of the Bank in Manila, recommending the appointment
of Florence O. Cabansag, for the position.

xxxxxxxxx

The President of the Bank was impressed with the credentials of Florence O. Cabansag that he approved the recommendation of Ruben C. Tobias. She then filed
an Application, with the Ministry of Manpower of the Government of Singapore, for the issuance of an Employment Pass as an employee of the Singapore PNB Branch.
Her application was approved for a period of two (2) years.

On December 7, 1998, Ruben C. Tobias wrote a letter to Florence O. Cabansag offering her a temporary appointment, as Credit Officer, at a basic salary of Singapore
Dollars 4,500.00, a month and, upon her successful completion of her probation to be determined solely, by the Bank, she may be extended at the discretion of the
Bank, a permanent appointment and that her temporary appointment was subject to the following terms and conditions:

1. You will be on probation for a period of three (3) consecutive months from the date of your assumption of duty.

2. You will observe the Banks rules and regulations and those that may be adopted from time to time.

3. You will keep in strictest confidence all matters related to transactions between the Bank and its clients.

4. You will devote your full time during business hours in promoting the business and interest of the Bank.

5. You will not, without prior written consent of the Bank, be employed in anyway for any purpose whatsoever outside business hours by any person, firm or company.

6. Termination of your employment with the Bank may be made by either party after notice of one (1) day in writing during probation, one month notice upon
confirmation or the equivalent of one (1) days or months salary in lieu of notice.

Florence O. Cabansag accepted the position and assumed office. In the meantime, the Philippine Embassy in Singapore processed the employment contract of Florence
O. Cabansag and, on March 8, 1999, she was issued by the Philippine Overseas Employment Administration, an Overseas Employment Certificate, certifying that she
was a bona fide contract worker for Singapore.

xxxxxxxxx

Barely three (3) months in office, Florence O. Cabansag submitted to Ruben C. Tobias, on March 9, 1999, her initial Performance Report. Ruben C. Tobias was so
impressed with the Report that he made a notation and, on said Report: GOOD WORK. However, in the evening of April 14, 1999, while Florence O. Cabansag was in
the flat, which she and Cecilia Aquino, the Assistant Vice-President and Deputy General Manager of the Branch and Rosanna Sarmiento, the Chief Dealer of the said
Branch, rented, she was told by the two (2) that Ruben C. Tobias has asked them to tell Florence O. Cabansag to resign from her job. Florence O. Cabansag was
perplexed at the sudden turn of events and the runabout way Ruben C. Tobias procured her resignation from the Bank. The next day, Florence O. Cabansag talked to
Ruben C. Tobias and inquired if what Cecilia Aquino and Rosanna Sarmiento had told her was true. Ruben C. Tobias confirmed the veracity of the information, with the
explanation that her resignation was imperative as a cost-cutting measure of the Bank. Ruben C. Tobias, likewise, told Florence O. Cabansag that the PNB Singapore
Branch will be sold or transformed into a remittance office and that, in either way, Florence O. Cabansag had to resign from her employment. The more Florence O.
Cabansag was perplexed. She then asked Ruben C. Tobias that she be furnished with a Formal Advice from the PNB Head Office in Manila. However, Ruben C. Tobias
flatly refused. Florence O. Cabansag did not submit any letter of resignation.
 129

On April 16, 1999, Ruben C. Tobias again summoned Florence O. Cabansag to his office and demanded that she submit her letter of resignation, with the pretext that he
needed a Chinese-speaking Credit Officer to penetrate the local market, with the information that a Chinese-speaking Credit Officer had already been hired and will be
reporting for work soon. She was warned that, unless she submitted her letter of resignation, her employment record will be blemished with the
notation DISMISSED spread thereon. Without giving any definitive answer, Florence O. Cabansag asked Ruben C. Tobias that she be given sufficient time to look for
another job. Ruben C. Tobias told her that she should be out of her employment by May 15, 1999.

However, on April 19, 1999, Ruben C. Tobias again summoned Florence O. Cabansag and adamantly ordered her to submit her letter of resignation. She refused. On
April 20, 1999, she received a letter from Ruben C. Tobias terminating her employment with the Bank.

xxxxxxxxx

On January 18, 2000, the Labor Arbiter rendered judgment in favor of the Complainant and against the Respondents, the decretal portion of which reads as follows:

WHEREFORE, considering the foregoing premises, judgment is hereby rendered finding respondents guilty of Illegal dismissal and devoid of due process, and are hereby
ordered:

1. To reinstate complainant to her former or substantially equivalent position without loss of seniority rights, benefits and privileges;

2. Solidarily liable to pay complainant as follows:

a) To pay complainant her backwages from 16 April 1999 up to her actual reinstatement. Her backwages as of the date of the promulgation of this decision amounted to
SGD 40,500.00 or its equivalent in Philippine Currency at the time of payment;

b) Mid-year bonus in the amount of SGD 2,250.00 or its equivalent in Philippine Currency at the time of payment;

c) Allowance for Sunday banking in the amount of SGD 120.00 or its equivalent in Philippine Currency at the time of payment;

d) Monetary equivalent of leave credits earned on Sunday banking in the amount of SGD 1,557.67 or its equivalent in Philippine Currency at the time of payment;

e) Monetary equivalent of unused sick leave benefits in the amount of SGD 1,150.60 or its equivalent in Philippine Currency at the time of payment.

f) Monetary equivalent of unused vacation leave benefits in the amount of SGD 319.85 or its equivalent in Philippine Currency at the time of payment.

g) 13th month pay in the amount of SGD 4,500.00 or its equivalent in Philippine Currency at the time of payment;

3. Solidarily to pay complainant actual damages in the amount of SGD 1,978.00 or its equivalent in Philippine Currency at the time of payment, and moral damages in
the amount of PhP 200,000.00, exemplary damages in the amount of PhP 100,000.00;

4. To pay complainant the amount of SGD 5,039.81 or its equivalent in Philippine Currency at the time of payment, representing attorneys fees.

SO ORDERED. [6] [Emphasis in the original.]

 130

PNB appealed the labor arbiters Decision to the NLRC. In a Resolution dated June 29, 2001, the Commission affirmed that Decision, but reduced the moral damages
to P100,000 and the exemplary damages to P50,000. In a subsequent Resolution, the NLRC denied PNBs Motion for Reconsideration.

Ruling of the Court of Appeals

In disposing of the Petition for Certiorari, the CA noted that petitioner bank had failed to adduce in evidence the Singaporean law supposedly governing the latters
employment Contract with respondent. The appellate court found that the Contract had actually been processed by the Philippine Embassy in Singapore and approved
by the Philippine Overseas Employment Administration (POEA), which then used that Contract as a basis for issuing an Overseas Employment Certificate in favor of
respondent.

According to the CA, even though respondent secured an employment pass from the Singapore Ministry of Employment, she did not thereby waive Philippine labor laws,
or the jurisdiction of the labor arbiter or the NLRC over her Complaint for illegal dismissal. In so doing, neither did she submit herself solely to the Ministry of Manpower
of Singapores jurisdiction over disputes arising from her employment. The appellate court further noted that a cursory reading of the Ministrys letter will readily show
that no such waiver or submission is stated or implied.

Finally, the CA held that petitioner had failed to establish a just cause for the dismissal of respondent. The bank had also failed to give her sufficient notice and an
opportunity to be heard and to defend herself. The CA ruled that she was consequently entitled to reinstatement and back wages, computed from the time of her
dismissal up to the time of her reinstatement.

Hence, this Petition.[7]

Issues

Petitioner submits the following issues for our consideration:

1. Whether or not the arbitration branch of the NLRC in the National Capital Region has jurisdiction over the instant controversy;

2. Whether or not the arbitration of the NLRC in the National Capital Region is the most convenient venue or forum to hear and decide the instant controversy; and

3. Whether or not the respondent was illegally dismissed, and therefore, entitled to recover moral and exemplary damages and attorneys fees. [8]

In addition, respondent assails, in her Comment, [9] the propriety of Rule 45 as the procedural mode for seeking a review of the CA Decision affirming the NLRC
Resolution. Such issue deserves scant consideration. Respondent miscomprehends the Courts discourse in St. Martin Funeral Home v. NLRC,[10] which has indeed
affirmed that the proper mode of review of NLRC decisions, resolutions or orders is by a special civil action for certiorari under Rule 65 of the Rules of Court. The
Supreme Court and the Court of Appeals have concurrent originaljurisdiction over such petitions for certiorari. Thus, in observance of the doctrine on the hierarchy of
courts, these petitions should be initially filed with the CA. [11]

Rightly, the bank elevated the NLRC Resolution to the CA by way of a Petition for Certiorari. In seeking a review by this Court of the CA Decision -- on questions of
jurisdiction, venue and validity of employment termination -- petitioner is likewise correct in invoking Rule 45. [12]

It is true, however, that in a petition for review on certiorari, the scope of the Supreme Courts judicial review of decisions of the Court of Appeals is generally confined
only to errors of law. It does not extend to questions of fact. This doctrine applies with greater force in labor cases. Factual questions are for the labor tribunals to
resolve. [13] In the present case, the labor arbiter and the NLRC have already determined the factual issues. Their findings, which are supported by substantial evidence,
 131

were affirmed by the CA. Thus, they are entitled to great respect and are rendered conclusive upon this Court, absent a clear showing of palpable error or arbitrary
disregard of evidence.[14]

The Courts Ruling

The Petition has no merit.

First Issue:

Jurisdiction

The jurisdiction of labor arbiters and the NLRC is specified in Article 217 of the Labor Code as follows:

ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving wage, rates of pay, hours of work and other terms and conditions of
employment

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including
those of persons in domestic or household service, involving an amount of exceeding five thousand pesos ( P5,000.00) regardless of whether accompanied with a claim
for reinstatement.

(b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

x x x x x x x x x.

More specifically, Section 10 of RA 8042 reads in part:

SECTION 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of
damages.
 132

xxxxxxxxx

Based on the foregoing provisions, labor arbiters clearly have original and exclusive jurisdiction over claims arising from employer-employee relations,
including termination disputesinvolving all workers, among whom are overseas Filipino workers (OFW).[15]

We are not unmindful of the fact that respondent was directly hired, while on a tourist status in Singapore, by the PNB branch in that city state. Prior to employing
respondent, petitioner had to obtain an employment pass for her from the Singapore Ministry of Manpower. Securing the pass was a regulatory requirement pursuant to
the immigration regulations of that country.[16]

Similarly, the Philippine government requires non-Filipinos working in the country to first obtain a local work permit in order to be legally employed here. That permit,
however, does not automatically mean that the non-citizen is thereby bound by local laws only, as averred by petitioner. It does not at all imply a waiver of ones
national laws on labor. Absent any clear and convincing evidence to the contrary, such permit simply means that its holder has a legal status as a worker in the issuing
country.

Noteworthy is the fact that respondent likewise applied for and secured an Overseas Employment Certificate from the POEA through the Philippine Embassy in
Singapore. The Certificate, issued on March 8, 1999, declared her a bona fide contract worker for Singapore. Under Philippine law, this document authorized her working
status in a foreign country and entitled her to all benefits and processes under our statutes. Thus, even assuming arguendo that she was considered at the start of her
employment as a direct hire governed by and subject to the laws, common practices and customs prevailing in Singapore [17] she subsequently became a contract worker
or an OFW who was covered by Philippine labor laws and policies upon certification by the POEA. At the time her employment was illegally terminated, she already
possessed the POEA employment Certificate.

Moreover, petitioner admits that it is a Philippine corporation doing business through a branch office in Singapore. [18] Significantly, respondents employment by the
Singapore branch office had to be approved by Benjamin P. Palma Gil, [19] the president of the bank whose principal offices were in Manila. This circumstance militates
against petitioners contention that respondent was locally hired; and totally governed by and subject to the laws, common practices and customs of Singapore, not of
the Philippines. Instead, with more reason does this fact reinforce the presumption that respondent falls under the legal definition of migrant worker, in this case one
deployed in Singapore. Hence, petitioner cannot escape the application of Philippine laws or the jurisdiction of the NLRC and the labor arbiter.

In any event, we recall the following policy pronouncement of the Court in Royal Crown Internationale v. NLRC:[20]

x x x. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the
contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal
work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. For the State assures the basic rights of all workers to
self-organization, collective bargaining, security of tenure, and just and humane conditions of work [Article 3 of the Labor Code of the Philippines; See also Section 18,
Article II and Section 3, Article XIII, 1987 Constitution]. This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws which have for
their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determination or conventions agreed
upon in a foreign country.

Second Issue:

Proper Venue

Section 1(a) of Rule IV of the NLRC Rules of Procedure reads:

 133

Section 1. Venue (a) All cases which Labor Arbiters have authority to hear and decide may be filed in the Regional Arbitration Branch having jurisdiction over the
workplace of the complainant/petitioner; Provided, however that cases of Overseas Filipino Worker (OFW) shall be filed before the Regional Arbitration Branch where the
complainant resides or where the principal office of the respondent/employer is situated, at the option of the complainant.

For purposes of venue, workplace shall be understood as the place or locality where the employee is regularly assigned when the cause of action arose. It shall include
the place where the employee is supposed to report back after a temporary detail, assignment or travel. In the case of field employees, as well as ambulant or itinerant
workers, their workplace is where they are regularly assigned, or where they are supposed to regularly receive their salaries/wages or work instructions from, and
report the results of their assignment to their employers.

Under the Migrant Workers and Overseas Filipinos Act of 1995 (RA 8042), a migrant worker refers to a person who is to be engaged, is engaged or has been engaged in
a remunerated activity in a state of which he or she is not a legal resident; to be used interchangeably with overseas Filipino worker. [21] Undeniably, respondent was
employed by petitioner in its branch office in Singapore. Admittedly, she is a Filipino and not a legal resident of that state. She thus falls within the category of migrant
worker or overseas Filipino worker.

As such, it is her option to choose the venue of her Complaint against petitioner for illegal dismissal. The law gives her two choices: (1) at the Regional Arbitration
Branch (RAB) where she resides or (2) at the RAB where the principal office of her employer is situated. Since her dismissal by petitioner, respondent has returned to
the Philippines -- specifically to her residence at Filinvest II, Quezon City. Thus, in filing her Complaint before the RAB office in Quezon City, she has made a valid choice
of proper venue.

Third Issue:

Illegal Dismissal

The appellate court was correct in holding that respondent was already a regular employee at the time of her dismissal, because her three-month probationary period of
employment had already ended. This ruling is in accordance with Article 281 of the Labor Code: An employee who is allowed to work after a probationary period shall be
considered a regular employee. Indeed, petitioner recognized respondent as such at the time it dismissed her, by giving her one months salary in lieu of a one-month
notice, consistent with provision No. 6 of her employment Contract.

Notice and Hearing

Not Complied With

As a regular employee, respondent was entitled to all rights, benefits and privileges provided under our labor laws. One of her fundamental rights is that she may not be
dismissed without due process of law. The twin requirements of notice and hearing constitute the essential elements of procedural due process, and neither of these
elements can be eliminated without running afoul of the constitutional guarantee. [22]

In dismissing employees, the employer must furnish them two written notices: 1) one to apprise them of the particular acts or omissions for which their dismissal is
sought; and 2) the other to inform them of the decision to dismiss them. As to the requirement of a hearing, its essence lies simply in the opportunity to be heard. [23]

The evidence in this case is crystal-clear. Respondent was not notified of the specific act or omission for which her dismissal was being sought. Neither was she given
any chance to be heard, as required by law. At any rate, even if she were given the opportunity to be heard, she could not have defended herself effectively, for she
knew no cause to answer to.
 134

All that petitioner tendered to respondent was a notice of her employment termination effective the very same day, together with the equivalent of a one-month pay.
This Court has already held that nothing in the law gives an employer the option to substitute the required prior notice and opportunity to be heard with the mere
payment of 30 days salary.[24]

Well-settled is the rule that the employer shall be sanctioned for noncompliance with the requirements of, or for failure to observe, due process that must be observed
in dismissing an employee.[25]

No Valid Cause

for Dismissal

Moreover, Articles 282,[26] 283[27] and 284[28] of the Labor Code provide the valid grounds or causes for an employees dismissal. The employer has the burden of proving
that it was done for any of those just or authorized causes. The failure to discharge this burden means that the dismissal was not justified, and that the employee is
entitled to reinstatement and back wages.[29]

Notably, petitioner has not asserted any of the grounds provided by law as a valid reason for terminating the employment of respondent. It merely insists that her
dismissal was validly effected pursuant to the provisions of her employment Contract, which she had voluntarily agreed to be bound to.

Truly, the contracting parties may establish such stipulations, clauses, terms and conditions as they want, and their agreement would have the force of law between
them. However, petitioner overlooks the qualification that those terms and conditions agreed upon must not be contrary to law, morals, customs, public policy or public
order.[30] As explained earlier, the employment Contract between petitioner and respondent is governed by Philippine labor laws. Hence, the stipulations, clauses, and
terms and conditions of the Contract must not contravene our labor law provisions.

Moreover, a contract of employment is imbued with public interest. The Court has time and time again reminded parties that they are not at liberty to insulate themselves
and their relationships from the impact of labor laws and regulations by simply contracting with each other.[31] Also, while a contract is the law between the parties, the
provisions of positive law that regulate such contracts are deemed included and shall limit and govern the relations between the parties. [32]

Basic in our jurisprudence is the principle that when there is no showing of any clear, valid, and legal cause for the termination of employment, the law considers the
matter a case of illegal dismissal.[33]

Awards for Damages

Justified

Finally, moral damages are recoverable when the dismissal of an employee is attended by bad faith or constitutes an act oppressive to labor or is done in a manner
contrary to morals, good customs or public policy. [34] Awards for moral and exemplary damages would be proper if the employee was harassed and arbitrarily dismissed
by the employer.[35]

In affirming the awards of moral and exemplary damages, we quote with approval the following ratiocination of the labor arbiter:

The records also show that [respondents] dismissal was effected by [petitioners] capricious and high-handed manner, anti-social and oppressive, fraudulent and in bad
faith, and contrary to morals, good customs and public policy. Bad faith and fraud are shown in the acts committed by [petitioners] before, during and after
[respondents] dismissal in addition to the manner by which she was dismissed. First, [respondent] was pressured to resign for two different and contradictory reasons,
 135

namely, cost-cutting and the need for a Chinese[-]speaking credit officer, for which no written advice was given despite complainants request. Such wavering stance or
vacillating position indicates bad faith and a dishonest purpose. Second, she was employed on account of her qualifications, experience and readiness for the position of
credit officer and pressured to resign a month after she was commended for her good work. Third, the demand for [respondents] instant resignation on 19 April 1999 to
give way to her replacement who was allegedly reporting soonest, is whimsical, fraudulent and in bad faith, because on 16 April 1999 she was given a period of [sic]
until 15 May 1999 within which to leave. Fourth, the pressures made on her to resign were highly oppressive, anti-social and caused her absolute torture, as
[petitioners] disregarded her situation as an overseas worker away from home and family, with no prospect for another job. She was not even provided with a return
trip fare. Fifth, the notice of termination is an utter manifestation of bad faith and whim as it totally disregards [respondents] right to security of tenure and due
process. Such notice together with the demands for [respondents] resignation contravenes the fundamental guarantee and public policy of the Philippine government on
security of tenure.

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

xxxxxxxxx

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

The Court also affirms the award of attorneys fees. It is settled that when an action is instituted for the recovery of wages, or when employees are forced to litigate and
consequently incur expenses to protect their rights and interests, the grant of attorneys fees is legally justifiable. [37]

WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Costs against petitioner.

SO ORDERED.
 136

BEBIANO M. BAEZ, petitioner, vs. HON. DOWNEY C. VALDEVILLA and ORO MARKETING, INC., respondents.

DECISION

GONZAGA_REYES, J.:

The orders of respondent judge [1] dated June 20, 1996 and October 16, 1996, taking jurisdiction over an action for damages filed by an employer against its dismissed
employee, are assailed in this petition for certiorari under Rule 65 of the Rules of Court for having been issued in grave abuse of discretion.

Petitioner was the sales operations manager of private respondent in its branch in Iligan City. In 1993, private respondent "indefinitely suspended" petitioner and the
latter filed a complaint for illegal dismissal with the National Labor Relations Commission ("NLRC") in Iligan City. In a decision dated July 7, 1994, Labor Arbiter
Nicodemus G. Palangan found petitioner to have been illegally dismissed and ordered the payment of separation pay in lieu of reinstatement, and of backwages and
attorney's fees. The decision was appealed to the NLRC, which dismissed the same for having been filed out of time. [2] Elevated by petition for certiorari before this
Court, the case was dismissed on technical grounds [3]; however, the Court also pointed out that even if all the procedural requirements for the filing of the petition were
met, it would still be dismissed for failure to show grave abuse of discretion on the part of the NLRC. Slxmis
 137

On November 13, 1995, private respondent filed a complaint for damages before the Regional Trial Court ("RTC") of Misamis Oriental, docketed as Civil Case No. 95-
554, which prayed for the payment of the following: Slxsc

a. P709,217.97 plus 12% interest as loss of profit and/or unearned income of three years;

b. P119,700.00 plus 12% interest as estimated cost of supplies, facilities, properties, space, etc. for three years;

c. P5,000.00 as initial expenses of litigation; and

d. P25,000.00 as attorney's fees.[4]

On January 30, 1996, petitioner filed a motion to dismiss the above complaint. He interposed in the court below that the action for damages, having arisen from an
employer-employee relationship, was squarely under the exclusive original jurisdiction of the NLRC under Article 217(a), paragraph 4 of the Labor Code and is barred by
reason of the final judgment in the labor case. He accused private respondent of splitting causes of action, stating that the latter could very well have included the
instant claim for damages in its counterclaim before the Labor Arbiter. He also pointed out that the civil action of private respondent is an act of forum-shopping and
was merely resorted to after a failure to obtain a favorable decision with the NLRC.Scslx

Ruling upon the motion to dismiss, respondent judge issued the herein questioned Order, which summarized the basis for private respondent's action for damages in
this manner: Slx

Paragraph 5 of the complaint alleged that the defendant violated the plaintiffs policy re: His business in his branch at Iligan City wherein defendant was the Sales
Operations Manager, and paragraph 7 of the same complaint briefly narrated the modus operandi of defendant, quoted herein: Defendant canvassed customers
personally or through salesmen of plaintiff which were hired or recruited by him. If said customer decided to buy items from plaintiff on installment basis, defendant,
without the knowledge of said customer and plaintiff, would buy the items on cash basis at ex-factory price, a privilege not given to customers, and thereafter required
the customer to sign promissory notes and other documents using the name and property of plaintiff, purporting that said customer purchased the items from plaintiff
on installment basis. Thereafter, defendant collected the installment payments either personally or through Venus Lozano, a Group Sales Manager of plaintiff but also
utilized by him as secretary in his own business for collecting and receiving of installments, purportedly for the plaintiff but in reality on his own account or business. The
collection and receipt of payments were made inside the Iligan City branch using plaintiffs facilities, property and manpower. That accordingly plaintiffs sales decreased
and reduced to a considerable extent the profits which it would have earned. [5]

In declaring itself as having jurisdiction over the subject matter of the instant controversy, respondent court stated: Mesm

A perusal of the complaint which is for damages does not ask for any relief under the Labor Code of the Philippines. It seeks to recover damages as redress for
defendant's breach of his contractual obligation to plaintiff who was damaged and prejudiced. The Court believes such cause of action is within the realm of civil law,
and jurisdiction over the controversy belongs to the regular courts.

While seemingly the cause of action arose from employer- employee relations, the employer's claim for damages is grounded on the nefarious activities of defendant
causing damage and prejudice to plaintiff as alleged in paragraph 7 of the complaint. The Court believes that there was a breach of a contractual obligation, which is
intrinsically a civil dispute. The averments in the complaint removed the controversy from the coverage of the Labor Code of the Philippines and brought it within the
purview of civil law. (Singapore Airlines, Ltd. Vs. Pao, 122 SCRA 671.) xxx [6]

Petitioner's motion for reconsideration of the above Order was denied for lack of merit on October 16, 1996. Hence, this petition. Calrky
 138

Acting on petitioner's prayer, the Second Division of this Court issued a Temporary Restraining Order ("TRO ") on March 5, 1997, enjoining respondents from further
proceeding with Civil Case No. 95-554 until further orders from the Court. Kycalr

By way of assignment of errors, the petition reiterates the grounds raised in the Motion to Dismiss dated January 30, 1996, namely, lack of jurisdiction over the subject
matter of the action, res judicata, splitting of causes of action, and forum-shopping. The determining issue, however, is the issue of jurisdiction. Kyle

Article 217(a), paragraph 4 of the Labor Code, which was already in effect at the time of the filing of this case, reads: Exsm

ART. 217. Jurisdiction of Labor Arbiters and the Commission. --- (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:

xxx

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;

xxx

The above provisions are a result of the amendment by Section 9 of Republic Act ("R.A.") No. 6715, which took effect on March 21, 1989, and which put to rest the
earlier confusion as to who between Labor Arbiters and regular courts had jurisdiction over claims for damages as between employers and employees. Sppedjo

It will be recalled that years prior to R.A. 6715, jurisdiction over all money claims of workers, including claims for damages, was originally lodged with the Labor Arbiters
and the NLRC by Article 217 of the Labor Code. [7] On May 1, 1979, however, Presidential Decree ("P.D.") No. 1367 amended said Article 217 to the effect that "Regional
Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages." [8] This limitation in jurisdiction, however, lasted only
briefly since on May 1, 1980, P.D. No. 1691 nullified P.D. No. 1367 and restored Article 217 of the Labor Code almost to its original form. Presently, and as amended by
R.A. 6715, the jurisdiction of Labor Arbiters and the NLRC in Article 217 is comprehensive enough to include claims for all forms of damages "arising from the employer-
employee relations". Miso

Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages filed by employees, [9] we hold that by the
designating clause "arising from the employer-employee relations" Article 217 should apply with equal force to the claim of an employer for actual damages against its
dismissed employee, where the basis for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a counterclaim in the
illegal dismissal case. Nexold

Even under Republic Act No. 875 (the "Industrial Peace Act", now completely superseded by the Labor Code), jurisprudence was settled that where the plaintiff's cause
of action for damages arose out of, or was necessarily intertwined with, an alleged unfair labor practice committed by the union, the jurisdiction is exclusively with the
(now defunct) Court of Industrial Relations, and the assumption of jurisdiction of regular courts over the same is a nullity. [10] To allow otherwise would be "to sanction
split jurisdiction, which is prejudicial to the orderly administration of justice." [11] Thus, even after the enactment of the Labor Code, where the damages separately
claimed by the employer were allegedly incurred as a consequence of strike or picketing of the union, such complaint for damages is deeply rooted from the labor
dispute between the parties, and should be dismissed by ordinary courts for lack of jurisdiction. As held by this Court in National Federation of Labor vs. Eisma, 127
SCRA 419: Manikx
 139

Certainly, the present Labor Code is even more committed to the view that on policy grounds, and equally so in the interest of greater promptness in the disposition of
labor matters, a court is spared the often onerous task of determining what essentially is a factual matter, namely, the damages that may be incurred by either labor or
management as a result of disputes or controversies arising from employer-employee relations.

There is no mistaking the fact that in the case before us, private respondent's claim against petitioner for actual damages arose from a prior employer-employee
relationship. In the first place, private respondent would not have taken issue with petitioner's "doing business of his own" had the latter not been concurrently its
employee. Thus, the damages alleged in the complaint below are: first, those amounting to lost profits and earnings due to petitioner's abandonment or neglect of his
duties as sales manager, having been otherwise preoccupied by his unauthorized installment sale scheme; and second, those equivalent to the value of private
respondent's property and supplies which petitioner used in conducting his "business ". Maniks

Second, and more importantly, to allow respondent court to proceed with the instant action for damages would be to open anew the factual issue of whether petitioner's
installment sale scheme resulted in business losses and the dissipation of private respondent's property. This issue has been duly raised and ruled upon in the illegal
dismissal case, where private respondent brought up as a defense the same allegations now embodied in his complaint, and presented evidence in support thereof. The
Labor Arbiter, however, found to the contrary ---that no business losses may be attributed to petitioner as in fact, it was by reason of petitioner's installment plan that
the sales of the Iligan branch of private respondent (where petitioner was employed) reached its highest record level to the extent that petitioner was awarded the 1989
Field Sales Achievement Award in recognition of his exceptional sales performance, and that the installment scheme was in fact with the knowledge of the management
of the Iligan branch of private respondent.[12] In other words, the issue of actual damages has been settled in the labor case, which is now final and executory. Manikan

Still on the prospect of re-opening factual issues already resolved by the labor court, it may help to refer to that period from 1979 to 1980 when jurisdiction over
employment-predicated actions for damages vacillated from labor tribunals to regular courts, and back to labor tribunals. In Ebon vs. de Guzman, 113 SCRA 52,[13] this
Court discussed:

The lawmakers in divesting the Labor Arbiters and the NLRC of jurisdiction to award moral and other forms of damages in labor cases could have assumed that the
Labor Arbiters' position-paper procedure of ascertaining the facts in dispute might not be an adequate tool for arriving at a just and accurate assessment of damages, as
distinguished from backwages and separation pay, and that the trial procedure in the Court of First Instance would be a more effective means of determining such
damages. xxx

Evidently, the lawmaking authority had second thoughts about depriving the Labor Arbiters and the NLRC of the jurisdiction to award damages in labor cases because
that setup would mean duplicity of suits, splitting the cause of action and possible conflicting findings and conclusions by two tribunals on one and the same claim.

So, on May 1, 1980, Presidential Decree No. 1691 (which substantially reenacted Article 217 in its original form) nullified Presidential Decree No. 1367 and restored to
the Labor Arbiter and the NLRC their jurisdiction to award all kinds of damages in cases arising from employer-employee relations. xxx (Underscoring supplied)

Clearly, respondent court's taking jurisdiction over the instant case would bring about precisely the harm that the lawmakers sought to avoid in amending the Labor
Code to restore jurisdiction over claims for damages of this nature to the NLRC. Oldmiso

This is, of course, to distinguish from cases of actions for damages where the employer-employee relationship is merely incidental and the cause of action proceeds from
a different source of obligation. Thus, the jurisdiction of regular courts was upheld where the damages, claimed for were based on tort [14], malicious prosecution[15], or
breach of contract, as when the claimant seeks to recover a debt from a former employee [16] or seeks liquidated damages in enforcement of a prior employment
contract. [17]
 140

Neither can we uphold the reasoning of respondent court that because the resolution of the issues presented by the complaint does not entail application of the Labor
Code or other labor laws, the dispute is intrinsically civil. Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive
jurisdiction over claims for damages arising from employer-employee relations ---in other words, the Labor Arbiter has jurisdiction to award not only the reliefs provided
by labor laws, but also damages governed by the Civil Code. [18]

Thus, it is obvious that private respondent's remedy is not in the filing of this separate action for damages, but in properly perfecting an appeal from the Labor Arbiter's
decision. Having lost the right to appeal on grounds of untimeliness, the decision in the labor case stands as a final judgment on the merits, and the instant action for
damages cannot take the place of such lost appeal.

Respondent court clearly having no jurisdiction over private respondent's complaint for damages, we will no longer pass upon petitioner's other assignments of
error. Ncm

WHEREFORE, the Petition is GRANTED, and the complaint in Civil Case No. 95-554 before Branch 39 of the Regional Trial Court of Misamis Oriental is hereby
DISMISSED. No pronouncement as to costs. Ncmmis

SO ORDERED.
141
 142

MA. ISABEL T. SANTOS, represented by ANTONIO P. SANTOS, G.R. No. 166377

Petitioner,

Present:

YNARES-SANTIAGO, J.,

- versus - Chairperson,

AUSTRIA-MARTINEZ,

CHICO-NAZARIO,

NACHURA, and

SERVIER PHILIPPINES, INC. and NATIONAL LABOR RELATIONS REYES, JJ.

COMMISSION,

Respondents.
Promulgated:

November 28, 2008

x------------------------------------------------------------------------------------x

DECISION
 143

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to set aside the Court of Appeals (CA) Decision, [1] dated August 12,
2004 and its Resolution[2] dated December 17, 2004, in CA-G.R. SP No. 75706.

The facts, as culled from the records, are as follows:

Petitioner Ma. Isabel T. Santos was the Human Resource Manager of respondent Servier Philippines, Inc. since 1991 until her termination from service in 1999. On
March 26 and 27, 1998, petitioner attended a meeting [3] of all human resource managers of respondent, held in Paris, France. Since the last day of the meeting
coincided with the graduation of petitioners only child, she arranged for a European vacation with her family right after the meeting. She, thus, filed a vacation leave
effective March 30, 1998.[4]

On March 29, 1998, petitioner, together with her husband Antonio P. Santos, her son, and some friends, had dinner at Leon des Bruxelles, a Paris restaurant known for
mussels[5] as their specialty. While having dinner, petitioner complained of stomach pain, then vomited. Eventually, she was brought to the hospital known as Centre
Chirurgical de LQuest where she fell into coma for 21 days; and later stayed at the Intensive Care Unit (ICU) for 52 days. The hospital found that the probable cause of
her sudden attack was alimentary allergy, as she had recently ingested a meal of mussels which resulted in a concomitant uticarial eruption. [6]

During the time that petitioner was confined at the hospital, her husband and son stayed with her in Paris. Petitioners hospitalization expenses, as well as those of her
husband and son, were paid by respondent.[7]

In June 1998, petitioners attending physicians gave a prognosis of the formers condition; and, with the consent of her family, allowed her to go back to
the Philippines for the continuation of her medical treatment. She was then confined at the St. Lukes Medical Center for rehabilitation.[8] During the period of petitioners
rehabilitation, respondent continued to pay the formers salaries; and to assist her in paying her hospital bills.
 144

In a letter dated May 14, 1999, respondent informed the petitioner that the former had requested the latters physician to conduct a thorough physical and psychological
evaluation of her condition, to determine her fitness to resume her work at the company. Petitioners physician concluded that the former had not fully recovered
mentally and physically. Hence, respondent was constrained to terminate petitioners services effective August 31, 1999.[9]

As a consequence of petitioners termination from employment, respondent offered a retirement package which consists of:

Retirement Plan Benefits: P 1,063,841.76

Insurance Pension at P20,000.00/month

for 60 months from company-sponsored

group life policy: P 1,200,000.00

Educational assistance: P 465,000.00

Medical and Health Care: P 200,000.00[10]

Of the promised retirement benefits amounting to P1,063,841.76, only P701,454.89 was released to petitioners husband, the balance [11] thereof was withheld allegedly
for taxation purposes. Respondent also failed to give the other benefits listed above. [12]

Petitioner, represented by her husband, instituted the instant case for unpaid salaries; unpaid separation pay; unpaid balance of retirement package plus interest;
insurance pension for permanent disability; educational assistance for her son; medical assistance; reimbursement of medical and rehabilitation expenses; moral,
exemplary, and actual damages, plus attorneys fees. The case was docketed as NLRC-NCR (SOUTH) Case No. 30-06-02520-01.

On September 28, 2001, Labor Arbiter Aliman D. Mangandog rendered a Decision [13] dismissing petitioners complaint. The Labor Arbiter stressed that respondent had
been generous in giving financial assistance to the petitioner. [14] He likewise noted that there was a retirement plan for the benefit of the employees. In denying
petitioners claim for separation pay, the Labor Arbiter ratiocinated that the same had already been integrated in the retirement plan established by respondent. Thus,
petitioner could no longer collect separation pay over and above her retirement benefits. [15] The arbiter refused to rule on the legality of the deductions made by
respondent from petitioners total retirement benefits for taxation purposes, as the issue was beyond the jurisdiction of the NLRC. [16] On the matter of educational
assistance, the Labor Arbiter found that the same may be granted only upon the submission of a certificate of enrollment. [17] Lastly, as to petitioners claim for damages
and attorneys fees, the Labor Arbiter denied the same as the formers dismissal was not tainted with bad faith. [18]
 145

On appeal to the National Labor Relations Commission (NLRC), the tribunal set aside the Labor Arbiters decision, ruling that:

WHEREFORE, premises considered, Complainants appeal is partly GRANTED. The Labor Arbiters decision in the above-entitled case is hereby SET ASIDE. Respondent is
ordered to pay Complainants portion of her separation pay covering the following: 1) P200,000.00 for medical and health care from September 1999 to April 2001; and
2) P35,000.00 per year for her sons high school (second year to fourth year) education and P45,000.00 per semester for the latters four-year college education, upon
presentation of any applicable certificate of enrollment.

SO ORDERED.[19]

The NLRC emphasized that petitioner was not retired from the service pursuant to law, collective bargaining agreement (CBA) or other employment contract; rather, she
was dismissed from employment due to a disease/disability under Article 284 [20] of the Labor Code.[21] In view of her non-entitlement to retirement benefits, the amounts
received by petitioner should then be treated as her separation pay. [22] Though not legally obliged to give the other benefits, i.e., educational assistance, respondent
volunteered to grant them, for humanitarian consideration. The NLRC therefore ordered the payment of the other benefits promised by the respondent. [23] Lastly, it
sustained the denial of petitioners claim for damages for the latters failure to substantiate the same. [24]

Unsatisfied, petitioner elevated the matter to the Court of Appeals which affirmed the NLRC decision.[25]

Hence, the instant petition.

At the outset, the Court notes that initially, petitioner raised the issue of whether she was entitled to separation pay, retirement benefits, and damages. In support of
her claim for separation pay, she cited Article 284 of the Labor Code, as amended. However, in coming to this Court via a petition for review on certiorari, she
abandoned her original position and alleged that she was, in fact, not dismissed from employment based on the above provision. She argued that her situation could not
be characterized as a disease; rather, she became disabled. In short, in her petition before us, she now changes her theory by saying that she is not entitled to
separation pay but to retirement pay pursuant to Section 4, [26]Article V of the Retirement Plan, on disability retirement. She, thus, prayed for the full payment of her
retirement benefits by giving back to her the amount deducted for taxation purposes.
 146

In our Resolution[27] dated November 23, 2005 requiring the parties to submit their respective memoranda, we specifically stated:

No new issues may be raised by a party in the Memorandum and the issues raised in the pleadings but not included in the Memorandum shall be deemed waived or
abandoned.

Being summations of the parties previous pleadings, the Court may consider the Memoranda alone in deciding or resolving this petition.

Pursuant to the above resolution, any argument raised in her petition, but not raised in her Memorandum, [28] is deemed abandoned.[29] Hence, the only issue proper for
determination is the propriety of deducting P362,386.87 from her total benefits, for taxation purposes. Nevertheless, in order to resolve the legality of the deduction, it
is imperative that we settle, once and for all, the ground relied upon by respondent in terminating the services of the petitioner, as well as the nature of the benefits
given to her after such termination. Only then can we decide whether the amount deducted by the respondent should be paid to the petitioner.

Respondent dismissed the petitioner from her employment based on Article 284 of the Labor Code, as amended, which reads:

Art. 284. DISEASE AS GROUND FOR TERMINATION

An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or
is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-
half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.

As she was dismissed on the abovementioned ground, the law gives the petitioner the right to demand separation pay. However, respondent established a retirement
plan in favor of all its employees which specifically provides for disability retirement, to wit:
 147

Sec. 4. DISABILITY RETIREMENT

In the event that a Member is retired by the Company due to permanent total incapacity or disability, as determined by a competent physician appointed by the
Company, his disability retirement benefit shall be the Full Members Account Balance determined as of the last valuation date. x x x.[30]

On the basis of the above-mentioned retirement plan, respondent offered the petitioner a retirement package which consists of retirement plan benefits, insurance
pension, and educational assistance. [31] The amount of P1,063,841.76 represented the disability retirement benefit provided for in the plan; while the insurance pension
was to be paid by their insurer; and the educational assistance was voluntarily undertaken by the respondent as a gesture of compassion to the petitioner. [32]

We have declared in Aquino v. National Labor Relations Commission [33] that the receipt of retirement benefits does not bar the retiree from receiving separation
pay. Separation pay is a statutory right designed to provide the employee with the wherewithal during the period that he/she is looking for another employment. On the
other hand, retirement benefits are intended to help the employee enjoy the remaining years of his life, lessening the burden of worrying about his financial support,
and are a form of reward for his loyalty and service to the employer. [34] Hence, they are not mutually exclusive. However, this is only true if there is no specific
prohibition against the payment of both benefits in the retirement plan and/or in the Collective Bargaining Agreement (CBA). [35]

In the instant case, the Retirement Plan bars the petitioner from claiming additional benefits on top of that provided for in the Plan. Section 2, Article XII of the
Retirement Plan provides:

Section 2. NO DUPLICATION OF BENEFITS

No other benefits other than those provided under this Plan shall be payable from the Fund. Further, in the event the Member receives benefits under the Plan, he shall
be precluded from receiving any other benefits under the Labor Code or under any present or future legislation under any other contract or Collective Bargaining
Agreement with the Company.[36]
 148

There being such a provision, as held in Cruz v. Philippine Global Communications, Inc., [37] petitioner is entitled only to either the separation pay under the law or
retirement benefits under the Plan, and not both.

Clearly, the benefits received by petitioner from the respondent represent her retirement benefits under the Plan. The question that now confronts us is whether these
benefits are taxable. If so, respondent correctly made the deduction for tax purposes. Otherwise, the deduction was illegal and respondent is still liable for the
completion of petitioners retirement benefits.

Respondent argues that the legality of the deduction from petitioners total benefits cannot be taken cognizance of by this Court since the issue was not raised during the
early stage of the proceedings.[38]

We do not agree.

Records reveal that as early as in petitioners position paper filed with the Labor Arbiter, she already raised the legality of said deduction, albeit designated as unpaid
balance of the retirement package. Petitioner specifically averred that P362,386.87 was not given to her by respondent as it was allegedly a part of the formers taxable
income.[39] This is likewise evident in the Labor Arbiter and the NLRCs decisions although they ruled that the issue was beyond the tribunals jurisdiction. They even
suggested that petitioners claim for illegal deduction could be addressed by filing a tax refund with the Bureau of Internal Revenue. [40]

Contrary to the Labor Arbiter and NLRCs conclusions, petitioners claim for illegal deduction falls within the tribunals jurisdiction. It is noteworthy that petitioner
demanded the completion of her retirement benefits, including the amount withheld by respondent for taxation purposes. The issue of deduction for tax purposes is
intertwined with the main issue of whether or not petitioners benefits have been fully given her. It is, therefore, a money claim arising from the employer-employee
relationship, which clearly falls within the jurisdiction [41] of the Labor Arbiter and the NLRC.

This is not the first time that the labor tribunal is faced with the issue of illegal deduction. In Intercontinental Broadcasting Corporation (IBC) v. Amarilla, [42] IBC withheld
the salary differentials due its retired employees to offset the tax due on their retirement benefits. The retirees thus lodged a complaint with the NLRC questioning said
withholding. They averred that their retirement benefits were exempt from income tax; and IBC had no authority to withhold their salary differentials. The Labor Arbiter
took cognizance of the case, and this Court made a definitive ruling that retirement benefits are exempt from income tax, provided that certain requirements are met.

Nothing, therefore, prevents us from deciding this main issue of whether the retirement benefits are taxable.
 149

We answer in the affirmative.

Section 32 (B) (6) (a) of the New National Internal Revenue Code (NIRC) provides for the exclusion of retirement benefits from gross income, thus:

(6) Retirement Benefits, Pensions, Gratuities, etc.

a) Retirement benefits received under Republic Act 7641 and those received by officials and employees of private firms, whether individual or corporate, in accordance
with a reasonable private benefit plan maintained by the employer: Provided, That the retiring official or employee has been in the service of the same employer for at
least ten (10) years and is not less than fifty (50) years of age at the time of his retirement: Provided further, That the benefits granted under this subparagraph shall
be availed of by an official or employee only once. x x x.

Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to prove the concurrence of the following elements: (1) a reasonable
private benefit plan is maintained by the employer; (2) the retiring official or employee has been in the service of the same employer for at least ten (10) years; (3) the
retiring official or employee is not less than fifty (50) years of age at the time of his retirement; and (4) the benefit had been availed of only once. [43]

As discussed above, petitioner was qualified for disability retirement. At the time of such retirement, petitioner was only 41 years of age; and had been in the service for
more or less eight (8) years. As such, the above provision is not applicable for failure to comply with the age and length of service requirements. Therefore, respondent
cannot be faulted for deducting from petitioners total retirement benefits the amount of P362,386.87, for taxation purposes.

WHEREFORE, the petition is DENIED for lack of merit. The Court of Appeals Decision dated August 12, 2004 and its Resolution dated December 17, 2004, in CA-G.R. SP
No. 75706 are AFFIRMED.

SO ORDERED.
150
 151

G.R. No. 89621 September 24, 1991

PEPSI COLA DISTRIBUTORS OF THE PHILIPPINES, INC., represented by its Plant General Manager ANTHONY B. SIAN, ELEAZAR LIMBAB, IRENEO BALTAZAR & JORGE
HERAYA, petitioners,
vs.
HON. LOLITA O. GAL-LANG, SALVADOR NOVILLA, ALEJANDRO OLIVA, WILFREDO CABAÑAS & FULGENCIO LEGO, respondents.

Aurelio D. Menzon for petitioners.

Mario P. Nicolasora co-counsel for petitioners.
Papiano L. Santo for private respondents.

CRUZ, J.:

The question now before us has been categorically resolved in earlier decisions of the Court that a little more diligent research would have disclosed to the petitioners.
On the basis of those cases and the facts now before us, the petition must be denied.

The private respondents were employees of the petitioner who were suspected of complicity in the irregular disposition of empty Pepsi Cola bottles. On July 16, 1987,
the petitioners filed a criminal complaint for theft against them but this was later withdrawn and substituted with a criminal complaint for falsification of private
documents. On November 26, 1987, after a preliminary investigation conducted by the Municipal Trial Court of Tanauan, Leyte, the complaint was dismissed. The
dismissal was affirmed on April 8, 1988, by the Office of the Provincial Prosecutor.

Meantime, allegedly after an administrative investigation, the private respondents were dismissed by the petitioner company on November 23, 1987. As a result, they
lodged a complaint for illegal dismissal with the Regional Arbitration Branch of the NLRC in Tacloban City on December 1, 1987, and decisions manded reinstatement
 152

with damages. In addition, they instituted in the Regional Trial Court of Leyte, on April 4, 1988, a separate civil complaint against the petitioners for damages arising
from what they claimed to be their malicious prosecution.

The petitioners moved to dismiss the civil complaint on the ground that the trial court had no jurisdiction over the case because it involved employee-employer relations
that were exclusively cognizable by the labor arbiter. The motion was granted on February 6, 1989. On July 6, 1989, however, the respondent judge, acting on the
motion for reconsideration, reinstated the complaint, saying it was "distinct from the labor case for damages now pending before the labor courts." The petitioners then
came to this Court for relief.

The petitioners invoke Article 217 of the Labor Code and a number of decisions of this Court to support their position that the private respondents civil complaint for
damages falls under the jurisdiction of the labor arbiter. They particularly cite the case of Getz Corporation v. Court of Appeals,1 where it was held that a court of first
instance had no jurisdiction over the complaint filed by a dismissed employee "for unpaid salary and other employment benefits, termination pay and moral and
exemplary damages."

We hold at the outset that the case is not in point because what was involved there was a claim arising from the alleged illegal dismissal of an employee, who chose to
complain to the regular court and not to the labor arbiter. Obviously, the claim arose from employee-employer relations and so came under Article 217 of the Labor
Code which then provided as follows:

ART. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide within thirty
(30) working days after submission of the case by the parties for decision, the following cases involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Those that workers may file involving wages, hours of work and other terms and conditions of employment;

3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime compensation, separation pay and other benefits provided
by law or appropriate agreement, except claims for employees' compensation, social security, medicare and maternity benefits;

4. Cases involving household services; and

5. Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes and lockouts.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by labor Arbiters. 2

It must be stressed that not every controversy involving workers and their employers can be resolved only by the labor arbiters. This will be so only if there is a
"reasonable causal connection" between the claim asserted and employee-employer relations to put the case under the provisions of Article 217. Absent such a link, the
complaint will be cognizable by the regular courts of justice in the exercise of their civil and criminal jurisdiction.

In Medina v. Castro-Bartolome,3 two employees filed in the Court of First Instance of Rizal a civil complaint for damages against their employer for slanderous remarks
made against them by the company president. On the order dismissing the case because it came under the jurisdiction of the labor arbiters, Justice Vicente Abad Santos
said for the Court:
 153

It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for damages for tortious acts allegedly committed
by the defendants. Such being the case, the governing statute is the Civil Code and not the Labor Code. It results that the orders under review are based on a wrong
premise.

In Singapore Airlines Ltd. v. Paño,4 where the plaintiff was suing for damages for alleged violation by the defendant of an "Agreement for a Course of Conversion
Training at the Expense of Singapore Airlines Limited," the jurisdiction of the Court of First Instance of Rizal over the case was questioned. The Court, citing the earlier
case of Quisaba v. Sta. Ines Melale Veneer and Plywood, Inc.,5 declared through Justice Herrera:

Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary relief sought is for liquidated damages for
breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as
payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil
dispute.

In Molave Sales, Inc. v. Laron,6 the same Justice held for the Court that the claim of the plaintiff against its sales manager for payment of certain accounts pertaining to
his purchase of vehicles and automotive parts, repairs of such vehicles, and cash advances from the corporation was properly cognizable by the Regional Trial Court of
Dagupan City and not the labor arbiter, because "although a controversy is between an employer and an employee, the Labor Arbiters have nojurisdiction if the Labor
Code is not involved."

The latest ruling on this issue is found in San Miguel Corporation v. NLRC,7 where the above cases are cited and the changes in Article 217 are recounted. That case
involved a claim of an employee for a P60,000.00 prize for a proposal made by him which he alleged had been accepted and implemented by the defendant corporation
in the processing of one of its beer products. The claim was filed with the labor arbiter, who dismissed it for lack of jurisdiction but was reversed by the NLRC on appeal.
In setting aside the appealed decision and dismissing the complaint, the Court observed through Justice Feliciano:

It is the character of the principal relief sought that appears essential, in this connection. Where such principal relief is to be granted under labor legislation or a
collective bargaining agreement, the case should fall within the jurisdiction of the Labor Arbiter and the NLRC, even though a claim for damages might be asserted as an
incident to such claim.

xxx xxx xxx

Where the claim to the principal relief sought is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement
but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such situations,
resolution of the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of employment, but rather in the
application of the general civil law. Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the
rationale for granting jurisdiction over such claims to these agencies disappears.

xxx xxx xxx

While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe of money claims that might be asserted by
workers against their employers has been absorbed into the original and exclusive jurisdiction of Labor Arbiters.

xxx xxx xxx

 154

For it cannot be presumed that money claims of workers which do not arise out of or in connection with their employer-employee relationship, and which would
therefore fall within the general jurisdiction of the regular courts of justice, were intended by the legislative authority to be taken away from the jurisdiction of the courts
and lodged with Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the 'money claims of workers" referred to in paragraph 3 of Article
217 embraces money claims which arise out of or in connection with the employer- employee relationship, or some aspect or incident of such relationship. Put a little
differently, that money claims of workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have some
reasonable causal connection with the employer-employee relationship (Ibid.).

The case now before the Court involves a complaint for damages for malicious prosecution which was filed with the Regional Trial Court of Leyte by the employees of the
defendant company. It does not appear that there is a "reasonable causal connection" between the complaint and the relations of the parties as employer and
employees. The complaint did not arise from such relations and in fact could have arisen independently of an employment relationship between the parties. No such
relationship or any unfair labor practice is asserted. What the employees are alleging is that the petitioners acted with bad faith when they filed the criminal complaint
which the Municipal Trial Court said was intended "to harass the poor employees" and the dismissal of which was affirmed by the Provincial Prosecutor "for lack of
evidence to establish even a slightest probability that all the respondents herein have committed the crime imputed against them." This is a matter which the labor
arbiter has no competence to resolve as the applicable law is not the Labor Code but the Revised Penal Code.

"Talents differ, all is well and wisely put," so observed the philosopher-poet. 8 So it must be in the case we here decide.

WHEREFORE, the order dated July 6, 1989, is AFFIRMED and the petition DENIED, with costs against the petitioner.

SO ORDERED.

G.R. No. 182295, June 26, 2013

7K CORPORATION, Petitioner, v. EDDIE ALBARICO, Respondent.

DECISION

SERENO, C.J.:

This is a Petition for Review on Certiorari filed under Rule 45 of the Revised Rules of Court, asking the Court to determine whether a voluntary arbitrator in a labor
dispute exceeded his jurisdiction in deciding issues not specified in the submission agreement of the parties. It assails the Decision 1 dated 18 September 2007 and the
Resolution2 dated 17 March 2008 of the Court of Appeals (CA).3

FACTS

When he was dismissed on 5 April 1993, respondent Eddie Albarico (Albarico) was a regular employee of petitioner 7K Corporation, a company selling water purifiers.
He started working for the company in 1990 as a salesman. 4 Because of his good performance, his employment was regularized. He was also promoted several times:
from salesman, he was promoted to senior sales representative and then to acting team field supervisor. In 1992, he was awarded the President’s Trophy for being one
of the company’s top water purifier specialist distributors. In April of 1993, the chief operating officer of petitioner 7K Corporation terminated Albarico’s employment
allegedly for his poor sales performance. 5Respondent had to stop reporting for work, and he subsequently submitted his money claims against petitioner for arbitration
 155

before the National Conciliation and Mediation Board (NCMB). The issue for voluntary arbitration before the NCMB, according to the parties’ Submission Agreement
dated 19 April 1993, was whether respondent Albarico was entitled to the payment of separation pay and the sales commission reserved for him by the corporation. 6

While the NCMB arbitration case was pending, respondent Albarico filed a Complaint against petitioner corporation with the Arbitration Branch of the National Labor
Relations Commission (NLRC) for illegal dismissal with money claims for overtime pay, holiday compensation, commission, and food and travelling allowances. 7 The
Complaint was decided by the labor arbiter in favor of respondent Albarico, who was awarded separation pay in lieu of reinstatement, backwages and attorney’s fees. 8

On appeal by petitioner, the labor arbiter’s Decision was vacated by the NLRC for forum shopping on the part of respondent Albarico, because the NCMB arbitration case
was still pending.9 The NLRC Decision, which explicitly stated that the dismissal was without prejudice to the pending NCMB arbitration case, 10became final after no
appeal was taken.

On 17 September 1997, petitioner corporation filed its Position Paper in the NCMB arbitration case. 11 It denied that respondent was terminated from work, much less
illegally dismissed. The corporation claimed that he had voluntarily stopped reporting for work after receiving a verbal reprimand for his sales performance; hence, it
was he who was guilty of abandonment of employment. Respondent made an oral manifestation that he was adopting the position paper he submitted to the labor
arbiter, a position paper in which the former claimed that he had been illegally dismissed. 12

On 12 January 2005, almost 12 years after the filing of the NCMB case, both parties appeared in a hearing before the NCMB. 13 Respondent manifested that he was
willing to settle the case amicably with petitioner based on the decision of the labor arbiter ordering the payment of separation pay in lieu of reinstatement, backwages
and attorney’s fees. On its part, petitioner made a counter-manifestation that it was likewise amenable to settling the dispute. However, it was willing to pay only the
separation pay and the sales commission according to the Submission Agreement dated 19 April 1993. 14

The factual findings of the voluntary arbitrator, as well as of the CA, are not clear on what happened afterwards. Even the records are bereft of sufficient information.

On 18 November 2005, the NCMB voluntary arbitrator rendered a Decision finding petitioner corporation liable for illegal dismissal. 15 The termination of respondent
Albarico, by reason of alleged poor performance, was found invalid. 16 The arbitrator explained that the promotions, increases in salary, and awards received by
respondent belied the claim that the latter was performing poorly. 17 It was also found that Albarico could not have abandoned his job, as the abandonment should have
been clearly shown. Mere absence was not sufficient, according to the arbitrator, but must have been accompanied by overt acts pointing to the fact that the employee
did not want to work anymore. It was noted that, in the present case, the immediate filing of a complaint for illegal dismissal against the employer, with a prayer for
reinstatement, showed that the employee was not abandoning his work. The voluntary arbitrator also found that Albarico was dismissed from his work without due
process.

However, it was found that reinstatement was no longer possible because of the strained relationship of the parties. 18 Thus, in lieu of reinstatement, the voluntary
arbitrator ordered the corporation to pay separation pay for two years at P4,456 for each year, or a total amount of P8,912.

Additionally, in view of the finding that Albarico had been illegally dismissed, the voluntary arbitrator also ruled that the former was entitled to backwages in the amount
of P90,804.19 Finally, the arbitrator awarded attorney’s fees in respondent’s favor, because he had been compelled to file an action for illegal dismissal. 20

Petitioner corporation subsequently appealed to the CA, imputing to the voluntary arbitrator grave abuse of discretion amounting to lack or excess of jurisdiction for
awarding backwages and attorney’s fees to respondent Albarico based on the former’s finding of illegal dismissal. 21 The arbitrator contended that the issue of the legality
of dismissal was not explicitly included in the Submission Agreement dated 19 April 1993 filed for voluntary arbitration and resolution. It prayed that the said awards be
set aside, and that only separation pay of P8,912.00 and sales commission of P4,787.60 be awarded.
 156

The CA affirmed the Decision of the voluntary arbitrator, but eliminated the award of attorney’s fees for having been made without factual, legal or equitable
justification.22 Petitioner’s Motion for Partial Reconsideration was denied as well. 23

Hence, this Petition.

ISSUE

The issue before the Court is whether the CA committed reversible error in finding that the voluntary arbitrator properly assumed jurisdiction to decide the issue of the
legality of the dismissal of respondent as well as the latter’s entitlement to backwages, even if neither the legality nor the entitlement was expressedly claimed in the
Submission Agreement of the parties.

The Petition is denied for being devoid of merit.

DISCUSSION

Preliminarily, we address petitioner’s claim that under Article 217 of the Labor Code, original and exclusive jurisdiction over termination disputes, such as the present
case, is lodged only with the labor arbiter of the NLRC. 24

Petitioner overlooks the proviso in the said article, thus:cralavvonlinelawlibrary

Art. 217. Jurisdiction of the Labor Arbiters and the Commission.

a. Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days
after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:cralavvonlinelawlibrary

x x x x

2. Termination disputes;

x x x x

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including
those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for
reinstatement. (Emphases supplied)

Thus, although the general rule under the Labor Code gives the labor arbiter exclusive and original jurisdiction over termination disputes, it also recognizes exceptions.
One of the exceptions is provided in Article 262 of the Labor Code. In San Jose v. NLRC,25 we said:cralavvonlinelawlibrary
 157

The phrase “Except as otherwise provided under this Code” refers to the following exceptions:cralavvonlinelawlibrary

A. Art. 217. Jurisdiction of Labor Arbiters . . .

x x x x

(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the interpretation or enforcement of company
procedure/policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitrator as may be provided in said
agreement.

B. Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide
all other labor disputes including unfair labor practices and bargaining deadlocks. (Emphasis supplied)

We also said in the same case that “[t]he labor disputes referred to in the same Article 262 [of the Labor Code] can include all those disputes mentioned in Article 217
over which the Labor Arbiter has original and exclusive jurisdiction.” 26

From the above discussion, it is clear that voluntary arbitrators may, by agreement of the parties, assume jurisdiction over a termination dispute such as the present
case, contrary to the assertion of petitioner that they may not.

We now resolve the main issue. Petitioner argues that, assuming that the voluntary arbitrator has jurisdiction over the present termination dispute, the latter should
have limited his decision to the issue contained in the Submission Agreement of the parties – the issue of whether respondent Albarico was entitled to separation pay
and to the sales commission the latter earned before being terminated. 27Petitioner asserts that under Article 262 of the Labor Code, the jurisdiction of a voluntary
arbitrator is strictly limited to the issues that the parties agree to submit. Thus, it contends that the voluntary arbitrator exceeded his jurisdiction when he resolved the
issues of the legality of the dismissal of respondent and the latter’s entitlement to backwages on the basis of a finding of illegal dismissal.

According to petitioner, the CA wrongly concluded that the issue of respondent’s entitlement to separation pay was necessarily based on his allegation of illegal
dismissal, thereby making the issue of the legality of his dismissal implicitly submitted to the voluntary arbitrator for resolution. 28 Petitioner argues that this was an
erroneous conclusion, because separation pay may in fact be awarded even in circumstances in which there is no illegal dismissal.

We rule that although petitioner correctly contends that separation pay may in fact be awarded for reasons other than illegal dismissal, the circumstances of the instant
case lead to no other conclusion than that the claim of respondent Albarico for separation pay was premised on his allegation of illegal dismissal. Thus, the voluntary
arbitrator properly assumed jurisdiction over the issue of the legality of his dismissal.

True, under the Labor Code, separation pay may be given not only when there is illegal dismissal. In fact, it is also given to employees who are terminated for
authorized causes, such as redundancy, retrenchment or installation of labor-saving devices under Article 283 29 of the Labor Code. Additionally, jurisprudence holds that
separation pay may also be awarded for considerations of social justice, even if an employee has been terminated for a just cause other than serious misconduct or an
act reflecting on moral character.30 The Court has also ruled that separation pay may be awarded if it has become an established practice of the company to pay the said
benefit to voluntarily resigning employees 31 or to those validly dismissed for non-membership in a union as required in a closed-shop agreement. 32

The above circumstances, however, do not obtain in the present case. There is no claim that the issue of entitlement to separation pay is being resolved in the context
of any authorized cause of termination undertaken by petitioner corporation. Neither is there any allegation that a consideration of social justice is being resolved here.
In fact, even in instances in which separation pay is awarded in consideration of social justice, the issue of the validity of the dismissal still needs to be resolved first.
 158

Only when there is already a finding of a valid dismissal for a just cause does the court then award separation pay for reason of social justice. The other circumstances
when separation pay may be awarded are not present in this case.

The foregoing findings indisputably prove that the issue of separation pay emanates solely from respondent’s allegation of illegal dismissal. In fact, petitioner itself
acknowledged the issue of illegal dismissal in its position paper submitted to the NCMB.

Moreover, we note that even the NLRC was of the understanding that the NCMB arbitration case sought to resolve the issue of the legality of the dismissal of the
respondent. In fact, the identity of the issue of the legality of his dismissal, which was previously submitted to the NCMB, and later submitted to the NLRC, was the
basis of the latter’s finding of forum shopping and the consequent dismissal of the case before it. In fact, petitioner also implicitly acknowledged this when it filed before
the NLRC its Motion to Dismiss respondent’s Complaint on the ground of forum shopping. Thus, it is now estopped from claiming that the issue before the NCMB does
not include the issue of the legality of the dismissal of respondent. Besides, there has to be a reason for deciding the issue of respondent’s entitlement to separation
pay. To think otherwise would lead to absurdity, because the voluntary arbitrator would then be deciding that issue in a vacuum. The arbitrator would have no basis
whatsoever for saying that Albarico was entitled to separation pay or not if the issue of the legality of respondent’s dismissal was not resolve first.

Hence, the voluntary arbitrator correctly assumed that the core issue behind the issue of separation pay is the legality of the dismissal of respondent. Moreover, we
have ruled in Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin 33 that a voluntary arbitrator has plenary jurisdiction and authority to interpret an agreement to
arbitrate and to determine the scope of his own authority when the said agreement is vague — subject only, in a proper case, to the certiorari jurisdiction of this Court.

Having established that the issue of the legality of dismissal of Albarico was in fact necessarily – albeit not explicitly – included in the Submission Agreement signed by
the parties, this Court rules that the voluntary arbitrator rightly assumed jurisdiction to decide the said issue.

Consequently, we also rule that the voluntary arbitrator may award backwages upon a finding of illegal dismissal, even though the issue of entitlement thereto is not
explicitly claimed in the Submission Agreement. Backwages, in general, are awarded on the ground of equity as a form of relief that restores the income lost by the
terminated employee by reason of his illegal dismissal. 34

In Sime Darby we ruled that although the specific issue presented by the parties to the voluntary arbitrator was only “the issue of performance bonus,” the latter had
the authority to determine not only the issue of whether or not a performance bonus was to be granted, but also the related question of the amount of the bonus, were
it to be granted. We explained that there was no indication at all that the parties to the arbitration agreement had regarded “the issue of performance bonus” as a two-
tiered issue, of which only one aspect was being submitted to arbitration. Thus, we held that the failure of the parties to limit the issues specifically to that which was
stated allowed the arbitrator to assume jurisdiction over the related issue.

Similarly, in the present case, there is no indication that the issue of illegal dismissal should be treated as a two-tiered issue whereupon entitlement to backwages must
be determined separately. Besides, “since arbitration is a final resort for the adjudication of disputes,” the voluntary arbitrator in the present case can assume that he
has the necessary power to make a final settlement. 35 Thus, we rule that the voluntary arbitrator correctly assumed jurisdiction over the issue of entitlement of
respondent Albarico to backwages on the basis of the former’s finding of illegal dismissal.

WHEREFORE, premises considered, the instant Petition is DENIED. The 18 September 2007 Decision and 17 March 2008 Resolution of the Court of Appeals in CA-G.R.
SP No. 92526, are hereby AFFIRMED.

SO ORDERED.
 159

G.R. No. 163768 March 27, 2007

JULIUS KAWACHI and GAYLE KAWACHI, Petitioners,

vs.
DOMINIE DEL QUERO and HON. JUDGE MANUEL R. TARO, Metropolitan Trial Court, Branch 43, Quezon City, Respondents.

DECISION

TINGA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure, assailing two resolutions of the Regional Trial Court (RTC), Branch 226, Quezon
City which affirmed the jurisdiction of the Metropolitan Trial Court (MeTC), Branch 42, Quezon City over private respondent’s action for damages against petitioner.

The following factual antecedents are matters of record.1ªvvphi1.nét

In an Affidavit-Complaint dated 14 August 2002, private respondent Dominie Del Quero charged A/J Raymundo Pawnshop, Inc., Virgilio Kawachi and petitioner Julius
Kawachi with illegal dismissal, non-execution of a contract of employment, violation of the minimum wage law, and non-payment of overtime pay. The complaint was
filed before the National Labor Relations Commission (NLRC). 1

The complaint essentially alleged that Virgilio Kawachi hired private respondent as a clerk of the pawnshop and that on certain occasions, she worked beyond the
regular working hours but was not paid the corresponding overtime pay.

The complaint also narrated an incident on 10 August 2002, wherein petitioner Julius Kawachi scolded private respondent in front of many people about the way she
treated the customers of the pawnshop and afterwards terminated private respondent’s employment without affording her due process.

On 7 November 2002, private respondent Dominie Del Quero filed an action for damages against petitioners Julius Kawachi and Gayle Kawachi before the MeTC of
Quezon City.2 The complaint, which was docketed as Civil Case No. 29522, alleged the following:

2. That the Plaintiff was employed as a clerk in the pawnshop business office of the Defendants otherwise known as the A/J RAYMUNDO PAWNSHOP, INC. located (sic)
and with principal office address at Unit A Virka Bldg. Edsa Corner Roosevelt[,] Quezon City, from May 27, 2002 to August 10, 2002;

3. That on August 10, 2002 at or about 11:30 AM, the Plaintiff was admonished by the Defendants Julius Kawachi and Gayle Kawachi who are acting as manager and
assistant manager respectively of the pawnshop business and alternately accused her of having committed an act which she had not done and was scolded in a loud
voice in front of many employees and customers in their offices;

4. That further for no apparent reason the Plaintiff was ordered to get out and leave the pawnshop office and was told to wait for her salary outside the office when she
tried to explain that she had no fault in the complaint of the customer, (sic) [H]owever[,] her explanation fell on deaf ears;

5. That she was instantly dismissed from her job without due process;

6. That the incident happened in front of many people which caused the Plaintiff to suffer serious embarrassment and shame so that she could not do anything but cry
because of the shameless way by which she was terminated from the service; x x x 3
 160

The complaint for damages specifically sought the recovery of moral damages, exemplary damages and attorney’s fees.

Petitioners moved for the dismissal of the complaint on the grounds of lack of jurisdiction and forum-shopping or splitting causes of action. At first, the MeTC granted
petitioners’ motion and ordered the dismissal of the complaint for lack of jurisdiction in an Order dated 2 January 2003. 4 Upon private respondent’s motion, the MeTC
reconsidered and set aside the order of dismissal in an Order dated 3 March 2003. 5 It ruled that no causal connection appeared between private respondent’s cause of
action and the employer-employee relations between the parties. The MeTC also rejected petitioners’ motion for reconsideration in an Order dated 22 April 2003. 6

Thus, petitioners elevated the MeTC’s aforesaid two orders to the RTC, Branch 226 of Quezon City, via a Petition for Certiorari (With Prayer for Temporary Restraining
Order and/or Preliminary Injunction). After due hearing, the RTC declined petitioners’ prayer for a temporary restraining order. For her part, private respondent filed a
Motion to Dismiss Petition.

On 20 October 2003, the RTC issued the assailed Resolution, upholding the jurisdiction of the MeTC over private respondent’s complaint for damages. 7

The RTC held that private respondent’s action for damages was based on the alleged tortious acts committed by her employers and did not seek any relief under the
Labor Code. The RTC cited the pronouncement in Medina, et al. v. Hon. Castro-Bartolome, etc., et al.8 where the Court held that the employee’s action for damages
based on the slanderous remarks uttered by the employer was within the regular courts’ jurisdiction since the complaint did not allege any unfair labor practice on the
part of the employer.

On 29 March 2004, the RTC denied petitioners’ motion for reconsideration. 9 Hence, the instant petition for review on certiorari, raising the sole issue of jurisdiction over
private respondent’s complaint for damages.

Petitioners argue that the NLRC has jurisdiction over the action for damages because the alleged injury is work-related. They also contend that private respondent
should not be allowed to split her causes of action by filing the action for damages separately from the labor case.

Private respondent maintains that there is no causal connection between her cause of action and the employer-employee relations of the parties.

The petition is meritorious.

The jurisdictional controversy of the sort presented in this case has long been settled by this Court.

Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damages arising from employer-
employee relations —in other words, the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws, but also damages governed by the Civil
Code.10

In the 1999 case of San Miguel Corporation v. Etcuban,11 the Court noted what was then the current trend, and still is, to refer worker-employer controversies to labor
courts, unless unmistakably provided by the law to be otherwise. Because of the trend, the Court noted further, jurisprudence has developed the "reasonable causal
connection rule." Under this rule, if there is a reasonable causal connection between the claim asserted and the employer-employee relations, then the case is within the
jurisdiction of our labor courts. In the absence of such nexus, it is the regular courts that have jurisdiction. 12

In San Miguel Corporation,13 the Court upheld the labor arbiter’s jurisdiction over the employees’ separate action for damages, which also sought the nullification of the
so-called "contract of termination" and noted that the allegations in the complaint were so carefully formulated as to avoid a semblance of employer-employee relations.
 161

In said case, the employees of San Miguel Corporation (SMC) availed of the "Retrenchment to Prevent Loss Program." After their inclusion in the retrenchment program,
the employees were given their termination letters and separation pay. In return, the employees executed "receipt and release" documents in favor of the company.
Subsequently, the employees learned that the company was never in financial distress and was engaged in hiring new employees. Thus, they filed a complaint

before the NLRC for the declaration of nullity of the retrenchment program and prayed for reinstatement, backwages and damages. After the labor arbiter dismissed the
complaint, the employees filed an action for damages before the RTC, alleging the deception employed upon them by SMC which led to their separation from the
company. They sought the declaration of nullity of their so-called collective "contract of termination" and the recovery of actual and compensatory damages, moral
damages, exemplary damages, and attorney’s fees.

The Court held that the employees’ claim for damages was intertwined with their having been separated from their employment without just cause and, consequently,
had a reasonable causal connection with their employer-employee relations with petitioner. The Court explained in this manner:

x x x First, their claim for damages is grounded on their having been deceived into serving their employment due to SMC’s concocted financial distress and fraudulent
retrenchment program—a clear case of illegal dismissal. Second, a comparison of respondents’ complaint for the declaration of nullity of the retrenchment program
before the labor arbiter and the complaint for the declaration of nullity of their "contract of termination" before the RTC reveals that the allegations and prayer of the
former are almost identical with those of the latter except that the prayer for reinstatement was no longer included and the claim for backwages and other benefits was
replaced with a claim for actual damages. These are telltale signs that respondents’ claim for damages is intertwined with their having been separated from their
employment without just cause and, consequently, has a reasonable causal connection with their employer-employee relations with SMC. Accordingly, it cannot be
denied that respondents’ claim falls under the jurisdiction of the labor arbiter as provided in paragraph 4 of Article 217. 14

The "reasonable causal connection rule" emerged in the 1987 case of Primero v. Intermediate Appellate Court,15where the Court recognized the jurisdiction of the labor
arbiters over claims for damages in connection with termination of employment, thus:

It is clear that the question of the legality of the act of dismissal is intimately related to the issue of the legality of the manner by which that act of dismissal was
performed. But while the Labor Code treats of the nature of, and the remedy available as

regards the first – the employee’s separation from employment – it does not at all deal with the second – the manner of that separation – which is governed exclusively
by the Civil Code. In addressing the first issue, the Labor Arbiter applies the Labor Code; in addressing the second, the Civil Code. And this appears to be the plain and
patent intendment of the law. For apart from the reliefs expressly set out in the Labor Code flowing from illegal dismissal from employment, no other damages may be
awarded to an illegally dismissed employee other than those specified by the Civil Code. Hence, the fact that the issue—of whether or not moral or other damages were
suffered by an employee and in the affirmative, the amount that should properly be awarded to him in the circumstances—is determined under the provisions of the
Civil Code and not the Labor Code, obviously was not meant to create a cause of action independent of that for illegal dismissal and thus place the matter beyond the
Labor Arbiter’s jurisdiction.16

In the instant case, the allegations in private respondent’s complaint for damages show that her injury was the offshoot of petitioners’ immediate harsh reaction as her
administrative superiors to the supposedly sloppy manner by which she had discharged her duties.

Petitioners’ reaction culminated in private respondent’s dismissal from work in the very same incident. The incident on 10 August 2002 alleged in the complaint for
damages was similarly narrated in private respondent’s Affidavit-Complaint supporting her action for illegal dismissal before the NLRC. Clearly, the alleged injury is
directly related to the employer-employee relations of the parties.
 162

Where the employer-employee relationship is merely incidental and the cause of action proceeds from a different source of obligation, the Court has not hesitated to
uphold the jurisdiction of the regular

courts. Where the damages claimed for were based on tort, malicious prosecution, or breach of contract, as when the claimant seeks to recover a debt from a former
employee or seeks liquidated damages in the enforcement of a prior employment contract, 17 the jurisdiction of regular courts was upheld. The scenario that obtains in
this case is obviously different. The allegations in private respondent’s complaint unmistakably relate to the manner of her alleged illegal dismissal.

For a single cause of action, the dismissed employee cannot be allowed to sue in two forums: one, before the labor arbiter for reinstatement and recovery of back wages
or for separation pay, upon the theory that the dismissal was illegal; and two, before a court of justice for recovery of moral and other damages, upon the theory that
the

manner of dismissal was unduly injurious or tortious. Suing in the manner described is known as "splitting a cause of action," a practice engendering multiplicity of
actions. It is considered procedurally unsound and obnoxious to the orderly administration of justice. 18

In the instant case, the NLRC has jurisdiction over private respondent’s complaint for illegal dismissal and damages arising therefrom. She cannot be allowed to file a
separate or independent civil action for damages where the alleged injury has a reasonable connection to her termination from employment. Consequently, the action
for damages filed before the MeTC must be dismissed.

WHEREFORE, the petition for review on certiorari is GRANTED. The two Resolutions dated 20 October 2003 and 29 March 2004 of the Regional Trial Court, Branch 226,
Quezon City are REVERSED and SET ASIDE. Costs against private respondent

[G.R. No. 200476 : April 18, 2012]

GILDA G. LUNZAGA v. ALBAR SHIPPING AND TRADING CORP. AND/OR AKIRA KATO, AND DARWIN, VENUS, ROMEO ULYSSES, MARIKIT ODESSA, ALL SURNAMED
LUNZAGA

Sirs/Mesdames:

Please take notice that the Court, Third Division, issued a Resolution dated 18 April 2012, which reads as follows:

G.R. No. 200476 (Gilda G. Lunzaga v. Albar Shipping and Trading Corp. and/or Akira Kato, and Darwin, Venus, Romeo Ulysses, Marikit Odessa, all surnamed Lunzaga)

RESOLUTION

Before the Court is a Petition for Review on Certiorari under Rule 45, assailing the July 21, 2011 Decision [1] and February 2, 2012 Resolution[2] of the Court of Appeals
(CA) in CA-G.R. SP No. 116476. The CA Decision upheld the Decision dated April 30, 2010 [3] of the National Labor Relations Commission (NLRC), which dismissed the
appeal of petitioner for having been filed out of time. The CA Decision, in effect, affirmed the Order dated August 28, 2009 [4] of the Labor Arbiter, which ruled that
jurisdiction over the instant controversy is with the regular courts and not with the NLRC, the dispositive portion of which reads:
 163

WHEREFORE PREMISES CONSIDERED the parties are directed to ventilate their conflict before the regular court to determine who the rightful heirs to receive the
disability benefits.

For the meantime instant case is temporarily dismissed.

SO ORDERED.

The facts of the case are as follows:

Romeo Lunzaga (Romeo) was a seaman working for respondent Albar Shipping and Trading Corp. (Albar). On June 11, 2008, Romeo was assigned as Chief Engineer on
board Albar's Philippine vessel MVLake Aru by virtue of a Philippine Overseas Employment Administration-approved employment contract. One month later, Romeo
suffered a heart attack and was repatriated to the Philippines only to die on September 5, 2008.

Sometime in early 2009, Gilda G. Lunzaga (Gilda), claiming to be the surviving spouse of Romeo, filed with the NLRC a complaint against Albar for payment of death
benefits, damages and attorney's fees. It should be noted that Gilda was the designated heir in Romeo's Overseas Filipino Worker Verification Sheet and PhilHealth
Information Sheet. Darwin Lunzaga, Venus Lunzaga, Romeo Ulysses Lunzaga, and Marikit Odessa Lunzaga (Lunzaga siblings), the children of Romeo from his first
marriage that was judicially declared null and void, opposed the complaint through a complaint-in-intervention. The Lunzaga siblings claimed that Gilda is not entitled to
the death benefits of Romeo, as she had a subsisting marriage when she married him. They claim that her marriage with Romeo was, therefore, bigamous. During the
mandatory conferences of the parties before the Labor Arbiter, Albar signified its willingness to pay Romeo's death benefits in the amount of USD 55,547.44. However,
Gilda and the Lunzaga siblings could not agree as to the sharing of the benefits.

Thus, on August 28, 2009, the Labor Arbiter issued an Order temporarily dismissing the complaint and directing the parties to file their case with the regular courts.
Gilda received a copy of the August 28, 2009 Order of the Labor Arbiter on September 28, 2009. Gilda's appeal to the NLRC was, however, filed only on October 9,
2009, one day past the 10-day period for filing an appeal from the decision of the Labor Arbiter. Thus, the NLRC rendered a Decision dated April 30, 2010, dismissing
the appeal for having been filed beyond the reglementary period.

On appeal, the CA rendered the July 21, 2011 Decision, ruling that the petition is devoid of merit. The CA ruled that despite the fact that the appeal to the NLRC was
filed only one day beyond the reglementary period, Gilda failed to present any reason for the liberal application of the rule on filing of appeals. The CA wrote, "Indeed,
the matter of the parties' entitlement is inherently intertwined with their status as legal heirs of Romeo Lunzaga. Clearly, this is a matter not within the competence of
the Labor Arbiter to decide."[5]

Gilda's motion for reconsideration of the Decision of the CA was denied in its February 2, 2012 Resolution. Hence, We have this petition.

We agree with the pronouncement of the Labor Arbiter and the CA that the issue of who is the proper beneficiary of Romeo is properly within the jurisdiction of the
regular courts. However, this is not the only issue in the instant petition.

A review of the records of the case reveals that the main issue in the complaint before the Labor Arbiter was whether the heirs of Romeo are entitled to receive his
death benefits from Albar. Clearly, the Labor Arbiter has jurisdiction over this issue and the case itself, involving as it does a claim arising from an employer-employee
relationship. And while the Labor Arbiter has no jurisdiction to determine who among the alleged heirs is entitled to receive Romeo's death benefits, it should have made
a ruling holding Albar liable for the claim.

In this light, substantial justice and fair play dictate that the Court reconsider the August 28, 2009 Order of the Labor Arbiter, the April 30, 2010 Decision of the NLRC,
and the July 21, 2011 Decision and February 2, 2012 Resolution of the CA.
 164

With regard to the dismissal of the appeal by the NLRC on the ground that it was filed one (1) day past the reglementary period, We rule that the ends of justice would
be best served with the admission of the appeal for the complete ventilation of the issues in the case. Considering that Albar admitted its liability to the heirs of Romeo
for his death benefits, the NLRC should have given due course to the meritorious appeal. Thus, this Court ruled in Chronicle Securities Corporation v. National Labor
Relations Commission:[6]

In not a few instances, we relaxed the rigid application of the rules of procedure to afford the parties the opportunity to fully ventilate their cases on the merits. This is
in line with the time honored principle that cases should be decided only after giving all parties the chance to argue their causes and defenses. Technicality and
procedural imperfections should thus not serve as bases of decisions. In that way, the ends of justice would be better served. For indeed, the general objective of
procedure is to facilitate the application of justice to the rival claims of contending parties, bearing always in mind that procedure is not to hinder but to promote the
administration of justice.

In Philippine National Bank, et al. v. Court of Appeals, we allowed, in the higher interest of justice, an appeal filed three days late.

In Republic v. Court of Appeals, we ordered the Court of Appeals to entertain an appeal filed six days after the expiration of the [reglementary] period; while
in Siguenza v. Court of Appeals, we accepted an appeal filed thirteen days late. Likewise, in Olacao v. NLRC, we affirmed the respondent Commission's order giving due
course to a tardy appeal "to forestall the grant of separation pay twice" since the issue of separation pay had been judicially settled with finality in another case. All of
the aforequoted rulings were reiterated in our 2001 decision in the case of Equitable PCI Bank v. Ku.

Notably, in Philippine National Bank v. Court of Appeals,[7] the Court cited the following cases, applicable to the instant controversy:

It has been said this time and again that the perfection of an appeal within the period fixed by the rules is mandatory and jurisdictional. But, it is always in the power of
this Court to suspend its own rules, or to except a particular case from its operation, whenever the purposes of justice require it. Strong compelling reasons such as
serving the ends of justice and preventing a grave miscarriage thereof warrant the suspension of the rules.

xxxx

In Siguenza vs. Court of Appeals, the appeal which was perfected thirteen days late was permitted, "since on its face the appeal appeared to be impressed with merit." x
xx

xxxx

In Cortes vs. Court of Appeals, the counsel of record of a party failed to withdraw his appearance as such when he was appointed as Judge of the RTC of Dumaguete
City. Thus, the copy of the adverse decision was still served at his address of record in Cebu City on 28 February 1983. He was at the time in Dumaguete City and
learned of the decision only on 8 March 1983 when he came home to Cebu City. He right away informed his client through a telegram, which reached the latter's office
in Zamboanga City at a time when he was out on official business and which came to his knowledge only a few days later. It was only on 22 March 1983 that a notice of
appeal was filed by his new lawyer. This Court held that the seven-day delay is excusable, and that the appeal, being ostensibly meritorious, deserves to be given due
course. (Emphasis supplied.)

Evidently, the NLRC and the CA erred in not giving due course to the appeal due to a one (l)-day delay of its filing, considering the apparent merit of the appeal as
shown by the admission of Albar.

Verily, Albar is liable to the heirs of Romeo for the amount of USD 55,547.44. Albar hereby is ordered to deposit this amount in an escrow account under the control of
the NLRC in order to protect the interests of Romeo's heirs. The parties claiming to be the beneficiaries of Romeo are directed to file the appropriate action with a trial
 165

court to determine the true and legal heirs of Romeo entitled to receive the disability benefits. The amount in the escrow account will only be released to the legal heirs
per the decision of a trial court.

WHEREFORE, the instant petition is GRANTED. The July 21, 2011 Decision and February 2, 2012 Resolution of the CA in CA-G.R. SP No. 116476, the Decision dated
April 30, 2010 of the NLRC, and the Order dated August 28, 2009 of the Labor Arbiter dismissing the complaint of petitioner Gilda G. Lunzaga are
hereby REVERSED and SET ASIDE.

Further, respondent Albar Shipping and Trading Corp. is hereby ORDERED to pay the heirs of Romeo Lunzaga the amount of USD 55,547.44 and to deposit in escrow
the said amount with the NLRC in a bank account in trust for the heirs of Romeo Lunzaga. The said amount shall only be released to the legal beneficiaries of Romeo
adjudged as such by a trial court in the appropriate action to determine his legal heirs.

SO ORDERED.
 166

G.R. Nos. 178382-83, September 23, 2015

CONTINENTAL MICRONESIA, INC., Petitioner, v. JOSEPH BASSO, Respondent.

DECISION
 167

JARDELEZA, J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the levised Rules of Court assailing the Decision 2 dated May 23, 2006 and Resolution 3 dated June 19, 2007 of
the Court of Appeals in the consolidated cases CA-G.R. SP No. 83938 and CA-G.R. SP No. 84281. These assailed Decision and Resolution set aside the Decision 4 dated
November 28, 2003 of the National Labor Relations Commission (NLRC) declaring Joseph Basso's (Basso) dismissal illegal, and ordering the payment of separation pay
as alternative to reinstatement and full backwages until the date of the Decision.

The Facts

Petitioner Continental Micronesia, Inc. (CMI) is a foreign corporation organized and existing under the laws of and domiciled in the United States of America (US). It is
licensed to do business in the Philippines. 5 Basso, a US citizen, resided in the Philippines prior to his death. 6

During his visit to Manila in 1990, Mr. Keith R. Braden (Mr. Braden), Managing Director-Asia of Continental Airlines, Inc. (Continental), offered Basso the position of
General Manager of the Philippine Branch of Continental. Basso accepted the offer. 7

It was not until much later that Mr. Braden, who had since returned to the US, sent Basso the employment contract 8 dated February 1, 1991, which Mr. Braden had
already signed. Basso then signed the employment contract and returned it to Mr. Braden as instructed.

On November 7, 1992, CMI took over the Philippine operations of Continental, with Basso retaining his position as General Manager. 9

On December 20, 1995, Basso received a letter from Mr. Ralph Schulz (Mr. Schulz), who was then CMI's Vice President of Marketing and Sales, informing Basso that he
has agreed to work in CMI as a consultant on an "as needed basis" effective February 1, 1996 to July 31, 1996. The letter also informed Basso that: (1) he will not
receive any monetary compensation but will continue being covered by the insurance provided by CMI; (2) he will enjoy travel privileges; and (3) CMI will advance
Php1,140,000.00 for the payment of housing lease for 12 months. 10

On January 11, 1996, Basso wrote a counter-proposal 11 to Mr. Schulz regarding his employment status in CMI. On March 14, 1996, Basso wrote another letter
addressed to Ms. Marty Woodward (Ms. Woodward) of CMI's Human Resources Department inquiring about the status of his employment. 12 On the same day, Ms.
Woodward responded that pursuant to the employment contract dated February 1, 1991, Basso could be terminated at will upon a thirty-day notice. This notice was
allegedly the letter Basso received from Mr. Schulz on December 20, 1995. Ms. Woodward also reminded Basso of the telephone conversation between him, Mr. Schulz
and Ms. Woodward on December 19, 1995, where they informed him of the company's decision to relieve him as General Manager. Basso, instead, was offered the
position of consultant to CMI. Ms. Woodward also informed Basso that CMI rejected his counter-proposal and, thus, terminated his employment effective January 31,
1996. CMI offered Basso a severance pay, in consideration of the Php1,140,000.00 housing advance that CMI promised him. 13

Basso filed a Complaint for Illegal Dismissal with Moral and Exemplary Damages against CMI on December 19, 1996. 14 Alleging the presence of foreign elements, CMI
filed a Motion to Dismiss 15 dated February 10, 1997 on the ground of lack of jurisdiction over the person of CMI and the subject matter of the controversy. In an
Order16 dated August 27, 1997, the Labor Arbiter granted the Motion to Dismiss. Applying the doctrine of lex loci contractus, the Labor Arbiter held that the terms and
provisions of the employment contract show that the parties did not intend to apply our Labor Code (Presidential Decree No. 442). The Labor Arbiter also held that no
employer-employee relationship existed between Basso and the branch office of CMI in the Philippines, but between Basso and the foreign corporation itself.

On appeal, the NLRC remanded the case to the Labor Arbiter for the determination of certain facts to settle the issue on jurisdiction. NLRC ruled that the issue on
whether the principle of lex loci contractus or lex loci celebrationis should apply has to be further threshed out.17
 168

Labor Arbiter's Ruling

Labor Arbiter Madjayran H. Ajan in his Decision 18 dated September 24, 1999 dismissed the case for lack of merit and jurisdiction.

The Labor Arbiter agreed with CMI that the employment contract was xecuted in the US "since the letter-offer was under the Texas letterhead and the acceptance of
Complainant was returned there." 19 Thus, applying the doctrine of lex loci celebrationis, US laws apply. Also, applying lex loci contractus, the Labor Arbiter ruled that the
parties did not intend to apply Philippine laws, thus:

Although the contract does not state what law shall apply, it is obvious that Philippine laws were not written into it. More specifically, the Philippine law on taxes and the
Labor Code were not intended by the parties to apply, otherwise Par. 7 on the payment by Complainant U.S. Federal and Home State income taxes, and Pars. 22/23 on
termination by 30-day prior notice, will not be there. The contract was prepared in contemplation of Texas or U.S. laws where Par. 7 is required and Pars. 22/23 is
allowed.20

The Labor Arbiter also ruled that Basso was terminated for a valid cause based on the allegations of CMI that Basso committed a series of acts that constitute breach of
trust and loss of confidence.21

The Labor Arbiter, however, found CMI to have voluntarily submitted to his office's jurisdiction. CMI participated in the proceedings, submitted evidence on the merits of
the case, and sought affirmative relief through a motion to dismiss. 22

NLRC's Ruling

On appeal, the NLRC Third Division promulgated its Decision 23 dated November 28, 2003, the decretal portion of which reads:

WHEREFORE, the decision dated 24 September 1999 is VACATED and SET ASIDE. Respondent CMI is ordered to pay complainant the amount of US$5,416.00 for failure
to comply with the due notice requirement. The other claims are dismissed.

SO ORDERED.24

The NLRC did not agree with the pronouncement of the Labor Arbiter that his office has no jurisdiction over the controversy. It ruled that the Labor Arbiter acquired
jurisdiction over the case when CMI voluntarily submitted to his office's jurisdiction by presenting evidence, advancing arguments in support of the legality of its acts,
and praying for reliefs on the merits of the case. 25cralawred

On the merits, the NLRC agreed with the Labor Arbiter that Basso was dismissed for just and valid causes on the ground of breach of trust and loss of confidence. The
NLRC ruled that under the applicable rules on loss of trust and confidence of a managerial employee, such as Basso, mere existence of a basis for believing that such
employee has breached the trust of his employer suffices. However, the NLRC found that CMI denied Basso the required due process notice in his dismissal. 26

Both CMI and Basso filed their respective Motions for Reconsideration dated January 15, 2004 27 and January 8, 2004.28 Both motions were dismissed in separate
Resolutions dated March 15, 2004 29 and February 27, 2004,30 respectively.

Basso filed a Petition for Certiorari dated April 16, 2004 with the Court of Appeals docketed as CA-G.R. SP No. 83938. 31 Basso imputed grave abuse of discretion on the
 169

part of the NLRC in ruling that he was validiy dismissed. CMI filed its own Petition for Certiorari dated May 13, 2004 docketed as CA-G.R. SP No. 84281, 32 alleging that
the NLRC gravely abused its discretion when it assumed jurisdiction over the person of CMI and the subject matter of the case.

In its Resolution dated October 7, 2004, the Court of Appeals consolidated the two cases 33 and ordered the parties to file their respective Memoranda.

The Court of Appeal's Decision

The Court of Appeals promulgated the now assailed Decision 34 dated May 23, 2006, the relevant dispositive portion of which reads:

WHEREFORE, the petition of Continental docketed as CA-G.R. SP No. 84281 is DENIED DUE COURSE and DISMISSED.

On the other hand the petition of Basso docketed as CA-G.R. SP No. 83938 is GIVEN DUE COURSE and GRANTED, and accordingly, the assailed Decision dated
November 28, 2003 and Resolution dated February 27, 2004 of the NLRC are SET ASIDE and VACATED. Instead judgment is rendered hereby declaring the dismissal of
Basso illegal and ordering Continental to pay him separation pay equivalent to one (1) month pay for every year of service as an alternative to reinstatement. Further,
ordering Continental to pay Basso his full backwages from the date of his said illegal dismissal until date of this decision. The claim for moral and exemplary damages as
well as attorney's fees are dismissed.35

The Court of Appeals ruled that the Labor Arbiter and the NLRC had jurisdiction over the subject matter of the case and over the parties. The Court of Appeals explained
that jurisdiction over the subject matter of the action is determined by the allegations of the complaint and the law. Since the case filed by Basso is a termination
dispute that is "undoubtedly cognizable by the labor tribunals", the Labor Arbiter and the NLRC had jurisdiction to rule on the merits of the case. On the issue of
jurisdiction over he person of the parties, who are foreigners, the Court of Appeals ruled that jurisdiction over the person of Basso was acquired when he filed the
complaint for illegal dismissal, while jurisdiction over the person of CMI was acquired through coercive process of service of summons to its agent in the Philippines. The
Court of Appeals also agreed that the active participation of CMI in the case rendered moot the issue on jurisdiction.

On the merits of the case, the Court of Appeals declared that CMI illegally dismissed Basso. The Court of Appeals found that CMI's allegations of loss of trust and
confidence were not established. CMI "failed to prove its claim of the incidents which were its alleged bases for loss of trust or confidence." 36 While managerial
employees can be dismissed for loss of trust and confidence, there must be a basis for such loss, beyond mere whim or caprice.

After the parties filed their Motions for Reconsideration, 37 the Court of Appeals promulgated Resolution 38dated June 19, 2007 denying CMI's motion, while partially
granting Basso's as to the computation of backwages.

Hence, this petition, which raises the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN REVIEWING THE FACTUAL FINDINGS OF THE NLRC INSTEAD OF LIMITING ITS INQUIRY INTO WHETHER OR NOT
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION.

II.
 170

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE LABOR ARBITER AND THE NLRC HAD JURISDICTION TO HEAR AND TRY THE ILLEGAL
DISMISSAL CASE.

III.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT BASSO WAS NOT VALIDLY DISMISSED ON THE GROUND OF LOSS OF TRUST OR CONFIDENCE.

We begin with the second issue on the jurisdiction of the Labor Arbiter and the NLRC in the illegal dismissal case. The first and third issues will be discussed jointly.

The labor tribunals had jurisdiction over the parties and the subject matter of the case.

CMI maintains that there is a conflict-of-laws issue that must be settled to determine proper jurisdiction over the parties and the subject matter of the case. It also
alleges that the existence of foreign elements calls or the application of US laws and the doctrines of lex loci celebrationis (the law of the place of the ceremony), lex loci
contractus (law of the place where a contract is executed), and lex loci intentionis(the intention of the parties as to the law that should govern their agreement). CMI
also invokes the application of the rule of forum non conveniens to determine the propriety of the assumption of jurisdiction by the labor tribunals.

We agree with CMI that there is a conflict-of-laws issue that needs to be resolved first. Where the facts establish the existence of foreign elements, he case presents a
conflict-of-laws issue.39 The foreign element in a case nay appear in different forms, such as in this case, where one of the parties s an alien and the other is domiciled in
another state.

In Hasegawa v. Kitamura,40 we stated that in the judicial resolution of conflict-of-laws problems, three consecutive phases are involved: jurisdiction, choice of law, and
recognition and enforcement of judgments. In resolving the conflicts problem, courts should ask the following questions:

1. "Under the law, do I have jurisdiction over the subject matter and the parties to this case?

2. "If the answer is yes, is this a convenient forum to the parties, in light of the facts?

3. "If the answer is yes, what is the conflicts rule for this particular problem?

4. "If the conflicts rule points to a foreign law, has said law been properly pleaded and proved by the one invoking it?

5. "If so, is the application or enforcement of the foreign law in the forum one of the basic exceptions to the application of foreign law? In short, is there any strong
policy or vital interest of the forum that is at stake in this case and which should preclude the application of foreign law? 41

Jurisdiction is defined as the power and authority of the courts to hear, try and decide cases. Jurisdiction over the subject matter is conferred by the Constitution or by
law and by the material allegations in the complaint, regardless of whether or not the plaintiff is entitled to recover all or some of the claims or reliefs sought
therein.42 It cannot be acquired through a waiver or enlarged by the omission of the parties or conferred by the acquiescence of the court. 43 That the employment
contract of Basso was replete with references to US laws, and that it originated from and was returned to the US, do not automatically preclude our labor tribunals from
exercising jurisdiction to hear and try this case.
 171

This case stemmed from an illegal dismissal complaint. The Labor Code, under Article 217, clearly vests original and exclusive jurisdiction to hear and decide cases
involving termination disputes to the Labor Arbiter. Hence, the Labor Arbiter and the NLRC have jurisdiction over the subject matter of the case.

As regards jurisdiction over the parties, we agree with the Court of Appeals that the Labor Arbiter acquired jurisdiction over the person of Basso, notwithstanding his
citizenship, when he filed his complaint against CMI. On the other hand, jurisdiction over the person of CMI was acquired through the coercive process of service of
summons. We note that CMI never denied that it was served with summons. CMI has, in fact, voluntarily appeared and participated in the proceedings before the
courts. Though a foreign corporation, CMI is licensed to do business in the Philippines and has a local business address here. The purpose of the law in requiring that
foreign corporations doing business in the country be licensed to do so, is to subject the foreign corporations to the jurisdiction of our courts. 44

Considering that the Labor Arbiter and the NLRC have jurisdiction over the parties and the subject matter of this case, these tribunals may proceed to try the case even
if the rules of conflict-of-laws or the convenience of the parties point to a foreign forum, this being an exercise of sovereign prerogative of the country where the case is
filed.45

The next question is whether the local forum is the convenient forum in light of the facts of the case. CMI contends that a Philippine court is an inconvenient forum.

We disagree.

Under the doctrine of forum non conveniens, a Philippine court in a conflict-of-laws case may assume jurisdiction if it chooses to do so, provided, that the following
requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and (3) that the Philippine Court has or is likely to have power to enforce its decision. 46 All these requisites are present
here.

Basso may conveniently resort to our labor tribunals as he and CMI lad physical presence in the Philippines during the duration of the trial. CMI has a Philippine branch,
while Basso, before his death, was residing here. Thus, it could be reasonably expected that no extraordinary measures were needed for the parties to make
arrangements in advocating their respective cases.

The labor tribunals can make an intelligent decision as to the law and facts. The incident subject of this case (i.e. dismissal of Basso) happened in the Philippines, the
surrounding circumstances of which can be ascertained without having to leave the Philippines. The acts that allegedly led to loss of trust and confidence and Basso's
eventual dismissal were committed in the Philippines. As to the law, we hold that Philippine law is the proper law of he forum, as we shall discuss shortly. Also, the labor
tribunals have the power to enforce their judgments because they acquired jurisdiction over the persons of both parties.

Our labor tribunals being the convenient fora, the next question is what law should apply in resolving this case.

The choice-of-law issue in a conflict-of-laws case seeks to answer the following important questions: (1) What legal system should control a given situation where some
of the significant facts occurred in two or more states; and (2) to what extent should the chosen legal system regulate the situation. 47 These questions are entirely
different from the question of jurisdiction that only seeks to answer whether the courts of a state where the case is initiated have jurisdiction to enter a judgment. 48 As
such, the power to exercise jurisdiction does not automatically give a state constitutional authority to apply forum law. 49

CMI insists that US law is the applicable choice-of-law under the principles of lex loci celebrationis and lex loci contractus. It argues that the contract of employment
originated from and was returned to the US after Basso signed it, and hence, was perfected there. CMI further claims that the references to US law in the employment
contract show the parties' intention to apply US law and not ours. These references are:
 172

Foreign station allowance of forty percent (40%) using the "U.S. State Department Index, the base being Washington, D.C."

Tax equalization that made Basso responsible for "federal and any home state income taxes."

Hardship allowance of fifteen percent (15%) of base pay based upon the "U.S. Department of State Indexes of living costs abroad."

The employment arrangement is "one at will, terminable by either party without any further liability on thirty days prior written notice." 50

CMI asserts that the US law on labor relations particularly, the US Railway Labor Act sanctions termination-at-will provisions in an employment contract. Thus, CMI
concludes that if such laws were applied, there would have been no illegal dismissal to speak of because the termination-at-will provision in Basso's employment
contract would have been perfectly valid.

We disagree.

In Saudi Arabian Airlines v. Court of Appeals,51 we emphasized that an essential element of conflict rules is the indication of a "test" or "connecting factor" or "point of
contact". Choice-of-law rules invariably consist of a factual relationship (such as property right, contract claim) and a connecting fact or point of contact, such as
the situs of the res, the place of celebration, the place of performance, or the place of wrongdoing. Pursuant to Saudi Arabian Airlines, we hold that the "test factors,"
"points of contact" or "connecting factors" in this case are the following:chanRoblesvirtualLawlibrary

(1) The nationality, domicile or residence of Basso;ChanRoblesVirtualawlibrary

(2) The seat of CMI;ChanRoblesVirtualawlibrary

(3) The place where the employment contract has been made, the locus actus;ChanRoblesVirtualawlibrary

(4) The place where the act is intended to come into effect, e.g., the place of performance of contractual duties;ChanRoblesVirtualawlibrary

(5) The intention of the contracting parties as to the law that should govern their agreement, the lex loci intentionis; and

(6) The place where judicial or administrative proceedings are instituted or done. 52

Applying the foregoing in this case, we conclude that Philippine law the applicable law. Basso, though a US citizen, was a resident here from he time he was hired by
CMI until his death during the pendency of the case. CMI, while a foreign corporation, has a license to do business in the Philippines and maintains a branch here, where
Basso was hired to work. The contract of employment was negotiated in the Philippines. A purely consensual contract, it was also perfected in the Philippines when
Basso accepted the terms and conditions of his employment as offered by CMI. The place of performance relative to Biasso's contractual duties was in the Philippines.
The alleged prohibited acts of Basso that warranted his dismissal were committed in the Philippines.

Clearly, the Philippines is the state with the most significant relationship to the problem. Thus, we hold that CMI and Basso intended Philippine law to govern,
notwithstanding some references made to US laws and the fact that this intention was not expressly stated in the contract. We explained in Philippine Export and
Foreign Loan Guarantee Corporation v. V. P. Eusebio Construction, Inc. 53 that the law selected may be implied from such factors as substantial connection with the
transaction, or the nationality or domicile of the parties. 54 We cautioned, however, that while Philippine courts would do well to adopt the first and most basic rule in
most legal systems, namely, to allow the parties to select the law applicable to their contract, the selection is subject to the limitation that it is not against the law,
 173

morals, or public policy of the forum. 55

Similarly, in Bank of America, NT&SA v. American Realty Corporation,56 we ruled that a foreign law, judgment or contract contrary to a sound and established public
policy of the forum shall not be applied. Thus:

Moreover, foreign law should not be applied when its application would work undeniable injustice to the citizens or residents of the forum. To give justice is the most
important function of law; hence, a law, or judgment or contract that is obviously unjust negates the fundamental principles of Conflict of Laws. 57

Termination-at-will is anathema to the public policies on labor protection espoused by our laws and Constitution, which dictates that no worker shall be dismissed except
for just and authorized causes provided by law and after due process having been complied with. 58 Hence, the US Railway Labor Act, which sanctions termination-at-will,
should not be applied in this case.

Additionally, the rule is that there is no judicial notice of any foreign law. As any other fact, it must be alleged and proved. 59 If the foreign law is not properly pleaded or
proved, the presumption of identity or similarity of the foreign law to our own laws, otherwise known as processual presumption, applies. Here, US law may have been
properly pleaded but it was not proved in the labor tribunals.

Having disposed of the issue on jurisdiction, we now rule on the first and third issues.

The Court of Appeals may review the factual findings of the NLRC in a Rule 65 petition.

CMI submits that the Court of Appeals overstepped the boundaries of the limited scope of its certiorarijurisdiction when instead of ruling on the existence of grave abuse
of discretion, it proceeded to pass upon the legality and propriety of Basso's dismissal. Moreover, CMI asserts that it was error on the part of the Court of Appeals to re-
evaluate the evidence and circumstances surrounding the dismissal of Basso.

We disagree.

The power of the Court of Appeals to review NLRC decisions via a Petition for Certiorari under Rule 65 of the Revised Rules of Court was settled in our decision in St.
Martin Funeral Home v. NLRC.60 The general rule is that certiorari does not lie to review errors of judgment of the trial court, as well as that of a quasi-judicial tribunal.
In certiorari proceedings, judicial review does not go as far as to examine and assess the evidence of the parties and to weigh their probative value. 61 However, this rule
admits of exceptions. In Globe Telecom, Inc. v. Florendo-Flores,62 we stated:

In the review of an NLRC decision through a special civil action for certiorari, resolution is confined only to issues of jurisdiction and grave abuse of discretion on the part
of the labor tribunal. Hence, the Court refrains from reviewing factual assessments of lower courts and agencies exercising adjudicative functions, such as the NLRC.
Occasionally, however, the Court is constrained to delve into factual matters where, as in the instant case, the findings of the NLRC contradict those of the Labor Arbiter.

In this instance, the Court in the exercise of its equity jurisdiction may look into the records of the case and re-examine the questioned findings. As a corollary, this
Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary to arrive at
a just decision of the case. The same principles are now necessarily adhered to and are applied by the Court of Appeals in its expanded jurisdiction over labor cases
elevated through a petition for certiorari; thus, we see no error on its part when it made anew a factual determination of the matters and on that basis reversed the
ruling of the NLRC.63 (Citations omitted.)
 174

Thus, the Court of Appeals may grant the petition when the factual hidings complained of are not supported by the evidence on record; when its necessary to prevent a
substantial wrong or to do substantial justice; when the findings of the NLRC contradict those of the Labor Arbiter; and when necessary to arrive at a just decision of the
case.64 To make these findings, the Court of Appeals necessarily has to look at the evidence and make its own factual determination. 65

Since the findings of the Labor Arbiter differ with that of the NLRC, we find that the Court of Appeals correctly exercised its power to review the evidence and the
records of the illegal dismissal case.

Basso was illegally dismissed.

It is of no moment that Basso was a managerial employee of CMI Managerial employees enjoy security of tenure and the right of the management to dismiss must be
balanced against the managerial employee's right to security of tenure, which is not one of the guaranties he gives up. 66

In Apo Cement Corporation v. Baptisma,67 we ruled that for an employer to validly dismiss an employee on the ground of loss of trust and confidence under Article 282
(c) of the Labor Code, the employer must observe the following guidelines: 1) loss of confidence should not be simulated; 2) it should not be used as subterfuge for
causes which are improper, illegal or unjustified; 3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and 4) it must be genuine,
not a mere afterthought to justify earlier action taken in bad faith. More importantly, it must be based on a willful breach of trust and founded on clearly established
facts.

We agree with the Court of Appeals that the dismissal of Basso was not founded on clearly established facts and evidence sufficient to warrant dismissal from
employment. While proof beyond reasonable doubt is not required to establish loss of trust and confidence, substantial evidence is required and on the employer rests
the burden to establish it. 68 There must be some basis for the loss of trust, or that the employer has reasonable ground to believe that the employee is responsible for
misconduct, which renders him unworthy of the trust and confidence demanded by his position. 69

CMI alleges that Basso committed the following:chanRoblesvirtualLawlibrary

(1) Basso delegated too much responsibility to the General Sales Agent and relied heavily on its judgments. 70

(2) Basso excessively issued promotional tickets to his friends who had no direct business with CMI. 71

(3) The advertising agency that CMI contracted had to deal directly with Guam because Basso was hardly available. 72 Mr. Schulz discovered that Basso exceeded
the advertising budget by $76,000.00 in 1994 and by $20,000.00 in 1995. 73

(4) Basso spent more time and attention to his personal businesses and was reputed to own nightclubs in the Philippines. 74

(5) Basso used free tickets and advertising money to promote his personal business, 75 such as a brochure that jointly advertised one of Basso's nightclubs with CMI.

We find that CMI failed to discharge its burden to prove the above acts. CMI merely submitted affidavits of its officers, without any other corroborating evidence. Basso,
on the other hand, had adequately explained his side. On the advertising agency and budget issues raised by CMI, he explained that these were blatant lies as the
advertising needs of CMI were centralized in its Guam office and the Philippine office was not authorized to deal with CMI's advertising agency, except on minor
issues.76 Basso further stated that under CMI's existing policy, ninety percent (90%) of the advertising decisions were delegated to the advertising firm of McCann-
Ericsson in Japan and only ten percent (10%) were left to the Philippine office. 77 Basso also denied the allegations of owning nightclubs and promoting his personal
 175

businesses and explained that it was illegal for foreigners in the Philippines to engage in retail trade in the first place.

Apart from these accusations, CMI likewise presented the findings of the audit team headed by Mr. Stephen D. Goepfert, showing that "for the period of 1995 and 1996,
personal passes for Continental and other airline employees were noted (sic) to be issued for which no service charge was collected." 78 The audit cited the trip pass log
of a total of 10 months. The trip log does not show, however, that Basso caused all the ticket issuances. More, half of the trips in the log occurred from March to July of
1996,79 a period beyond the tenure of Basso. Basso was terminated effectively on January 31, 1996 as indicated in the letter of Ms. Woodward. 80

CMI also accused Basso of making "questionable overseas phone calls". Basso, however, adequately explained in his Reply81 that the phone calls to Italy and Portland,
USA were made for the purpose of looking for a technical maintenance personnel with US Federal Aviation Authority qualifications, which CMI needed at that time. The
calls to the US were also made in connection with his functions as General Manager, such as inquiries on his tax returns filed in Nevada. Biasso also explained that the
phone lines82 were open direct lines that all personnel were free to use to make direct long distance calls. 83

Finally, CMI alleged that Basso approved the disbursement of Php80,000.00 to cover the transfer fee of the Manila Polo Club share from Mr. Kenneth Glover, the
previous General Manager, to him. CMI claimed that "nowhere in the said contract was it likewise indicated that the Manila Polo Club share was part of the compensation
package given by CMI to Basso."84 CMI's claims are not credible. Basso explained that the Manila Polo Club share was offered to him as a bonus to entice him to leave
his then employer, United Airlines. A letter from Mr. Paul J. Casey, former president of Continental, supports Basso. 85 In the letter, Mr. Casey explained:

As a signing bonus, and a perk to attract Mr. Basso to join Continental Airlines, he was given the Manila Polo Club share and authorized to have the share re-issued in
his name. In addition to giving Mr. Basso the Manila Polo Club share, Continental agreed to pay the dues for a period of three years and this was embodied in his
contract with Continental. This was all clone with my knowledge and approval. 86

Clause 14 of the employment contract also states:

Club Memberships: The Company will locally pay annual dues for membership in a club in Manila that your immediate supervisor and I agree is of at least that value to
Continental through you in your role as our General Manager for the Philippines. 87

Taken together, the above pieces of evidence suggest that the Manila Polo Club share was part of Basso's compensation package and thus he validly used company
funds to pay for the transfer fees. If doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the
latter.88

Finally, CMI violated procedural due process in terminating Basso. In King of Kings Transport, Inc. v. Mamac 89 we detailed the procedural due process steps in
termination of employment:

To clarify, the following should be considered in terminating the services of employees:chanRoblesvirtualLawlibrary

(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the
employees are given the opportunity to submit their written explanation within a reasonable period. "Reasonable opportunity" under the Omnibus Rules means every
kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer,
gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their
explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A
general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the
 176

grounds under Art. 282 is being charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1)
explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by
the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or
counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment.
(Emphasis in original.)

Here, Mr. Schulz's and Ms. Woodward's letters dated December 19, 1995 and March 14, 1996, respectively, are not one of the valid twin notices. Neither identified the
alleged acts that CMI now claims as bases for Basso's termination. Ms. Woodward's letter even stressed that the original plan was to remove Basso as General Manager
but with an offer to make him consultant. It was inconsistent of CMI to declare Basso as unworthy of its trust and confidence and, in the same breath, offer him the
position of consultant. As the Court of Appeals pointed out:

But mark well that Basso was clearly notified that the sole ground for his dismissal was the exercise of the termination at will clause in the employment contract. The
alleged loss of trust and confidence claimed by Continental appears to be a mere afterthought belatedly trotted out to save the day. 90

Basso is entitled to separation pay and full backwages.

Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of eniority rights and other
privileges, and to his full backwages, inclusive of allowances and to his other benefits or their monetary equivalent omputed from the time his compensation was
withheld up to the time of actual reinstatement.

Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative.
The payment of separation pay is in addition to payment of backwages. 91 In the case of Basso, reinstatement is no longer possible since he has already passed away.
Thus, Basso's separation pay with full backwages shall be paid to his heirs.

As to the computation of backwages, we agree with CMI that Basso was entitled to backwages only up to the time he reached 65 years old, the compulsory retirement
age under the law.92 This is our consistent ruling.93 When Basso was illegally dismissed on January 31, 1996, he was already 58 years old. 94 He turned 65 years old on
October 2, 2002. Since backwages are granted on grounds of equity for earnings lost by an employee due to his illegal dismissal, 95 Basso was entitled to backwages only
for the period he could have worked had he not been illegally dismissed, i.e. from January 31, 1996 to October 2, 2002.

WHEREFORE, premises considered, the Decision of the Court of Appeals dated May 23, 2006 and Resolution dated June 19, 2007 in the consolidated cases CA-G.R. SP
No. 83938 and CA-G.R. SP No. 84281 are AFFIRMED, with MODIFICATION as to the award of backwages. Petitioner Continental Micronesia, Inc. is hereby ordered to
pay Respondent Joseph Basso's heirs: 1) separation pay equivalent to one (1) month pay for every year of service, and 2) full backwages from January 31, 1996, the
date of his illegal dismissal, to October 2, 2002, the date of his compulsory retirement age.

SO ORDERED.chanroblesvirtuallawlibrary
177
 178

G.R. No. 211588, September 09, 2015

WORLD'S BEST GAS, INC., Petitioner, v. HENRY VITAL, JOINED BY HIS WIFE FLOSERFINA VITAL, Respondents.

DECISION

PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari1 filed by petitioner World's Best Gas, Inc. (WBGI) assailing the Decision 2 dated September 30, 2013 and the
Resolution3 dated March 4, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 123497, which affirmed the Decision 4 dated December 12, 2011 of the Regional Trial
Court of Bataan, Branch 2 (RTC) in Civil Case No. 8694 finding WBGI liable to respondent Henry Vital (Vital) for his unpaid salaries and separation pay.

The Facts

Vital was one of the incorporators of WBGI, holding P500,000.00 worth of shares of stocks therein. 5 As a separate business venture, Vital and his wife, respondent
Floserfina Vital (respondents), sourced Liquefied Petroleum Gas (LPG) from WBGI and distributed the same through ERJ Enterprises owned by them. 6 As of respondents'
last statement of account, their outstanding balance with WBGI for unpaid LPG amounted to P923,843.59 .7

On January 6, 1999, Vital was appointed as Internal Auditor and Personnel Manager by WBGI's President/CEO and continued to serve as such until his mandatory
retirement on September 25, 2003.8Upon his retirement, WBGI's Board of Directors computed Vital's retirement benefits at P82,500.00 by multiplying his P15,000.00
monthly pay by 5.5 years, which was the number of years he served as Internal Auditor and Personnel Manager. WBGI also agreed to acquire Vital's P500,000.00
shares of stocks at par value.9

After offsetting the P500,000.00 due from WBGI's acquisition of his shares of stocks against ERJ Enterprises' P923,843.59 outstanding balance to WBGI, Vital claimed
 179

that the unpaid salaries and separation pay due him amounted to P845,000.00 and P250,000.00, respectively, leaving a net amount of P671,156.41 payable to him.
WBGI rejected Vital's claim and contended that after offsetting, Vital actually owed it P369,156.19. 10

On January 4, 2006, Vital filed a complaint before the National Labor Relations Commission (NLRC) — Regional Arbitration Branch III (RAB), docketed as NLRC Case No.
RAB-III-01-9671-06, for non-payment of separation and retirement benefits, underpayment of salaries/wages and 13 thmonth pay, illegal reduction of salary and
benefits, and damages.11

For its part, WBGI averred that the Labor Arbiter (LA) had no jurisdiction over the complaint because Vital is not an employee, but a mere incorporator and stockholder
of WBGI, hence, no employer-employee relationship exists between them. 12

The LA Ruling

In a Decision13 dated May 3, 2006, the LA found that the issues between Vital and WBGI are intra-corporate in nature as they arose between the relations of a
stockholder and the corporation, and not from an employee and employer relationship. 14 Thus, the LA dismissed the case for lack of jurisdiction, 15prompting Vital to file
his complaint16 for payment of unpaid salaries, separation and retirement benefits, and damages on July 19, 2007 before the RTC, docketed as Civil Case No. 8694. 17

The RTC Ruling

In a Decision18 dated December 12, 2011, the RTC, acting as a special commercial court, oppositely found that Vital was an employee of WBGI and thereby, upheld his
claim of P845,000.00 and P250,000.00 in unpaid salaries and separation pay. However, the RTC offset these amounts, including the P500,000.00 due from WBGFs
acquisition of Vital's shares of stocks, against the P923,843.59 payable to WBGI from ERJ Enterprises, thus, awarding Vital the net amount of P671,156.41, with legal
interest from date of demand until full payment, P50,000.00 as attorney's fees and costs of suit plus litigation expenses. 19

The RTC ratiocinated that since the positions of Internal Auditor and Personnel Manager were not provided for in WBGI's By-Laws, Vital was not a corporate officer but
an employee entitled to employment benefits. It also maintained that it had jurisdiction to rule on the main intra-corporate controversy, together with the question of
damages and employment benefits.20

Aggrieved, WBGI elevated the case to the CA on appeal. 21

The CA Ruling

In a Decision22 dated September 30, 2013, the CA dismissed the appeal, agreeing with the RTC's finding that Vital was an employee of WGBI. While the CA observed
that the RTC's award of employment benefits to Vital was improper, as the same was under the exclusive jurisdiction of the labor arbiters, it still ruled on said claim,
reasoning that it has the eventual authority to review the labor courts' decision on the matter. 23

WBGI filed a motion for reconsideration24 which was, however, denied in a Resolution25 dated March 4, 2014; hence, the present petition.

The Issue Before the Court

 180

The main issue to be resolved is whether or not the CA erred in ruling upon Vital's claim of P845,000.00 and P250,000.00 in unpaid salaries and separation pay.

The Court's Ruling

The petition is partly meritorious.

At the outset, it should be pointed out that the instant case actually involves three (3) distinct causes of action, namely, ( 1) Vital's claim for P845,000.00 and
P250,000.00 in unpaid salaries and separation pay; (2) the P923,843.59 in arrearages payable to WBGI from ERJ Enterprises, which was admitted by Vital but not
claimed by WBGI; and (3) Vital's claim of P500,000.00 due from WBGI's acquisition of Vital's shares of stocks. All of the foregoing were threshed out by the RTC in its
December 12, 2011 Decision, and effectively upheld by the CA on appeal.

However, the RTC's adjudication of the first cause of action was improper since the same is one which arose from Vital and WBGI's employer-employee relations,
involving an amount exceeding P5,000.00, hence, belonging to the jurisdiction of the labor arbiters pursuant to Article 217 of the Labor Code:

Art. 217. Jurisdiction of the Labor Arbiters and the Commission.

(a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days
after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:chanRoblesvirtualLawlibrary

1. Unfair labor practice cases;ChanRoblesVirtualawlibrary

2. Termination disputes;ChanRoblesVirtualawlibrary

3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of
employment;ChanRoblesVirtualawlibrary

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and

6. Except claims for Employees' Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including
those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for
reinstatement.

xxxx

Having no subject matter jurisdiction to resolve claims arising from employer-employee relations, the RTC's ruling on Vital's claim of P845,000.00 and P250,000.00 in
unpaid salaries and separation pay is, thus, null and void, and therefore, cannot perpetuate even if affirmed on appeal, 26 rendering the CA's ratiocination that it "has the
eventual authority to review the labor courts' decision on the matter" 27direly infirm. As a result, WBGI's petition is meritorious on this score. However, since the
 181

dismissal is grounded on lack of jurisdiction, then the same should be considered as a dismissal without prejudice. 28As such, Vital may re-file29the same claim, including
those related thereto (e.g., moral and exemplary damages, and attorney's fees) before the proper labor tribunal.

Contrary to its lack of jurisdiction over claims arising from employer-employee relations, the RTC has: ( a) general jurisdiction to adjudicate on the P923,843.59 in
arrearages payable to WBGI from ERJ Enterprises, which was admitted by Vital but not claimed by WBGI;30 and (b) special jurisdiction, as a special commercial court, to
adjudicate on Vital's claim of P500,000.00 from WBGI's acquisition of his shares of stocks.31 Indeed, even acting as a special commercial court, the RTC's general
jurisdiction to adjudicate on the first-mentioned claim is retained.

With the RTC's jurisdiction established over the above-mentioned causes of action, Vital's claim of P500,000.00 due from WBGI's acquisition of his shares of stocks
should therefore be offset against the P923,843.59 in arrearages payable to WBGI by ERJ Enterprises owned by respondents, as prayed for by him. Hence, no amount
can be adjudicated in Vital's favor, since it is the respondents who, after due computation, would be left liable to WBGI in the net amount of P423,843.59. This
notwithstanding, WBGI cannot recover this latter amount in this case since it never interposed a permissive counterclaim therefor in its answer. 32 It is well-settled that
courts cannot grant a relief not prayed for in the pleadings or in excess of what is being sought by the party. 33WBGI may, however, opt to file a separate collection suit,
including those related thereto (e.g., moral and exemplary damages, and attorney's fees), to recover such sum.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated September 30, 2013 and the Resolution dated March 4, 2014 of the Court of Appeals in CA-G.R. SP
No. 123497 are hereby SET ASIDE. A new one is entered:chanRoblesvirtualLawlibrary

(a) DISMISSING respondent Henry Vital's (Vital) labor claims of P845,000.00 and P250,000.00 in unpaid salaries and separation pay against petitioner World's Best
Gas, Inc.'s (WBGI), WITHOUT PREJUDICE as stated in this Decision; and

(b) RECOGNIZING WBGI's liability to Vital in the amount of P500,000.00 due from the acquisition of his shares of stocks. This amount is, however, OFFSET against the
P923,843.59 in arrearages payable to WBGI by ERJ Enterprises owned by Vital and his wife, respondent Floserfma Vital, leaving a net amount of P423,843.59, which
WBGI may claim in a separate case as stated in this Decision.

SO ORDERED
 182

G.R. No. 201595

ALLAN M. MENDOZA, Petitioner,

vs.
OFFICERS OF MANILA WATER EMPLOYEES UNION (MWEU), namely, EDUARDO B. BORELA, BUENAVENTURA QUEBRAL, ELIZABETH COMETA, ALEJANDRO TORRES,
AMORSOLO TIERRA, SOLEDAD YEBAN, LUIS RENDON, VIRGINIA APILADO, TERESITA BOLO, ROGELIO BARBERO, JOSE CASAÑAS, ALFREDO MAGA, EMILIO FERNANDEZ,
ROSITA BUENA VENTURA, ALMENIO CANCINO, ADELA IMANA, MARIO MANCENIDO, WILFREDO MANDILAG, ROLANDO MANLAP AZ, EFREN MONTEMAYOR, NELSON
PAGULAYAN, CARLOS VILLA, RIC BRIONES, and CHITO BERNARDO, Respondents.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the April 24, 2012 Decision 2 of the Court of Appeals (CA) which dismissed the Petition for Certiorari3 in CA-G.R. SP No.
115639.
 183

Factual Antecedents

Petitioner was a member of the Manila Water Employees Union (MWEU), a Department of Labor and Employment (DOLE)-registered labor organization consisting of
rank-and-file employees within Manila Water Company (MWC). The respondents herein named – Eduardo B. Borela (Borela), Buenaventura Quebral (Quebral), Elizabeth
Cometa (Cometa), Alejandro Torres (Torres), Amorsolo Tierra (Tierra), Soledad Yeban (Yeban), Luis Rendon (Rendon), Virginia Apilado (Apilado), Teresita Bolo (Bolo),
Rogelio Barbero (Barbero), Jose Casañas (Casañas), Alfredo Maga (Maga), Emilio Fernandez (Fernandez), Rosita Buenaventura (Buenaventura), Almenio Cancino
(Cancino), Adela Imana, Mario Mancenido (Mancenido), Wilfredo Mandilag (Mandilag), Rolando Manlapaz (Manlapaz), Efren Montemayor (Montemayor), Nelson
Pagulayan, Carlos Villa, Ric Briones, and Chito Bernardo – were MWEU officers during the period material to this Petition, with Borela as President and Chairman of the
MWEU Executive Board, Quebral as First Vice-President and Treasurer, and Cometa as Secretary. 4

In an April 11, 2007 letter, 5 MWEU through Cometa informed petitioner that the union was unable to fully deduct the increased P200.00 union dues from his salary due
to lack of the required December 2006 check-off authorization from him. Petitioner was warned that his failure to pay the union dues would result in sanctions upon
him. Quebral informed Borela, through a May 2, 2007 letter, 6 that for such failure to pay the union dues, petitioner and several others violated Section 1(g), Article IX of
the MWEU’s Constitution and By-Laws.7 In turn, Borela referred the charge to the MWEU grievance committee for investigation.

On May 21, 2007, a notice of hearing was sent to petitioner, who attended the scheduled hearing. On June 6, 2007, the MWEU grievance committee recommended that
petitioner be suspended for 30 days.

In a June 20, 2007 letter, 8 Borela informed petitioner and his corespondents of the MWEU Executive Board’s "unanimous approval" 9 of the grievance committee’s
recommendation and imposition upon them of a penalty of 30 days suspension, effective June 25, 2007.

In a June 26, 2007 letter10 to Borela, petitioner and his co-respondents took exception to the imposition and indicated their intention to appeal the same to the General
Membership Assembly in accordance with Section 2(g), Article V of the union’s Constitution and By-Laws, 11 which grants them the right to appeal any arbitrary
resolution, policy and rule promulgated by the Executive Board to the General Membership Assembly. In a June 28, 2007 reply, 12 Borela denied petitioner’s appeal,
stating that the prescribed period for appeal had expired.

Petitioner and his co-respondents sent another letter 13 on July 4, 2007, reiterating their arguments and demanding that the General Membership Assembly be convened
in order that their appeal could be taken up. The letter was not acted upon.

Petitioner was once more charged with non-payment of union dues, and was required to attend an August 3, 2007 hearing. 14 Thereafter, petitioner was again penalized
with a 30-day suspension through an August 21, 2007 letter 15by Borela informing petitioner of the Executive Board’s "unanimous approval" 16 of the grievance committee
recommendation to suspend him effective August 24, 2007, to which he submitted a written reply, 17 invoking his right to appeal through the convening of the General
Membership Assembly. However, the respondents did not act on petitioner’s plea.

Meanwhile, MWEU scheduled an election of officers on September 14, 2007. Petitioner filed his certificate of candidacy for Vice-President, but he was disqualified for not
being a member in good standing on account of his suspension.

On October 2, 2007, petitioner was charged with non-payment of union dues for the third time. He did not attend the scheduled hearing. This time, he was meted the
penalty of expulsion from the union, per "unanimous approval" 18 of the members of the Executive Board. His pleas for an appeal to the General Membership Assembly
were once more unheeded.19
 184

In 2008, during the freedom period and negotiations for a new collective bargaining agreement (CBA) with MWC, petitioner joined another union, the Workers
Association for Transparency, Empowerment and Reform, All-Filipino Workers Confederation (WATER-AFWC). He was elected union President. Other MWEU members
were inclined to join WATER-AFWC, but MWEU director Torres threatened that they would not get benefits from the new CBA. 20

The MWEU leadership submitted a proposed CBA which contained provisions to the effect that in the event of retrenchment, non-MWEU members shall be removed first,
and that upon the signing of the CBA, only MWEU members shall receive a signing bonus. 21

Ruling of the Labor Arbiter

On October 13, 2008, petitioner filed a Complaint 22 against respondents for unfair labor practices, damages, and attorney’s fees before the National Labor Relations
Commission (NLRC), Quezon City, docketed as NLRC Case No. NCR-10-14255-08. In his Position Paper and other written submissions, 23 petitioner accused the
respondents of illegal termination from MWEU in connection with the events relative to his non-payment of union dues; unlawful interference, coercion, and violation of
the rights of MWC employees to self-organization – in connection with the proposed CBA submitted by MWEU leadership, which petitioner claims contained provisions
that discriminated against non-MWEU members. Petitioner prayed in his Supplemental Position Paper that respondents be held guilty of unfair labor practices and
ordered to indemnify him moral damages in the amount of P100,000.00, exemplary damages amounting to P50,000.00, and 10% attorney’s fees.

In their joint Position Paper and other pleadings, 24 respondents claimed that the Labor Arbiter had no jurisdiction over the dispute, which is intra-union in nature; that
the Bureau of Labor Relations (BLR) was the proper venue, in accordance with Article 226 of the Labor Code 25 and Section 1, Rule XI of Department Order 40-03, series
of 2003, of the DOLE;26 and that they were not guilty of unfair labor practices, discrimination, coercion or restraint.

On May 29, 2009, Labor Arbiter Virginia T. Luyas-Azarraga issued her Decision 27 which decreed as follows:

Indeed the filing of the instant case is still premature. Section 5, Article X-Investigation Procedures and Appeal Process of the Union Constitution and By-Laws provides
that:

Section 5. Any dismissed and/or expelled member shall have the rights to appeal to the Executive Board within seven (7) days from the date of notice of the said
dismissal and/or expulsion, which in [turn] shall be referred to the General Membership Assembly. In case of an appeal, a simple majority of the decision of the
Executive Board is imperative. The same shall be approved/disapproved by a majority vote of the general membership assembly in a meeting duly called for the
purpose.

On the basis of the foregoing, the parties shall exhaust first all the administrative remedies before resorting to compulsory arbitration. Thus, instant case is referred
back to the Union for the General Assembly to act or deliberate complainant’s appeal on the decision of the Executive Board.

WHEREFORE PREMISES CONSIDERED, instant case is referred back to the Union level for the General Assembly to act on complainant’s appeal.

SO ORDERED.28

Ruling of the National Labor Relations Commission

Petitioner appealed before the NLRC, where the case was docketed as NLRC LAC No. 07-001913-09. On March 15, 2010, the NLRC issued its Decision, 29 declaring as
follows:

Complainant30 imputes serious error to the Labor Arbiter when she decided as follows:
 185

a. Referring back the subject case to the Union level for the General Assembly to act on his appeal.

b. Not ruling that respondents are guilty of ULP as charged.

c. Not granting to complainant moral and exemplary damages and attorney’s fees.

Complainant, in support of his charges, claims that respondents restrained or coerced him in the exercise of his right as a union member in violation of paragraph "a",
Article 249 of the Labor Code,31particularly, in denying him the explanation as to whether there was observance of the proper procedure in the increase of the
membership dues from P100.00 to P200.00 per month. Further, complainant avers that he was denied the right to appeal his suspension and expulsion in accordance
with the provisions of the Union’s Constitution and By-Laws. In addition, complainant claims that respondents attempted to cause the management to discriminate
against the members of WATER-AFWC thru the proposed CBA.

Pertinent to the issue then on hand, the Labor Arbiter ordered that the case be referred back to the Union level for the General Assembly to act on complainant’s appeal.
Hence, these appeals.

After a careful look at all the documents submitted and a meticulous review of the facts, We find that this Commission lacks the jurisdictional competence to act on this
case.

Article 217 of the Labor Code,32 as amended, specifically enumerates the cases over which the Labor Arbiters and the Commission have original and exclusive
jurisdiction. A perusal of the record reveals that the causes of action invoked by complainant do not fall under any of the enumerations therein. Clearly, We have no
jurisdiction over the same.

Moreover, pursuant to Section 1, Rule XI, as amended, DOLE Department Order No. 40-03 in particular, Item A, paragraphs (h) and (j) and Item B, paragraph (a)(3),
respectively, provide:

"A. Inter-Intra-Union disputes shall include:

"(h) violation of or disagreements over any provision of the Constitution and By-Laws of a Union or workers’ association.

"(j) violation of the rights and conditions of membership in a Union or workers’ association.

"B. Other Labor Relations disputes, not otherwise covered by Article 217 of the Labor Code, shall include –

"3. a labor union and an individual who is not a member of said union."

Clearly, the above-mentioned disputes and conflict fall under the jurisdiction of the Bureau of Labor Relations, as these are inter/intra-union disputes.

WHEREFORE, the decision of the Labor Arbiter a quo dated May 29, 2009 is hereby declared NULL and VOID for being rendered without jurisdiction and the instant
complaint is DISMISSED.

SO ORDERED.33

Petitioner moved for reconsideration,34 but in a June 16, 2010 Resolution,35 the motion was denied and the NLRC sustained its Decision.
 186

Ruling of the Court of Appeals

In a Petition for Certiorari36 filed with the CA and docketed as CA-G.R. SP No. 115639, petitioner sought to reverse the NLRC Decision and be awarded his claim for
damages and attorney’s fees on account of respondents’ unfair labor practices, arguing among others that his charge of unfair labor practices is cognizable by the Labor
Arbiter; that the fact that the dispute is inter- or intra-union in nature cannot erase the fact that respondents were guilty of unfair labor practices in interfering and
restraining him in the exercise of his right to self-organization as member of both MWEU and WATER-AFWC, and in discriminating against him and other members
through the provisions of the proposed 2008 CBA which they drafted; that his failure to pay the increased union dues was proper since the approval of said increase was
arrived at without observing the prescribed voting procedure laid down in the Labor Code; that he is entitled to an award of damages and attorney’s fees as a result of
respondents’ illegal acts in discriminating against him; and that in ruling the way it did, the NLRC committed grave abuse of discretion.

On April 24, 2012, the CA issued the assailed Decision containing the following pronouncement:

The petition lacks merit.

Petitioner’s causes of action against MWEU are inter/intra-union disputes cognizable by the BLR whose functions and jurisdiction are largely confined to union matters,
collective bargaining registry, and labor education. Section 1, Rule XI of Department Order (D.O.) No. 40-03, Series of 2003, of the Department of Labor and
Employment enumerates instances of inter/intra-union disputes, viz:

Section 1. Coverage. – Inter/intra-union disputes shall include:

xxxx

(b) conduct of election of union and workers’ association officers/nullification of election of union and workers’ association officers;

(c) audit/accounts examination of union or workers’ association funds;

xxxx

(g) validity/invalidity of impeachment/ expulsion of union and workers’ association officers and members;

xxxx

(j) violations of or disagreements over any provision in a union or workers’ association constitution and by-laws;

xxxx

(l) violations of the rights and conditions of union or workers’ association membership;

xxxx

(n) such other disputes or conflicts involving the rights to self-organization, union membership and collective bargaining –

(1) between and among legitimate labor organizations;

 187

(2) between and among members of a union or workers’ association.

In brief, "Inter-Union Dispute" refers to any conflict between and among legitimate labor unions involving representation questions for purposes of collective bargaining
or to any other conflict or dispute between legitimate labor unions. "Intra-Union Dispute" refers to any conflict between and among union members, including grievances
arising from any violation of the rights and conditions of membership, violation of or disagreement over any provision of the union’s constitution and by-laws, or
disputes arising from chartering or affiliation of union. On the other hand, the circumstances of unfair labor practices (ULP) of a labor organization are stated in Article
249 of the Labor Code, to wit:

Article 249. Unfair labor practices of labor organizations. It shall be unlawful for labor organization, its officers, agents, or representatives to commit any of the following
unfair labor practices:

(a) To restrain or coerce employees in the exercise of their right to self-organization; Provided, That the labor organization shall have the right to prescribe its own rules
with respect to the acquisition or retention of membership;

(b) To cause or attempt to cause an employer to discriminate against an employee, including discrimination against an employee with respect to whom membership in
such organization has been denied or terminated on any ground other than the usual terms and conditions under which membership or continuation of membership is
made available to other members;

xxxx

Applying the aforementioned rules, We find that the issues arising from petitioner’s right to information on the increased membership dues, right to appeal his
suspension and expulsion according to CBL provisions, and right to vote and be voted on are essentially intra-union disputes; these involve violations of rights and
conditions of union membership. But his claim that a director of MWEU warned that non-MWEU members would not receive CBA benefits is an inter-union dispute. It is
more of an "interference" by a rival union to ensure the loyalty of its members and to persuade non-members to join their union. This is not an actionable wrong
because interfering in the exercise of the right to organize is itself a function of self-organizing. 37 As long as it does not amount to restraint or coercion, a labor
organization may interfere in the employees’ right to self-organization. 38 Consequently, a determination of validity or illegality of the alleged acts necessarily touches on
union matters, not ULPs, and are outside the scope of the labor arbiter’s jurisdiction.

As regards petitioner’s other accusations, i.e., discrimination in terms of meting out the penalty of expulsion against him alone, and attempt to cause the employer,
MWC, to discriminate against non-MWEU members in terms of retrenchment or reduction of personnel, and signing bonus, while We may consider them as falling within
the concept of ULP under Article 249(a) and (b), still, petitioner’s complaint cannot prosper for lack of substantial evidence. Other than his bare allegation, petitioner
offered no proof that MWEU did not penalize some union members who failed to pay the increased dues. On the proposed discriminatory CBA provisions, petitioner
merely attached the pages containing the questioned provisions without bothering to reveal the MWEU representatives responsible for the said proposal. Article 249
mandates that "x x x only the officers, members of the governing boards, representatives or agents or members of labor associations or organizations who have
actually participated in, authorized or ratified unfair labor practices shall be held criminally liable." Plain accusations against all MWEU officers, without specifying their
actual participation, do not suffice. Thus, the ULP charges must necessarily fail.

In administrative and quasi-judicial proceedings, only substantial evidence is necessary to establish the case for or against a party. Substantial evidence is that amount
of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. Petitioner failed to discharge the burden of proving, by substantial
evidence, the allegations of ULP in his complaint. The NLRC, therefore, properly dismissed the case.

FOR THESE REASONS, the petition is DISMISSED.

 188

SO ORDERED.39

Thus, the instant Petition.

Issue

In an August 28, 2013 Resolution,40 this Court resolved to give due course to the Petition, which claims that the CA erred:

A. IN DECLARING THAT THE PRESENCE OF INTER/INTRA-UNION CONFLICTS NEGATES THE COMPLAINT FOR UNFAIR LABOR PRACTICES AGAINST A LABOR
ORGANIZATION AND ITS OFFICERS, AND IN AFFIRMING THAT THE NLRC PROPERLY DISMISSED THE CASE FOR ALLEGED LACK OF JURISDICTION.

B. IN NOT RULING THAT RESPONDENTS ARE GUILTY OF UNFAIR LABOR PRACTICES UNDER ARTICLE 249(a) AND (b) OF THE LABOR CODE.

C. IN DECLARING THAT THE THREATS MADE BY A UNION OFFICER AGAINST MEMBERS OF A RIVAL UNION IS (sic) MERELY AN "INTERFERENCE" AND DO NOT AMOUNT
TO "RESTRAINT" OR "COERCION".

D. IN DECLARING THAT PETITIONER FAILED TO PRESENT SUBSTANTIAL EVIDENCE IN PROVING RESPONDENTS’ SPECIFIC ACTS OF UNFAIR LABOR PRACTICES.

E. IN NOT RULING THAT RESPONDENTS ARE SOLIDARILY LIABLE TO PETITIONER FOR MORAL AND EXEMPLARY DAMAGES, AND ATTORNEY’S FEES. 41

Petitioner’s Arguments

Praying that the assailed CA dispositions be set aside and that respondents be declared guilty of unfair labor practices under Article 249(a) and (b) and adjudged liable
for damages and attorney’s fees as prayed for in his complaint, petitioner maintains in his Petition and Reply 42 that respondents are guilty of unfair labor practices which
he clearly enumerated and laid out in his pleadings below; that these unfair labor practices committed by respondents fall within the jurisdiction of the Labor Arbiter;
that the Labor Arbiter, the NLRC, and the CA failed to rule on his accusation of unfair labor practices and simply dismissed his complaint on the ground that his causes of
action are intra- or inter-union in nature; that admittedly, some of his causes of action involved intra- or inter-union disputes, but other acts of respondents constitute
unfair labor practices; that he presented substantial evidence to prove that respondents are guilty of unfair labor practices by failing to observe the proper procedure in
the imposition of the increased monthly union dues, and in unduly imposing the penalties of suspension and expulsion against him; that under the union’s constitution
and by-laws, he is given the right to appeal his suspension and expulsion to the general membership assembly; that in denying him his rights as a union member and
expelling him, respondents are guilty of malice and evident bad faith; that respondents are equally guilty for violating and curtailing his rights to vote and be voted to a
position within the union, and for discriminating against non-MWEU members; and that the totality of respondents’ conduct shows that they are guilty of unfair labor
practices.

Respondent’s Arguments

In their joint Comment,43 respondents maintain that petitioner raises issues of fact which are beyond the purview of a petition for review on certiorari; that the findings
of fact of the CA are final and conclusive; that the Labor Arbiter, NLRC, and CA are one in declaring that there is no unfair labor practices committed against petitioner;
that petitioner’s other allegations fall within the jurisdiction of the BLR, as they refer to intra- or inter-union disputes between the parties; that the issues arising from
petitioner’s right to information on the increased dues, right to appeal his suspension and expulsion, and right to vote and be voted upon are essentially intra-union in
nature; that his allegations regarding supposed coercion and restraint relative to benefits in the proposed CBA do not constitute an actionable wrong; that all of the acts
questioned by petitioner are covered by Section 1, Rule XI of Department Order 40-03, series of 2003 as intra-/inter-union disputes which do not fall within the
jurisdiction of the Labor Arbiter; that in not paying his union dues, petitioner is guilty of insubordination and deserved the penalty of expulsion; that petitioner failed to
 189

petition to convene the general assembly through the required signature of 30% of the union membership in good standing pursuant to Article VI, Section 2(a) of
MWEU’s Constitution and By-Laws or by a petition of the majority of the general membership in good standing under Article VI, Section 3; and that for his failure to
resort to said remedies, petitioner can no longer question his suspension or expulsion and avail of his right to appeal.

Our Ruling

The Court partly grants the Petition.

In labor cases, issues of fact are for the labor tribunals and the CA to resolve, as this Court is not a trier of facts. However, when the conclusion arrived at by them is
erroneous in certain respects, and would result in injustice as to the parties, this Court must intervene to correct the error. While the Labor Arbiter, NLRC, and CA are
one in their conclusion in this case, they erred in failing to resolve petitioner’s charge of unfair labor practices against respondents.

It is true that some of petitioner’s causes of action constitute intra-union cases cognizable by the BLR under Article 226 of the Labor Code.

An intra-union dispute refers to any conflict between and among union members, including grievances arising from any violation of the rights and conditions of
membership, violation of or disagreement over any provision of the union’s constitution and by-laws, or disputes arising from chartering or disaffiliation of the union.
Sections 1 and 2, Rule XI of Department Order No. 40-03, Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union disputes x x x. 44

However, petitioner’s charge of unfair labor practices falls within the original and exclusive jurisdiction of the Labor Arbiters, pursuant to Article 217 of the Labor Code.
In addition, Article 247 of the same Code provides that "the civil aspects of all cases involving unfair labor practices, which may include claims for actual, moral,
exemplary and other forms of damages, attorney’s fees and other affirmative relief, shall be under the jurisdiction of the Labor Arbiters."

Unfair labor practices may be committed both by the employer under Article 248 and by labor organizations under Article 249 of the Labor Code, 45 which provides as
follows:

ART. 249. Unfair labor practices of labor organizations. - It shall be unfair labor practice for a labor organization, its officers, agents or representatives:

(a) To restrain or coerce employees in the exercise of their right to self-organization. However, a labor organization shall have the right to prescribe its own rules with
respect to the acquisition or retention of membership;

(b) To cause or attempt to cause an employer to discriminate against an employee, including discrimination against an employee with respect to whom membership in
such organization has been denied or to terminate an employee on any ground other than the usual terms and conditions under which membership or continuation of
membership is made available to other members;

(c) To violate the duty, or refuse to bargain collectively with the employer, provided it is the representative of the employees;

(d) To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other things of value, in the nature of an exaction, for services
which are not performed or not to be performed, including the demand for fee for union negotiations;

(e) To ask for or accept negotiation or attorney’s fees from employers as part of the settlement of any issue in collective bargaining or any other dispute; or

(f) To violate a collective bargaining agreement.

 190

The provisions of the preceding paragraph notwithstanding, only the officers, members of governing boards, representatives or agents or members of labor associations
or organizations who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable. (As amended by Batas Pambansa Bilang
130, August 21, 1981).

Petitioner contends that respondents committed acts constituting unfair labor practices – which charge was particularly laid out in his pleadings, but that the Labor
Arbiter, the NLRC, and the CA ignored it and simply dismissed his complaint on the ground that his causes of action were intra- or inter-union in nature. Specifically,
petitioner claims that he was suspended and expelled from MWEU illegally as a result of the denial of his right to appeal his case to the general membership assembly in
accordance with the union’s constitution and by-laws. On the other hand, respondents counter that such charge is intra-union in nature, and that petitioner lost his right
to appeal when he failed to petition to convene the general assembly through the required signature of 30% of the union membership in good standing pursuant to
Article VI, Section 2(a) of MWEU’s Constitution and By-Laws or by a petition of the majority of the general membership in good standing under Article VI, Section 3.

Under Article VI, Section 2(a) of MWEU’s Constitution and By-Laws, the general membership assembly has the power to "review revise modify affirm or repeal [sic]
resolution and decision of the Executive Board and/or committees upon petition of thirty percent (30%) of the Union in good standing," 46 and under Section 2(d), to
"revise, modify, affirm or reverse all expulsion cases." 47 Under Section 3 of the same Article, "[t]he decision of the Executive Board may be appealed to the General
Membership which by a simple majority vote reverse the decision of said body. If the general Assembly is not in session the decision of the Executive Board may be
reversed by a petition of the majority of the general membership in good standing." 48 And, in Article X, Section 5, "[a]ny dismissed and/or expelled member shall have
the right to appeal to the Executive Board within seven days from notice of said dismissal and/or expulsion which, in [turn] shall be referred to the General membership
assembly. In case of an appeal, a simple majority of the decision of the Executive Board is imperative. The same shall be approved/disapproved by a majority vote of
the general membership assembly in a meeting duly called for the purpose." 49

In regard to suspension of a union member, MWEU’s Constitution and By-Laws provides under Article X, Section 4 thereof that "[a]ny suspended member shall have the
right to appeal within three (3) working days from the date of notice of said suspension. In case of an appeal a simple majority of vote of the Executive Board shall be
necessary to nullify the suspension."

Thus, when an MWEU member is suspended, he is given the right to appeal such suspension within three working days from the date of notice of said suspension, which
appeal the MWEU Executive Board is obligated to act upon by a simple majority vote. When the penalty imposed is expulsion, the expelled member is given seven days
from notice of said dismissal and/or expulsion to appeal to the Executive Board, which is required to act by a simple majority vote of its members. The Board’s decision
shall then be approved/ disapproved by a majority vote of the general membership assembly in a meeting duly called for the purpose.1avvphi1

The documentary evidence is clear that when petitioner received Borela’s August 21, 2007 letter informing him of the Executive Board’s unanimous approval of the
grievance committee recommendation to suspend him for the second time effective August 24, 2007, he immediately and timely filed a written appeal. However, the
Executive Board – then consisting of respondents Borela, Tierra, Bolo, Casañas, Fernandez, Rendon, Montemayor, Torres, Quebral, Pagulayan, Cancino, Maga, Cometa,
Mancenido, and two others who are not respondents herein – did not act thereon. Then again, when petitioner was charged for the third time and meted the penalty of
expulsion from MWEU by the unanimous vote of the Executive Board, his timely appeal was again not acted upon by said board – this time consisting of respondents
Borela, Quebral, Tierra, Imana, Rendon, Yeban, Cancino, Torres, Montemayor, Mancenido, Mandilag, Fernandez, Buenaventura, Apilado, Maga, Barbero, Cometa, Bolo,
and Manlapaz.

Thus, contrary to respondents’ argument that petitioner lost his right to appeal when he failed to petition to convene the general assembly through the required
signature of 30% of the union membership in good standing pursuant to Article VI, Section 2(a) of MWEU’s Constitution and By-Laws or by a petition of the majority of
the general membership in good standing under Article VI, Section 3, this Court finds that petitioner was illegally suspended for the second time and thereafter
unlawfully expelled from MWEU due to respondents’ failure to act on his written appeals. The required petition to convene the general assembly through the required
signature of 30% (under Article VI, Section 2[a]) or majority (under Article VI, Section 3) of the union membership does not apply in petitioner’s case; the Executive
 191

Board must first act on his two appeals before the matter could properly be referred to the general membership. Because respondents did not act on his two appeals,
petitioner was unceremoniously suspended, disqualified and deprived of his right to run for the position of MWEU Vice-President in the September 14, 2007 election of
officers, expelled from MWEU, and forced to join another union, WATER-AFWC. For these, respondents are guilty of unfair labor practices under Article 249 (a) and (b) –
that is, violation of petitioner’s right to self-organization, unlawful discrimination, and illegal termination of his union membership – which case falls within the original
and exclusive jurisdiction of the Labor Arbiters, in accordance with Article 217 of the Labor Code.

The primary concept of unfair labor practices is stated in Article 247 of the Labor Code, which states:

Article 247. Concept of unfair labor practice and procedure for prosecution thereof. –– Unfair labor practices violate the constitutional right of workers and employees to
self-organization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other
in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations.

"In essence, [unfair labor practice] relates to the commission of acts that transgress the workers’ right to organize." 50"[A]ll the prohibited acts constituting unfair labor
practice in essence relate to the workers’ right to self-organization." 51 "[T]he term unfair labor practice refers to that gamut of offenses defined in the Labor Code which,
at their core, violates the constitutional right of workers and employees to self-organization." 52

Guaranteed to all employees or workers is the ‘right to self-organization and to form, join, or assist labor organizations of their own choosing for purposes of collective
bargaining.’ This is made plain by no less than three provisions of the Labor Code of the Philippines. Article 243 of the Code provides as follows:

ART. 243. Coverage and employees’ right to self-organization. — All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable,
medical, or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their
own choosing for purposes or collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without any definite
employers may form labor organizations for their mutual aid and protection.

Article 248 (a) declares it to be an unfair labor practice for an employer, among others, to ‘interfere with, restrain or coerce employees in the exercise of their right to
self-organization.’ Similarly, Article 249 (a) makes it an unfair labor practice for a labor organization to ‘restrain or coerce employees in the exercise of their rights to
self-organization . . .’

xxxx

The right of self-organization includes the right to organize or affiliate with a labor union or determine which of two or more unions in an establishment to join, and to
engage in concerted activities with co-workers for purposes of collective bargaining through representatives of their own choosing, or for their mutual aid and
protection, i.e., the protection, promotion, or enhancement of their rights and interests. 53

As members of the governing board of MWEU, respondents are presumed to know, observe, and apply the union’s constitution and by-laws. Thus, their repeated
violations thereof and their disregard of petitioner’s rights as a union member – their inaction on his two appeals which resulted in his suspension, disqualification from
running as MWEU officer, and subsequent expulsion without being accorded the full benefits of due process – connote willfulness and bad faith, a gross disregard of his
rights thus causing untold suffering, oppression and, ultimately, ostracism from MWEU. "Bad faith implies breach of faith and willful failure to respond to plain and well
understood obligation."54This warrants an award of moral damages in the amount of P100,000.00. Moreover, the Civil Code provides:

Art. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the
following rights and liberties of another person shall be liable to the latter for damages:
 192

xxxx

(12) The right to become a member of associations or societies for purposes not contrary to law;

In Vital-Gozon v. Court of Appeals,55 this Court declared, as follows:

Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury. They may be recovered if they are the proximate result of the defendant’s wrongful act or omission. The instances when moral damages may be recovered
are, inter alia, ‘acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35 of the Civil Code,’ which, in turn, are found in the Chapter on Human
Relations of the Preliminary Title of the Civil Code. x x x

Under the circumstances, an award of exemplary damages in the amount of P50,000.00, as prayed for, is likewise proper. "Exemplary damages are designed to permit
the courts to mould behavior that has socially deleterious consequences, and their imposition is required by public policy to suppress the wanton acts of the
offender."56 This should prevent respondents from repeating their mistakes, which proved costly for petitioner.1âwphi1

Under Article 2229 of the Civil Code, ‘[e]xemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages.’ As this court has stated in the past: ‘Exemplary damages are designed by our civil law to permit the courts to reshape
behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour.’ 57

Finally, petitioner is also entitled to attorney’s fees equivalent to 10 per cent (10%) of the total award. The unjustified acts of respondents clearly compelled him to
institute an action primarily to vindicate his rights and protect his interest. Indeed, when an employee is forced to litigate and incur expenses to protect his rights and
interest, he is entitled to an award of attorney’s fees.58

WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed April 24, 2012 Decision of the Court of Appeals in CA-G.R. SP No. 115639 is hereby MODIFIED, in that
all of the respondents - except for Carlos Villa, Ric Briones, and Chito Bernardo - are declared guilty of unfair labor practices and ORDERED TO INDEMNIFY petitioner
Allan M. Mendoza the amounts of Pl00,000.00 as and by way of moral damages, PS0,000.00 as exemplary damages, and attorney's fees equivalent to 10 per
cent (10%) of the total award.

SO ORDERED.
193
 194

G.R. No. 208986, January 13, 2016

HIJO RESOURCES CORPORATION, Petitioner, v. EPIFANIO P. MEJARES, REMEGIO C. BALURAN, JR., DANTE SAYCON, AND CECILIO CUCHARO, REPRESENTED BY
NAMABDJERA-HRC, Respondents.

DECISION

CARPIO, J.:

The Case

This petition for review 1 assails the 29 August 2012 Decision 2 and the 13 August 2013 Resolution 3 of the Court of Appeals in CA-G.R. SP No. 04058-MIN. The Court of
Appeals reversed and set aside the Resolutions dated 29 June 2009 and 16 December 2009 of the National Labor Relations Commission (NLRC) in NLRC No. MIC-03-
000229-08 (RAB XI-09-00774-2007), and remanded the case to the Regional Arbitration Branch, Region XI, Davao City for further proceedings.

The Facts

Respondents Epifanio P. Mejares, Remegio C. Baluran, Jr., Dante Saycon, and Cecilio Cucharo (respondents) were among the complainants, represented by their labor
union named "Nagkahiusang Mamumuo ng Bit, Djevon, at Raquilla Farms sa Hijo Resources Corporation" (NAMABDJERA-HRC), who filed with the NLRC an illegal
dismissal case against petitioner Hijo Resources Corporation (HRC).

Complainants (which include the respondents herein) alleged that petitioner HRC, formerly known as Hijo Plantation Incorporated (HPI), is the owner of agricultural
lands in Madum, Tagum, Davao del Norte, which were planted primarily with Cavendish bananas. In 2000, HPI was renamed as HRC. In December 2003, HRC's
application for the conversion of its agricultural lands into agri-industrial use was approved. The machineries and equipment formerly used by HPI continued to be
utilized by HRC.

Complainants claimed that they were employed by HPI as farm workers in HPI's plantations occupying various positions as area harvesters, packing house workers,
loaders, or labelers. In 2001, complainants were absorbed by HRC, but they were working under the contractor-growers: Buenaventura Tano (Bit Farm); Djerame Pausa
(Djevon Farm); and Ramon Q. Laurente (Raquilla Farm). Complainants asserted that these contractor-growers received compensation from HRC and were under the
control of HRC. They further alleged that the contractor-growers did not have their own capitalization, farm machineries, and equipment.

On 1 July 2007, complainants formed their union NAMABDJERA-HRC, which was later registered with the Department of Labor and Employment (DOLE). On 24 August
2007, NAMABDJERA-HRC filed a petition for certification election before the DOLE.
 195

When HRC learned that complainants formed a union, the three contractor-growers filed with the DOLE a notice of cessation of business operations. In September 2007,
complainants were terminated from their employment on the ground of cessation of business operations by the contractor-growers of HRC. On 19 September 2007,
complainants, represented by NAMABDJERA-HRC, filed a case for unfair labor practices, illegal dismissal, and illegal deductions with prayer for moral and exemplary
damages and attorney's fees before the NLRC.

On 19 November 2007, DOLE Med-Arbiter Lito A. Jasa issued an Order, 4 dismissing NAMABDJERA-HRC's petition for certification election on the ground that there was
no employer-employee relationship between complainants (members of NAMABDJERA-HRC) and HRC. Complainants did not appeal the Order of Med-Arbiter Jasa but
pursued the illegal dismissal case they filed.

On 4 January 2008, HRC filed a motion to inhibit Labor Arbiter Maria Christina S. Sagmit and moved to dismiss the complaint for illegal dismissal. The motion to dismiss
was anchored on the following arguments: (1) Lack of jurisdiction under the principle of res judicata; and (2) The Order of the Med-Arbiter finding that complainants
were not employees of HRC, which complainants did not appeal, had become final and executory.

The Labor Arbiter's Ruling

On 5 February 2008, Labor Arbiter Sagmit denied the motion to inhibit. Labor Arbiter Sagmit likewise denied the motion to dismiss in an Order dated 12 February 2008.
Labor Arbiter Sagmit held that res judicata does not apply. Citing the cases of Manila Golf & Country Club, Inc. v. IAC 5 and Sandoval Shipyards, Inc. v. Pepito, 6 the
Labor Arbiter ruled that the decision of the Med-Arbiter in a certification election case, by the nature of that proceedings, does not foreclose further dispute between the
parties as to the existence or non-existence of employer-employee relationship between them. Thus, the finding of Med-Arbiter Jasa that no employment relationship
exists between HRC and complainants does not bar the Labor Arbiter from making his own independent finding on the same issue. The non-litigious nature of the
proceedings before the Med-Arbiter does not prevent the Labor Arbiter from hearing and deciding the case. Thus, Labor Arbiter Sagmit denied the motion to dismiss and
ordered the parties to file their position papers.

HRC filed with the NLRC a petition for certiorari with a prayer for temporary restraining order, seeking to nullify the 5 February 2008 and 12 February 2008 Orders of
Labor Arbiter Sagmit.

The Ruling of the NLRC

The NLRC granted the petition, holding that Labor Arbiter Sagmit gravely abused her discretion in denying HRC's motion to dismiss. The NLRC held that the Med-Arbiter
Order dated 19 November 2007 dismissing the certification election case on the ground of lack of employer-employee relationship between HRC and complainants
(members of NAMABDJERA-HRC) constitutes res judicata under the concept of conclusiveness of judgment, and thus, warrants the dismissal of the case. The NLRC ruled
that the Med-Arbiter exercises quasi-judicial power and the Med-Arbiter's decisions and orders have, upon their finality, the force and effect of a final judgment within
the purview of the doctrine of res judicata.

On the issue of inhibition, the NLRC found it moot and academic in view of Labor Arbiter Sagmit's voluntary inhibition from the case as per Order dated 11 March 2009.

The Ruling of the Court of Appeals

 196

The Court of Appeals found the ruling in the Sandoval case more applicable in this case. The Court of Appeals noted that the Sandoval case, which also involved a
petition for certification election and an illegal dismissal case filed by the union members against the alleged employer, is on all fours with this case. The issue
in Sandoval on the effect of the Med-Arbiter's findings as to the existence of employer-employee relationship is the very same issue raised in this case. On the other
hand, the case of Chris Garments Corp. v. Hon. Sto. Tomas 7 cited by the NLRC, which involved three petitions for certification election filed by the same union, is of a
different factual milieu.

The Court of Appeals held that the certification proceedings before the Med-Arbiter are non-adversarial and merely investigative. On the other hand, under Article 217 of
the Labor Code, the Labor Arbiter has original and exclusive jurisdiction over illegal dismissal cases. Although the proceedings before the Labor Arbiter are also
described as non-litigious, the Court of Appeals noted that the Labor Arbiter is given wide latitude in ascertaining the existence of employment relationship. Thus, unlike
the Med-Artbiter, the Labor Arbiter may conduct clarificatory hearings and even avail of ocular inspection to ascertain facts speedily.

Hence, the Court of Appeals concluded that the decision in a certification election case does not foreclose further dispute as to the existence or non-existence of an
employer-employee relationship between HRC and the complainants.

On 29 August 2012, the Court of Appeals promulgated its Decision, the dispositive portion of which reads:chanRoblesvirtualLawlibrary

WHEREFORE, the petition is hereby GRANTED and the assailed Resolutions dated June 29, 2009 and December 16, 2009 of the National Labor Relations Commission are
hereby REVERSED AND SET ASIDE. Let NLRC CASE No. RAB-XI-09-00774-0707 be remanded to the Regional Arbitration Branch, Region XI, Davao City for further
proceedings.

SO ORDERED.8ChanRoblesVirtualawlibrary
cralawlawlibrary

The Issue

Whether the Court of Appeals erred in setting aside the NLRC ruling and remanding the case to the Labor Arbiter for further proceedings.

The Ruling of the Court

We find the petition without merit.

There is no question that the Med-Arbiter has the authority to determine the existence of an employer-employee relationship between the parties in a petition for
certification election. As held in M. Y. San Biscuits, Inc. v. Acting Sec. Laguesma:9chanroblesvirtuallawlibrary

Under Article 226 of the Labor Code, as amended, the Bureau of Labor Relations (BLR), of which the med-arbiter is an officer, has the following jurisdiction -
 197

"ART. 226. Bureau of Labor Relations. - The Bureau of Labor Relations and the Labor Relations Divisionfs] in the regional offices of the Department of Labor shall have
original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or non-agricultural , except those arising from the
implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration.

The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by agreement of the parties." (Italics supplied)

From the foregoing, the BLR has the original and exclusive jurisdiction to inter alia, decide all disputes, grievances or problems arising from or affecting labor-
management relations in all workplaces whether agricultural or non-agricultural. Necessarily, in the exercise of this jurisdiction over labor-management relations, the
med-arbiter has the authority, original and exclusive, to determine the existence of an employer-employee relationship between the parties.

Apropos to the present case, once there is a determination as to the existence of such a relationship, the med-arbiter can then decide the certification election case. As
the authority to determine the employer-employee relationship is necessary and indispensable in the exercise of jurisdiction by the med-arbiter, his finding thereon may
only be reviewed and reversed by the Secretary of Labor who exercises appellate jurisdiction under Article 259 of the Labor Code, as amended, which provides -

"ART. 259. Appeal from certification election orders. - Any party to an election may appeal the order or results of the election as determined by the Med-Arbiter directly
to the Secretary of Labor and Employment on the ground that the rules and regulations or parts thereof established by the Secretary of Labor and Employment for the
conduct of the election have been violated. Such appeal shall be decided within fifteen (15) calendar days." 10

cralawlawlibrary

In this case, the Med-Arbiter issued an Order dated 19 November 2007, dismissing the certification election case because of lack of employer-employee relationship
between HRC and the members of the respondent union. The order dismissing the petition was issued after the members of the respondent union were terminated from
their employment in September 2007, which led to the filing of the illegal dismissal case before the NLRC on 19 September 2007. Considering their termination from
work, it would have been futile for the members of the respondent union to appeal the Med-Arbiter' s order in the certification election case to the DOLE Secretary.
Instead, they pursued the illegal dismissal case filed before the NLRC.

The Court is tasked to resolve the issue of whether the Labor Arbiter, in the illegal dismissal case, is bound by the ruling of the Med-Arbiter regarding the existence or
non-existence of employer-employee relationship between the parties in the certification election case.

The Court rules in the negative. As found by the Court of Appeals, the facts in this case are very similar to those in the Sandoval case, which also involved the issue of
whether the ruling in a certification election case on the existence or non-existence of an employer-employee relationship operates as res judicata in the illegal dismissal
case filed before the NLRC. In Sandoval, the DOLE Undersecretary reversed the finding of the Med-Arbiter in a certification election case and ruled that there was no
employer-employee relationship between the members of the petitioner union and Sandoval Shipyards, Inc. (SSI), since the former were employees of the
subcontractors. Subsequently, several illegal dismissal cases were filed by some members of the petitioner union against SSI. Both the Labor Arbiter and the NLRC ruled
that there was no employer-employee relationship between the parties, citing the resolution of the DOLE Undersecretary in the certification election case. The Court of
Appeals reversed the NLRC ruling and held that the members of the petitioner union were employees of SSI. On appeal, this Court affirmed the appellate court's
decision and ruled that the Labor Arbiter and the NLRC erred in relying on the pronouncement of the DOLE Undersecretary that there was no employer-employee
relationship between the parties. The Court cited the ruling in the Manila Golf11 case that the decision in a certification election case, by the very nature of that
proceeding, does not foreclose all further dispute between the parties as to the existence or non-existence of an employer-employee relationship between them.
 198

This case is different from the Chris Garments case cited by the NLRC where the Court held that the matter of employer-employee relationship has been resolved with
finality by the DOLE Secretary, whose factual findings were not appealed by the losing party. As mentioned earlier, the Med-Arbiter's order in this case dismissing the
petition for certification election on the basis of non-existence of employer-employee relationship was issued after the members of the respondent union were dismissed
from their employment. The purpose of a petition for certification election is to determine which organization will represent the employees in their collective bargaining
with the employer.12The respondent union, without its member-employees, was thus stripped of its personality to challenge the Med-Arbiter's decision in the certification
election case. Thus, the members of the respondent union were left with no option but to pursue their illegal dismissal case filed before the Labor Arbiter. To dismiss the
illegal dismissal case filed before the Labor Arbiter on the basis of the pronouncement of the Med-Arbiter in the certification election case that there was no employer-
employee relationship between the parties, which the respondent union could not even appeal to the DOLE Secretary because of the dismissal of its members, would be
tantamount to denying due process to the complainants in the illegal dismissal case. This, we cannot allow.

WHEREFORE, we DENY the petition. We AFFIRM the 29 August 2012 Decision and the 13 August 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 04058-MIN.

SO ORDERED.chanroblesvirtuallawlibrary
 199

G.R. No. 202961, February 04, 2015

EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID, BONIFACIO MATUNDAN, NORA MENDOZA, ET AL., Petitioners, v. NATIONAL LABOR
RELATIONS COMMISSION, SOLID MILLS, INC., AND/OR PHILIP ANG, Respondents.

DECISION

LEONEN, J.:

An employer is allowed to withhold terminal pay and benefits pending the employee’s return of its properties.

Petitioners are respondent Solid Mills, Inc.’s (Solid Mills) employees. 1 They are represented by the National Federation of Labor Unions (NAFLU), their collective
bargaining agent.2chanroblesvirtuallawlibrary

As Solid Mills’ employees, petitioners and their families were allowed to occupy SMI Village, a property owned by Solid Mills. 3 According to Solid Mills, this was “[o]ut of
liberality and for the convenience of its employees . . . [and] on the condition that the employees . . . would vacate the premises anytime the Company deems
fit.”4chanroblesvirtuallawlibrary
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In September 2003, petitioners were informed that effective October 10, 2003, Solid Mills would cease its operations due to serious business losses. 5 NAFLU recognized
Solid Mills’ closure due to serious business losses in the memorandum of agreement dated September 1, 2003. 6 The memorandum of agreement provided for Solid
Mills’ grant of separation pay less accountabilities, accrued sick leave benefits, vacation leave benefits, and 13th month pay to the employees. 7 Pertinent portions of the
agreement provide:chanRoblesvirtualLawlibrary

WHEREAS, the COMPANY has incurred substantial financial losses and is currently experiencing further severe financial losses;chanrobleslaw

WHEREAS, in view of such irreversible financial losses, the COMPANY will cease its operations on October 10, 2003;chanrobleslaw

WHEREAS, all employees of the COMPANY on account of irreversible financial losses, will be dismissed from employment effective October 10, 2003;chanrobleslaw

In view thereof, the parties agree as follows:chanRoblesvirtualLawlibrary

That UNION acknowledges that the COMPANY is experiencing severe financial losses and as a consequence of which, management is constrained to cease the company’s
operations.

The UNION acknowledges that under Article 283 of the Labor Code, separation pay is granted to employees who are dismissed due to closures or cessation of operations
NOT DUE to serious business losses.

The UNION acknowledges that in view of the serious business losses the Company has been experiencing as seen in their audited financial statements, employees ARE
NOT granted separation benefits under the law.

The COMPANY, by way of goodwill and in the spirit of generosity agrees to grant financial assistance less accountabilities to members of the Union based on length of
service to be computed as follows: (Italics in this paragraph supplied)

Number of days - 12.625 for every year of service

In view of the above, the members of the UNION will receive such financial assistance on an equal monthly installments basis based on the following
schedule:chanRoblesvirtualLawlibrary

First Check due on January 5, 2004 and every 5th of the month thereafter until December 5, 2004.

The COMPANY commits to pay any accrued benefits the Union members are entitled to, specifically those arising from sick and vacation leave benefits and 13th month
pay, less accountabilities based on the following schedule:chanRoblesvirtualLawlibrary

One Time Cash Payment to be distributed anywhere from. . . .

....

The foregoing agreement is entered into with full knowledge by the parties of their rights under the law and they hereby bind themselves not to conduct any concerted
action of whatsoever kind, otherwise the grant of financial assistance as discussed above will be withheld. 8 (Emphasis in the original)
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Solid Mills filed its Department of Labor and Employment termination report on September 2, 2003. 9chanroblesvirtuallawlibrary

Later, Solid Mills, through Alfredo Jingco, sent to petitioners individual notices to vacate SMI Village. 10chanroblesvirtuallawlibrary

Petitioners were no longer allowed to report for work by October 10, 2003. 11 They were required to sign a memorandum of agreement with release and quitclaim before
their vacation and sick leave benefits, 13th month pay, and separation pay would be released. 12 Employees who signed the memorandum of agreement were
considered to have agreed to vacate SMI Village, and to the demolition of the constructed houses inside as condition for the release of their termination benefits and
separation pay.13 Petitioners refused to sign the documents and demanded to be paid their benefits and separation pay. 14chanroblesvirtuallawlibrary

Hence, petitioners filed complaints before the Labor Arbiter for alleged non-payment of separation pay, accrued sick and vacation leaves, and 13th month pay. 15 They
argued that their accrued benefits and separation pay should not be withheld because their payment is based on company policy and practice. 16 Moreover, the 13th
month pay is based on law, specifically, Presidential Decree No. 851. 17 Their possession of Solid Mills property is not an accountability that is subject to clearance
procedures.18 They had already turned over to Solid Mills their uniforms and equipment when Solid Mills ceased operations. 19chanroblesvirtuallawlibrary

On the other hand, Solid Mills argued that petitioners’ complaint was premature because they had not vacated its property. 20chanroblesvirtuallawlibrary

The Labor Arbiter ruled in favor of petitioners. 21 According to the Labor Arbiter, Solid Mills illegally withheld petitioners’ benefits and separation pay. 22 Petitioners’ right
to the payment of their benefits and separation pay was vested by law and contract. 23 The memorandum of agreement dated September 1, 2003 stated no condition to
the effect that petitioners must vacate Solid Mills’ property before their benefits could be given to them. 24 Petitioners’ possession should not be construed as petitioners’
“accountabilities” that must be cleared first before the release of benefits. 25 Their possession “is not by virtue of any employer-employee relationship.” 26 It is a civil
issue, which is outside the jurisdiction of the Labor Arbiter. 27chanroblesvirtuallawlibrary

The dispositive portion of the Labor Arbiter’s decision reads:chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, judgment is entered ORDERING respondents SOLID MILLS, INC. and/or PHILIP ANG (President), in solido to pay the remaining 21
complainants:chanRoblesvirtualLawlibrary

1) 19 of which, namely EMER MILAN, RAMON MASANGKAY, ALFREDO JAVIER, RONALDO DAVID, BONIFACIO MATUNDAN, NORA MENDOZA, MYRNA IGCAS, RAUL DE
LAS ALAS, RENATO ESTOLANO, REX S. DIMAFELIX, MAURA MILAN, JESSICA BAYBAYON, ALFREDO MENDOZA, ROBERTO IGCAS, ISMAEL MATA, CARLITO DAMIAN,
TEODORA MAHILOM, MARILOU LINGA, RENATO LINGA their separation pay of 12.625 days’ pay per year of service, pro-rated 13th month pay for 2003 and accrued
vacation and sick leaves, plus 12% interest p.a. from date of filing of the lead case/judicial demand on 12/08/03 until actual payment and/or finality;chanrobleslaw

2) the remaining 2 of which, complainants CLEOPATRA ZACARIAS, as she already received on 12/19/03 her accrued 13th month pay for 2003, accrued VL/SL total
amount of P15,435.16, likewise, complainant Jerry L. Sesma as he already received his accrued 13th month pay for 2003, SL/VL in the total amount of P10,974.97,
shall be paid only their separation pay of 12.625 days’ pay per year of service but also with 12% interest p.a. from date of filing of the lead case/judicial demand on
12/08/03 until actual payment and/or finality, which computation as of date, amount to as shown in the attached computation sheet.

3) Nine (9) individual complaints viz., of Maria Agojo, Joey Suarez, Ronaldo Vergara, Ronnie Vergara, Antonio R. Dulo, Sr., Bryan D. Durano, Silverio P. Durano, Sr.,
Elizabeth Duarte and Purificacion Malabanan are DISMISSED WITH PREJUDICE due to amicable settlement, whereas, that of [RONIE ARANAS], [EMILITO NAVARRO],
[NONILON PASCO], [GENOVEVA PASCO], [OLIMPIO A. PASCO] are DISMISSED WITHOUT PREJUDICE, for lack of interest and/or failure to prosecute.
 202

The Computation and Examination unit is directed to cause the computation of the award in Pars. 2 and 3 above. 28 (Emphasis in the original)

Solid Mills appealed to the National Labor Relations Commission. 29 It prayed for, among others, the dismissal of the complaints against it and the reversal of the Labor
Arbiter’s decision.30chanroblesvirtuallawlibrary

The National Labor Relations Commission affirmed paragraph 3 of the Labor Arbiter’s dispositive portion, but reversed paragraphs 1 and 2.
Thus:chanRoblesvirtualLawlibrary

WHEREFORE, the Decision of Labor Arbiter Renaldo O. Hernandez dated 10/17/05 is AFFIRMED in so far as par. 3 thereof is concerned but modified in that paragraphs 1
and 2 thereof are REVERSED and SET ASIDE. Accordingly, the following complainants, namely: Emir Milan, Ramon Masangkay, Alfredo Javier, Ronaldo David, Bonifacio
Matundan, Nora Mendoza, Myrna Igcas, Raul De Las Alas, Renato Estolano, Rex S. Dimaf[e]lix, Maura Milan, Jessica Baybayon, Alfredo Mendoza, Roberto Igcas,
Cleopatra Zacarias and Jerry L. Sesma’s monetary claims in the form of separation pay, accrued 13th month pay for 2003, accrued vacation and sick leave pays are
held in abeyance pending compliance of their accountabilities to respondent company by turning over the subject lots they respectively occupy at SMI Village Sucat
Muntinlupa City, Metro Manila to herein respondent company. 31

The National Labor Relations Commission noted that complainants Marilou Linga, Renato Linga, Ismael Mata, and Carlito Damian were already paid their respective
separation pays and benefits. 32 Meanwhile, Teodora Mahilom already retired long before Solid Mills’ closure. 33 She was already given her retirement
benefits.34chanroblesvirtuallawlibrary

The National Labor Relations Commission ruled that because of petitioners’ failure to vacate Solid Mills’ property, Solid Mills was justified in withholding their benefits
and separation pay.35 Solid Mills granted the petitioners the privilege to occupy its property on account of petitioners’ employment. 36 It had the prerogative to
terminate such privilege.37 The termination of Solid Mills and petitioners’ employer-employee relationship made it incumbent upon petitioners to turn over the property
to Solid Mills.38chanroblesvirtuallawlibrary

Petitioners filed a motion for partial reconsideration on October 18, 2010, 39 but this was denied in the November 30, 2010 resolution. 40chanroblesvirtuallawlibrary

Petitioners, thus, filed a petition for certiorari41 before the Court of Appeals to assail the National Labor Relations Commission decision of August 31, 2010 and resolution
of November 30, 2010.42chanroblesvirtuallawlibrary

On January 31, 2012, the Court of Appeals issued a decision dismissing petitioners’ petition, 43 thus:chanRoblesvirtualLawlibrary

WHEREFORE, the petition is hereby ordered DISMISSED.44

The Court of Appeals ruled that Solid Mills’ act of allowing its employees to make temporary dwellings in its property was a liberality on its part. It may be revoked any
time at its discretion.45 As a consequence of Solid Mills’ closure and the resulting termination of petitioners, the employer-employee relationship between them ceased
to exist. There was no more reason for them to stay in Solid Mills’ property. 46 Moreover, the memorandum of agreement between Solid Mills and the union
representing petitioners provided that Solid Mills’ payment of employees’ benefits should be “less accountabilities.” 47chanroblesvirtuallawlibrary

On petitioners’ claim that there was no evidence that Teodora Mahilom already received her retirement pay, the Court of Appeals ruled that her complaint filed before
 203

the Labor Arbiter did not include a claim for retirement pay. The issue was also raised for the first time on appeal, which is not allowed. 48 In any case, she already
retired before Solid Mills ceased its operations. 49chanroblesvirtuallawlibrary

The Court of Appeals agreed with the National Labor Relations Commission’s deletion of interest since it found that Solid Mills’ act of withholding payment of benefits
and separation pay was proper. Petitioners’ terminal benefits and pay were withheld because of petitioners’ failure to vacate Solid Mills’
property.50chanroblesvirtuallawlibrary

Finally, the Court of Appeals noted that Carlito Damian already received his separation pay and benefits. 51 Hence, he should no longer be awarded these
claims.52chanroblesvirtuallawlibrary

In the resolution promulgated on July 16, 2012, the Court of Appeals denied petitioners’ motion for reconsideration. 53chanroblesvirtuallawlibrary

Petitioners raise in this petition the following errors:chanRoblesvirtualLawlibrary

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT RULED THAT PAYMENT OF THE MONETARY CLAIMS OF
PETITIONERS SHOULD BE HELD IN ABEYANCE PENDING COMPLIANCE OF THEIR ACCOUNTABILITIES TO RESPONDENT SOLID MILLS BY TURNING OVER THE SUBJECT
LOTS THEY RESPECTIVELY OCCUPY AT SMI VILLAGE, SUCAT, MUNTINLUPA CITY.

II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT UPHELD THE RULING OF THE NLRC DELETING THE INTEREST OF
12% PER ANNUM IMPOSED BY THE HONORABLE LABOR ARBITER HERNANDEZ ON THE AMOUNT DUE FROM THE DATE OF FILING OF THE LEAD CASE/JUDICIAL
DEMAND ON DECEMBER 8, 2003 UNTIL ACTUAL PAYMENT AND/OR FINALITY.

III

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT UPHELD THE RULING OF THE NLRC DENYING THE CLAIM OF
TEODORA MAHILOM FOR PAYMENT OF RETIREMENT BENEFITS DESPITE LACK OF ANY EVIDENCE THAT SHE RECEIVED THE SAME.

IV

WHETHER OR NOT PETITIONER CARLITO DAMIAN IS ENTITLED TO HIS MONETARY BENEFITS FROM RESPONDENT SOLID MILLS. 54

Petitioners argue that respondent Solid Mills and NAFLU’s memorandum of agreement has no provision stating that benefits shall be paid only upon return of the
possession of respondent Solid Mills’ property. 55 It only provides that the benefits shall be “less accountabilities,” which should not be interpreted to include such
 204

possession.56 The fact that majority of NAFLU’s members were not occupants of respondent Solid Mills’ property is evidence that possession of the property was not
contemplated in the agreement. 57 “Accountabilities” should be interpreted to refer only to accountabilities that were incurred by petitioners while they were performing
their duties as employees at the worksite. 58 Moreover, applicable laws, company practice, or policies do not provide that 13th month pay, and sick and vacation leave
pay benefits, may be withheld pending satisfaction of liabilities by the employee. 59chanroblesvirtuallawlibrary

Petitioners also point out that the National Labor Relations Commission and the Court of Appeals have no jurisdiction to declare that petitioners’ act of withholding
possession of respondent Solid Mills’ property is illegal. 60 The regular courts have jurisdiction over this issue. 61 It is independent from the issue of payment of
petitioners’ monetary benefits. 62chanroblesvirtuallawlibrary

For these reasons, and because, according to petitioners, the amount of monetary award is no longer in question, petitioners are entitled to 12% interest per
annum.63chanroblesvirtuallawlibrary

Petitioners also argue that Teodora Mahilom and Carlito Damian are entitled to their claims. They insist that Teodora Mahilom did not receive her retirement benefits
and that Carlito Damian did not receive his separation benefits. 64chanroblesvirtuallawlibrary

Respondents Solid Mills and Philip Ang, in their joint comment, argue that petitioners’ failure to turn over respondent Solid Mills’ property “constituted an unsatisfied
accountability” for which reason “petitioners’ benefits could rightfully be withheld.” 65 The term “accountability” should be given its natural and ordinary meaning. 66
Thus, it should be interpreted as “a state of being liable or responsible,” or “obligation.” 67 Petitioners’ differentiation between accountabilities incurred while performing
jobs at the worksite and accountabilities incurred outside the worksite is baseless because the agreement with NAFLU merely stated “accountabilities,” without
qualification.68chanroblesvirtuallawlibrary

On the removal of the award of 12% interest per annum, respondents argue that such removal was proper since respondent Solid Mills was justified in withholding the
monetary claims.69chanroblesvirtuallawlibrary

Respondents argue that Teodora Mahilom had no more cause of action for retirement benefits claim. 70 She had already retired more than a decade before Solid Mills’
closure. She also already received her retirement benefits in 1991. 71 Teodora Mahilom’s claim was also not included in the complaint filed before the Labor Arbiter. It
was improper to raise this claim for the first time on appeal. In any case, Teodora Mahilom’s claim was asserted long after the three-year prescriptive period provided
in Article 291 of the Labor Code. 72chanroblesvirtuallawlibrary

Lastly, according to respondents, it would be unjust if Carlito Damian would be allowed to receive monetary benefits again, which he, admittedly, already received from
Solid Mills.73chanroblesvirtuallawlibrary

The National Labor Relations

Commission may preliminarily
determine issues related to rights
arising from an employer-employee
relationship
 205

The National Labor Relations Commission has jurisdiction to determine, preliminarily, the parties’ rights over a property, when it is necessary to determine an issue
related to rights or claims arising from an employer-employee relationship.

Article 217 provides that the Labor Arbiter, in his or her original jurisdiction, and the National Labor Relations Commission, in its appellate jurisdiction, may determine
issues involving claims arising from employer-employee relations. Thus:chanRoblesvirtualLawlibrary

ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. – (1) Except as otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the
absence of stenographic notes, the following cases involving workers, whether agricultural or non-agricultural:chanRoblesvirtualLawlibrary

Unfair labor practice cases;

Termination disputes;

If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of
employment;

Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;

Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and

Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations including those
of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00), regardless of whether accompanied with a claim for
reinstatement.

(2) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (Emphasis supplied)

Petitioners’ claim that they have the right to the immediate release of their benefits as employees separated from respondent Solid Mills is a question arising from the
employer-employee relationship between the parties.

Claims arising from an employer-employee relationship are not limited to claims by an employee. Employers may also have claims against the employee, which arise
from the same relationship.

In Bañez v. Valdevilla,74 this court ruled that Article 217 of the Labor Code also applies to employers’ claim for damages, which arises from or is connected with the labor
issue. Thus:chanRoblesvirtualLawlibrary

Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages filed by employees, we hold that by the
designating clause “arising from the employer-employee relations” Article 217 should apply with equal force to the claim of an employer for actual damages against its
dismissed employee, where the basis for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a counterclaim in the
illegal dismissal case.75
 206

Bañez was cited in Domondon v. National Labor Relations Commission. 76 One of the issues in Domondon is whether the Labor Arbiter has jurisdiction to decide an issue
on the transfer of ownership of a vehicle assigned to the employee. It was argued that only regular courts have jurisdiction to decide the
issue.77chanroblesvirtuallawlibrary

This court ruled that since the transfer of ownership of the vehicle to the employee was connected to his separation from the employer and arose from the employer-
employee relationship of the parties, the employer’s claim fell within the Labor Arbiter’s jurisdiction. 78chanroblesvirtuallawlibrary

As a general rule, therefore, a claim only needs to be sufficiently connected to the labor issue raised and must arise from an employer-employee relationship for the
labor tribunals to have jurisdiction.

In this case, respondent Solid Mills claims that its properties are in petitioners’ possession by virtue of their status as its employees. Respondent Solid Mills allowed
petitioners to use its property as an act of liberality. Put in other words, it would not have allowed petitioners to use its property had they not been its employees. The
return of its properties in petitioners’ possession by virtue of their status as employees is an issue that must be resolved to determine whether benefits can be released
immediately. The issue raised by the employer is, therefore, connected to petitioners’ claim for benefits and is sufficiently intertwined with the parties’ employer-
employee relationship. Thus, it is properly within the labor tribunals’ jurisdiction.

II

Institution of clearance procedures

has legal bases

Requiring clearance before the release of last payments to the employee is a standard procedure among employers, whether public or private. Clearance procedures
are instituted to ensure that the properties, real or personal, belonging to the employer but are in the possession of the separated employee, are returned to the
employer before the employee’s departure.

As a general rule, employers are prohibited from withholding wages from employees. The Labor Code provides:chanRoblesvirtualLawlibrary

Art. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker
or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the worker’s consent.

The Labor Code also prohibits the elimination or diminution of benefits. Thus:chanRoblesvirtualLawlibrary

Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of promulgation of this Code.

However, our law supports the employers’ institution of clearance procedures before the release of wages. As an exception to the general rule that wages may not be
withheld and benefits may not be diminished, the Labor Code provides:chanRoblesvirtualLawlibrary
 207

Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees,
except:chanRoblesvirtualLawlibrary

1. In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on
the insurance;chanrobleslaw

2. For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker
concerned; and

3. In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment. (Emphasis supplied)

The Civil Code provides that the employer is authorized to withhold wages for debts due:chanRoblesvirtualLawlibrary

Article 1706. Withholding of the wages, except for a debt due, shall not be made by the employer.cralawred

“Debt” in this case refers to any obligation due from the employee to the employer. It includes any accountability that the employee may have to the employer. There
is no reason to limit its scope to uniforms and equipment, as petitioners would argue.

More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed that the release of petitioners’ benefits shall be “less accountabilities.”

“Accountability,” in its ordinary sense, means obligation or debt. The ordinary meaning of the term “accountability” does not limit the definition of accountability to
those incurred in the worksite. As long as the debt or obligation was incurred by virtue of the employer-employee relationship, generally, it shall be included in the
employee’s accountabilities that are subject to clearance procedures.

It may be true that not all employees enjoyed the privilege of staying in respondent Solid Mills’ property. However, this alone does not imply that this privilege when
enjoyed was not a result of the employer-employee relationship. Those who did avail of the privilege were employees of respondent Solid Mills. Petitioners’ possession
should, therefore, be included in the term “accountability.”

Accountabilities of employees are personal. They need not be uniform among all employees in order to be included in accountabilities incurred by virtue of an employer-
employee relationship.

Petitioners do not categorically deny respondent Solid Mills’ ownership of the property, and they do not claim superior right to it. What can be gathered from the
findings of the Labor Arbiter, National Labor Relations Commission, and the Court of Appeals is that respondent Solid Mills allowed the use of its property for the benefit
of petitioners as its employees. Petitioners were merely allowed to possess and use it out of respondent Solid Mills’ liberality. The employer may, therefore, demand
the property at will.79chanroblesvirtuallawlibrary

The return of the property’s possession became an obligation or liability on the part of the employees when the employer-employee relationship ceased. Thus,
respondent Solid Mills has the right to withhold petitioners’ wages and benefits because of this existing debt or liability. In Solas v. Power and Telephone Supply Phils.,
Inc., et al., this court recognized this right of the employer when it ruled that the employee in that case was not constructively dismissed. 80
Thus:chanRoblesvirtualLawlibrary
 208

There was valid reason for respondents’ withholding of petitioner’s salary for the month of February 2000. Petitioner does not deny that he is indebted to his employer
in the amount of around P95,000.00. Respondents explained that petitioner’s salary for the period of February 1-15, 2000 was applied as partial payment for his debt
and for withholding taxes on his income; while for the period of February 15-28, 2000, petitioner was already on absence without leave, hence, was not entitled to any
pay.81

The law does not sanction a situation where employees who do not even assert any claim over the employer’s property are allowed to take all the benefits out of their
employment while they simultaneously withhold possession of their employer’s property for no rightful reason.

Withholding of payment by the employer does not mean that the employer may renege on its obligation to pay employees their wages, termination payments, and due
benefits. The employees’ benefits are also not being reduced. It is only subjected to the condition that the employees return properties properly belonging to the
employer. This is only consistent with the equitable principle that “no one shall be unjustly enriched or benefited at the expense of
another.”82chanroblesvirtuallawlibrary

For these reasons, we cannot hold that petitioners are entitled to interest of their withheld separation benefits. These benefits were properly withheld by respondent
Solid Mills because of their refusal to return its property.

III

Mahilom and Damian are not

entitled to the benefits claimed

Teodora Mahilom is not entitled to separation benefits.

Both the National Labor Relations Commission and the Court of Appeals found that Teodora Mahilom already retired long before respondent Solid Mills’ closure. They
found that she already received her retirement benefits. We have no reason to disturb this finding. This court is not a trier of facts. Findings of the National Labor
Relations Commission, especially when affirmed by the Court of Appeals, are binding upon this court. 83chanroblesvirtuallawlibrary

Moreover, Teodora Mahilom’s claim for retirement benefits was not included in her complaint filed before the Labor Arbiter. Hence, it may not be raised in the appeal.

Similarly, the National Labor Relations Commission and the Court of Appeals found that Carlito Damian already received his terminal benefits. Hence, he may no longer
claim terminal benefits.

The fact that respondent Solid Mills has not yet demolished Carlito Damian’s house in SMI Village is not evidence that he did not receive his benefits. Both the National
Labor Relations Commission and the Court of Appeals found that he executed an affidavit stating that he already received the benefits.

Absent any showing that the National Labor Relations Commission and the Court of Appeals misconstrued these facts, we will not reverse these findings.

Our laws provide for a clear preference for labor. This is in recognition of the asymmetrical power of those with capital when they are left to negotiate with their
workers without the standards and protection of law. In cases such as these, the collective bargaining unit of workers are able to get more benefits and in exchange,
 209

the owners are able to continue with the program of cutting their losses or wind down their operations due to serious business losses. The company in this case did all
that was required by law.

The preferential treatment given by our law to labor, however, is not a license for abuse. 84 It is not a signal to commit acts of unfairness that will unreasonably infringe
on the property rights of the company. Both labor and employer have social utility, and the law is not so biased that it does not find a middle ground to give each their
due.

Clearly, in this case, it is for the workers to return their housing in exchange for the release of their benefits. This is what they agreed upon. It is what is fair in the
premises.

WHEREFORE, the petition is DENIED. The Court of Appeals’ decision is AFFIRMED.

 210

G.R. No. 198587, January 14, 2015

SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA J. BETIA, Petitioners, v. MA. JOPETTE M. REBESENCIO, MONTASSAH B. SACAR-ADIONG, ROUEN RUTH A.
CRISTOBAL AND LORAINE S. SCHNEIDER-CRUZ, Respondents.

DECISION

LEONEN, J.:

All Filipinos are entitled to the protection of the rights guaranteed in the Constitution.

This is a Petition for Review on Certiorari with application for the issuance of a temporary restraining order and/or writ of preliminary injunction under Rule 45 of the
1997 Rules of Civil Procedure praying that judgment be rendered reversing and setting aside the June 16, 2011 Decision 1 and September 13, 2011 Resolution 2 of the
Court of Appeals in CA-G.R. SP. No. 113006.

Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation established and existing under the laws of Jeddah, Kingdom of Saudi Arabia. It has a Philippine office
located at 4/F, Metro House Building, Sen. Gil J. Puyat Avenue, Makati City. 3 In its Petition filed with this court, Saudia identified itself as
follows:chanroblesvirtuallawlibrary

1. Petitioner SAUDIA is a foreign corporation established and existing under the Royal Decree No. M/24 of 18.07.1385H (10.02.1962G) in Jeddah, Kingdom of Saudi
Arabia ("KSA"). Its Philippine Office is located at 4/F Metro House Building, Sen, Gil J. Puyat Avenue, Makati City (Philippine Office). It may be served with orders of this
Honorable Court through undersigned counsel at 4th and 6th Floors, Citibank Center Bldg., 8741 Paseo de Roxas, Makati City. 4 (Emphasis supplied)
 211

Respondents (complainants before the Labor Arbiter) were recruited and hired by Saudia as Temporary Flight Attendants with the accreditation and approval of the
Philippine Overseas Employment Administration. 5 After undergoing seminars required by the Philippine Overseas Employment Administration for deployment overseas,
as well as training modules offered by Saudia (e.g., initial flight attendant/training course and transition training), and after working as Temporary Flight Attendants,
respondents became Permanent Flight Attendants. They then entered into Cabin Attendant contracts with Saudia: Ma. Jopette M. Rebesencio (Ma. Jopette) on May 16,
1990;6 Montassah B. Sacar-Adiong (Montassah) and Rouen Ruth A. Cristobal (Rouen Ruth) on May 22, 1993; 7 and Loraine Schneider-Cruz (Loraine) on August 27,
1995.8

Respondents continued their employment with Saudia until they were separated from service on various dates in 2006. 9

Respondents contended that the termination of their employment was illegal. They alleged that the termination was made solely because they were pregnant. 10

As respondents alleged, they had informed Saudia of their respective pregnancies and had gone through the necessary procedures to process their maternity leaves.
Initially, Saudia had given its approval but later on informed respondents that its management in Jeddah, Saudi Arabia had disapproved their maternity leaves. In
addition, it required respondents to file their resignation letters. 11

Respondents were told that if they did not resign, Saudia would terminate them all the same. The threat of termination entailed the loss of benefits, such as separation
pay and ticket discount entitlements.12

Specifically, Ma. Jopette received a call on October 16, 2006 from Saudia's Base Manager, Abdulmalik Saddik (Abdulmalik). 13 Montassah was informed personally by
Abdulmalik and a certain Faisal Hussein on October 20, 2006 after being required to report to the office one (1) month into her maternity leave. 14Rouen Ruth was also
personally informed by Abdulmalik on October 17, 2006 after being required to report to the office by her Group Supervisor. 15 Loraine received a call on October 12,
2006 from her Group Supervisor, Dakila Salvador. 16

Saudia anchored its disapproval of respondents' maternity leaves and demand for their resignation on its "Unified Employment Contract for Female Cabin Attendants"
(Unified Contract).17 Under the Unified Contract, the employment of a Flight Attendant who becomes pregnant is rendered void. It provides:chanroblesvirtuallawlibrary

(H) Due to the essential nature of the Air Hostess functions to be physically fit on board to provide various services required in normal or emergency cases on both
domestic/international flights beside her role in maintaining continuous safety and security of passengers, and since she will not be able to maintain the required
medical fitness while at work in case of pregnancy, accordingly, if the Air Hostess becomes pregnant at any time during the term of this contract, this shall render her
employment contract as void and she will be terminated due to lack of medical fitness.18 (Emphasis supplied)

In their Comment on the present Petition,19 respondents emphasized that the Unified Contract took effect on September 23, 2006 (the first day of Ramadan), 20 well after
they had filed and had their maternity leaves approved. Ma. Jopette filed her maternity leave application on September 5, 2006. 21 Montassah filed her maternity leave
application on August 29, 2006, and its approval was already indicated in Saudia's computer system by August 30, 2006. 22 Rouen Ruth filed her maternity leave
application on September 13, 2006, 23 and Loraine filed her maternity leave application on August 22, 2006. 24

Rather than comply and tender resignation letters, respondents filed separate appeal letters that were all rejected. 25

Despite these initial rejections, respondents each received calls on the morning of November 6, 2006 from Saudia's office secretary informing them that their maternity
leaves had been approved. Saudia, however, was quick to renege on its approval. On the evening of November 6, 2006, respondents again received calls informing
them that it had received notification from Jeddah, Saudi Arabia that their maternity leaves had been disapproved. 26
 212

Faced with the dilemma of resigning or totally losing their benefits, respondents executed handwritten resignation letters. In Montassah's and Rouen Ruth's cases, their
resignations were executed on Saudia's blank letterheads that Saudia had provided. These letterheads already had the word "RESIGNATION" typed on the subject
portions of their headings when these were handed to respondents. 27

On November 8, 2007, respondents filed a Complaint against Saudia and its officers for illegal dismissal and for underpayment of salary, overtime pay, premium pay for
holiday, rest day, premium, service incentive leave pay, 13 th month pay, separation pay, night shift differentials, medical expense reimbursements, retirement benefits,
illegal deduction, lay-over expense and allowances, moral and exemplary damages, and attorney's fees. 28 The case was initially assigned to Labor Arbiter Hermino V.
Suelo and docketed as NLRC NCR Case No. 00-11-12342-07.

Saudia assailed the jurisdiction of the Labor Arbiter. 29 It claimed that all the determining points of contact referred to foreign law and insisted that the Complaint ought
to be dismissed on the ground of forum non conveniens.30 It added that respondents had no cause of action as they resigned voluntarily. 31

On December 12, 2008, Executive Labor Arbiter Fatima Jambaro-Franco rendered the Decision 32dismissing respondents' Complaint. The dispositive portion of this
Decision reads:chanroblesvirtuallawlibrary

WHEREFORE, premises' considered, judgment is hereby rendered DISMISSING the instant complaint for lack of jurisdiction/merit.33cralawlawlibrary

On respondents' appeal, the National Labor Relations Commission's Sixth Division reversed the ruling of Executive Labor Arbiter Jambaro-Franco. It explained that
"[considering that complainants-appellants are OFWs, the Labor Arbiters and the NLRC has [sic] jurisdiction to hear and decide their complaint for illegal
termination."34 On the matter of forum non conveniens, it noted that there were no special circumstances that warranted its abstention from exercising jurisdiction. 35 On
the issue of whether respondents were validly dismissed, it held that there was nothing on record to support Saudia's claim that respondents resigned voluntarily.

The dispositive portion of the November 19, 2009 National Labor Relations Commission Decision 36reads:chanroblesvirtuallawlibrary

WHEREFORE, premises considered, judgment is hereby rendered finding the appeal impressed with merit. The respondents-appellees are hereby directed to pay
complainants-appellants the aggregate amount of SR614,001.24 corresponding to their backwages and separation pay plus ten (10%) percent thereof as attorney's
fees. The decision of the Labor Arbiter dated December 12, 2008 is hereby VACATED and SET ASIDE. Attached is the computation prepared by this Commission and
made an integral part of this Decision.37cralawlawlibrary

In the Resolution dated February 11, 2010, 38 the National Labor Relations Commission denied petitioners' Motion for Reconsideration.

In the June 16, 2011 Decision, 39 the Court of Appeals denied petitioners' Rule 65 Petition and modified the Decision of the National Labor Relations Commission with
respect to the award of separation pay and backwages.

The dispositive portion of the Court of Appeals Decision reads:chanroblesvirtuallawlibrary

WHEREFORE, the instant petition is hereby DENIED. The Decision dated November 19, 2009 issued by public respondent, Sixth Division of the National Labor Relations
Commission - National Capital Region is MODIFIED only insofar as the computation of the award of separation pay and backwages. For greater clarity, petitioners are
ordered to pay private respondents separation pay which shall be computed from private respondents' first day of employment up to the finality of this decision, at the
rate of one month per year of service and backwages which shall be computed from the date the private respondents were illegally terminated until finality of this
decision. Consequently, the ten percent (10%) attorney's fees shall be based on the total amount of the award. The assailed Decision is affirmed in all other respects.
 213

The labor arbiter is hereby DIRECTED to make a recomputation based on the foregoing.40cralawlawlibrary

In the Resolution dated September 13, 2011, 41 the Court of Appeals denied petitioners' Motion for Reconsideration.

Hence, this Appeal was filed.

The issues for resolution are the following:

First, whether the Labor Arbiter and the National Labor Relations Commission may exercise jurisdiction over Saudi Arabian Airlines and apply Philippine law in
adjudicating the present dispute;

Second, whether respondents' voluntarily resigned or were illegally terminated; and

Lastly, whether Brenda J. Betia may be held personally liable along with Saudi Arabian Airlines.chanRoblesvirtualLawlibrary

Summons were validly served on Saudia and jurisdiction over it validly acquired.

There is no doubt that the pleadings and summons were served on Saudia through its counsel. 42 Saudia, however, claims that the Labor Arbiter and the National Labor
Relations Commission had no jurisdiction over it because summons were never served on it but on "Saudia Manila." 43 Referring to itself as "Saudia Jeddah," it claims
that "Saudia Jeddah" and not "Saudia Manila" was the employer of respondents because:

First, "Saudia Manila" was never a party to the Cabin Attendant contracts entered into by respondents;

Second, it was "Saudia Jeddah" that provided the funds to pay for respondents' salaries and benefits; and

Lastly, it was with "Saudia Jeddah" that respondents filed their resignations. 44

Saudia posits that respondents' Complaint was brought against the wrong party because "Saudia Manila," upon which summons was served, was never the employer of
respondents.45

Saudia is vainly splitting hairs in its effort to absolve itself of liability. Other than its bare allegation, there is no basis for concluding that "Saudia Jeddah" is distinct from
"Saudia Manila."

What is clear is Saudia's statement in its own Petition that what it has is a "Philippine Office . . . located at 4/F Metro House Building, Sen. Gil J. Puyat Avenue, Makati
City."46 Even in the position paper that Saudia submitted to the Labor Arbiter, 47 what Saudia now refers to as "Saudia Jeddah" was then only referred to as "Saudia Head
Office at Jeddah, KSA,"48 while what Saudia now refers to as "Saudia Manila" was then only referred to as "Saudia's office in Manila." 49

By its own admission, Saudia, while a foreign corporation, has a Philippine office.
 214

Section 3(d) of Republic Act No.. 7042, otherwise known as the Foreign Investments Act of 1991, provides the following:chanroblesvirtuallawlibrary

The phrase "doing business" shall include . . . opening offices, whether called "liaison" offices or branches; . . . and any other act or acts that imply a continuity of
commercial dealings or arrangements and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to,
and in progressive prosecution of commercial gain or of the purpose and object of the business organization. (Emphasis supplied)

A plain application of Section 3(d) of the Foreign Investments Act leads to no other conclusion than that Saudia is a foreign corporation doing business in the Philippines.
As such, Saudia may be sued in the Philippines and is subject to the jurisdiction of Philippine tribunals.

Moreover, since there is no real distinction between "Saudia Jeddah" and "Saudia Manila" — the latter being nothing more than Saudia's local office — service of
summons to Saudia's office in Manila sufficed to vest jurisdiction over Saudia's person in Philippine tribunals.chanRoblesvirtualLawlibrary

II

Saudia asserts that Philippine courts and/or tribunals are not in a position to make an intelligent decision as to the law and the facts. This is because respondents' Cabin
Attendant contracts require the application of the laws of Saudi Arabia, rather than those of the Philippines. 50 It claims that the difficulty of ascertaining foreign law calls
into operation the principle of forum non conveniens, thereby rendering improper the exercise of jurisdiction by Philippine tribunals. 51

A choice of law governing the validity of contracts or the interpretation of its provisions dees not necessarily imply forum non conveniens. Choice of law and forum non
conveniens are entirely different matters.

Choice of law provisions are an offshoot of the fundamental principle of autonomy of contracts. Article 1306 of the Civil Code firmly ensconces
this:chanroblesvirtuallawlibrary

Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to
law, morals, good customs, public order, or public policy.

In contrast, forum non conveniens is a device akin to the rule against forum shopping. It is designed to frustrate illicit means for securing advantages and vexing
litigants that would otherwise be possible if the venue of litigation (or dispute resolution) were left entirely to the whim of either party.

Contractual choice of law provisions factor into transnational litigation and dispute resolution in one of or in a combination of four ways: (1) procedures for settling
disputes, e.g., arbitration; (2) forum, i.e., venue; (3) governing law; and (4) basis for interpretation. Forum non conveniens relates to, but is not subsumed by, the
second of these.

Likewise, contractual choice of law is not determinative of jurisdiction. Stipulating on the laws of a given jurisdiction as the governing law of a contract does not preclude
the exercise of jurisdiction by tribunals elsewhere. The reverse is equally true: The assumption of jurisdiction by tribunals does not ipso factomean that it cannot apply
and rule on the basis of the parties' stipulation. In Hasegawa v. Kitamura:52ChanRoblesVirtualawlibrary

Analytically, jurisdiction and choice of law are two distinct concepts. Jurisdiction considers whether it is fair to cause a defendant to travel to this state; choice of law
asks the further question whether the application of a substantive law V'hich will determine the merits of the case is fair to both parties. The power to exercise
 215

jurisdiction does not automatically give a state constitutional authority to apply forum law. While jurisdiction and the choice of the lex fori will often, coincide, the
"minimum contacts" for one do not always provide the necessary "significant contacts" for the other. The question of whether the law of a state can be applied to a
transaction is different from the question of whether the courts of that state have jurisdiction to enter a judgment. 53cralawlawlibrary

As various dealings, commercial or otherwise, are facilitated by the progressive ease of communication and travel, persons from various jurisdictions find themselves
transacting with each other. Contracts involving foreign elements are, however, nothing new. Conflict of laws situations precipitated by disputes and litigation anchored
on these contracts are not totally novel.

Transnational transactions entail differing laws on the requirements Q for the validity of the formalities and substantive provisions of contracts and their interpretation.
These transactions inevitably lend themselves to the possibility of various fora for litigation and dispute resolution. As observed by an eminent expert on transnational
law:chanroblesvirtuallawlibrary

The more jurisdictions having an interest in, or merely even a point of contact with, a transaction or relationship, the greater the number of potential fora for the
resolution of disputes arising out of or related to that transaction or relationship. In a world of increased mobility, where business and personal transactions transcend
national boundaries, the jurisdiction of a number of different fora may easily be invoked in a single or a set of related disputes. 54cralawlawlibrary

Philippine law is definite as to what governs the formal or extrinsic validity of contracts. The first paragraph of Article 17 of the Civil Code provides that "[t]he forms and
solemnities of contracts . . . shall be governed by the laws of the country in which they are executed" 55 (i.e., lex loci celebrationis).

In contrast, there is no statutorily established mode of settling conflict of laws situations on matters pertaining to substantive content of contracts. It has been noted
that three (3) modes have emerged: (1) lex loci contractus or the law of the place of the making; (2) lex loci solutionis or the law of the place of performance; and
(3) lex loci intentionis or the law intended by the parties. 56

Given Saudia's assertions, of particular relevance to resolving the present dispute is lex loci intentionis.

An author observed that Spanish jurists and commentators "favor lex loci intentionis."57 These jurists and commentators proceed from the Civil Code of Spain, which,
like our Civil Code, is silent on what governs the intrinsic validity of contracts, and the same civil law traditions from which we draw ours.

In this jurisdiction, this court, in Philippine Export and Foreign Loan Guarantee v. V.P. Eusebio Construction, Inc.,58 manifested preference for allowing the parties to
select the law applicable to their contract":chanroblesvirtuallawlibrary

No conflicts rule on essential validity of contracts is expressly provided for in our laws. The rule followed by most legal systems, however, is that the intrinsic validity of
a contract must be governed by the lex contractus or "proper law of the contract." This is the law voluntarily agreed upon by the parties (the lex loci voluntatis) or the
law intended by them either expressly or implicitly (the lex loci intentionis). The law selected may be implied from such factors as substantial connection with the
transaction, or the nationality or domicile of the parties. Philippine courts would do well to adopt the first and most basic rule in most legal systems, namely, to allow
the parties to select the law applicable to their contract, subject to the limitation that it is not against the law, morals, or public policy of the forum and that the chosen
law must bear a substantive relationship to the transaction.59(Emphasis in the original)

Saudia asserts that stipulations set in the Cabin Attendant contracts require the application of the laws of Saudi Arabia. It insists that the need to comply with these
stipulations calls into operation the doctrine of forum non conveniens and, in turn, makes it necessary for Philippine tribunals to refrain from exercising jurisdiction.

As mentioned, contractual choice of laws factors into transnational litigation in any or a combination of four (4) ways. Moreover, forum non conveniens relates to one of
 216

these: choosing between multiple possible fora.

Nevertheless, the possibility of parallel litigation in multiple fora — along with the host of difficulties it poses — is not unique to transnational litigation. It is a difficulty
that similarly arises in disputes well within the bounds of a singe jurisdiction.

When parallel litigation arises strictly within the context of a single jurisdiction, such rules as those on forum shopping, litis pendentia, and res judicata come into
operation. Thus, in the Philippines, the 1997 Rules on Civil Procedure provide for willful and deliberate forum shopping as a ground not only for summary dismissal with
prejudice but also for citing parties and counsels in direct contempt, as well as for the imposition of administrative sanctions. 60 Likewise, the same rules expressly
provide that a party may seek the dismissal of a Complaint or another pleading asserting a claim on the ground "[t]hat there is another action pending between the
same parties for the same cause," i.e., litis pendentia, or "[t]hat the cause of action is barred by a prior judgment," 61 i.e., res judicata.

Forum non conveniens, like the rules of forum shopping, litis pendentia, and res judicata, is a means of addressing the problem of parallel litigation. While the rules of
forum shopping, litis pendentia, and res judicata are designed to address the problem of parallel litigation within a single jurisdiction, forum non conveniens is a means
devised to address parallel litigation arising in multiple jurisdictions.

Forum non conveniens literally translates to "the forum is inconvenient." 62 It is a concept in private international law and was devised to combat the "less than
honorable" reasons and excuses that litigants use to secure procedural advantages, annoy and harass defendants, avoid overcrowded dockets, and select a "friendlier"
venue.63 Thus, the doctrine of forum non conveniens addresses the same rationale that the rule against forum shopping does, albeit on a multijurisdictional scale.

Forum non conveniens, like res judicata,64 is a concept originating in common law. 65 However, unlike the rule on res judicata, as well as those on litis pendentia and
forum shopping, forum non conveniens finds no textual anchor, whether in statute or in procedural rules, in our civil law system. Nevertheless, jurisprudence has
applied forum non conveniens as basis for a court to decline its exercise of jurisdiction. 66

Forum non conveniens is soundly applied not only to address parallel litigation and undermine a litigant's capacity to vex and secure undue advantages by engaging in
forum shopping on an international scale. It is also grounded on principles of comity and judicial efficiency.

Consistent with the principle of comity, a tribunal's desistance in exercising jurisdiction on account of forum non conveniens is a deferential gesture to the tribunals of
another sovereign. It is a measure that prevents the former's having to interfere in affairs which are better and more competently addressed by the latter.
Further, forum non conveniens entails a recognition not only that tribunals elsewhere are better suited to rule on and resolve a controversy, but also, that these
tribunals are better positioned to enforce judgments and, ultimately, to dispense justice. Forum non conveniens prevents the embarrassment of an awkward situation
where a tribunal is rendered incompetent in the face of the greater capability — both analytical and practical — of a tribunal in another jurisdiction.

The wisdom of avoiding conflicting and unenforceable judgments is as much a matter of efficiency and economy as it is a matter of international courtesy. A court would
effectively be neutering itself if it insists on adjudicating a controversy when it knows full well that it is in no position to enforce its judgment. Doing so is not only an
exercise in futility; it is an act of frivolity. It clogs the dockets of a.tribunal and leaves it to waste its efforts on affairs, which, given transnational exigencies, will be
reduced to mere academic, if not trivial, exercises.

Accordingly, under the doctrine of forum non conveniens, "a court, in conflicts of law cases, may refuse impositions on its jurisdiction where it is not the most
'convenient' or available forum and the parties are not precluded from seeking remedies elsewhere." 67 In Puyat v. Zabarte,68 this court recognized the following
situations as among those that may warrant a court's desistance from exercising jurisdiction:chanroblesvirtuallawlibrary

1) The belief that the matter can be better tried and decided elsewhere, either because the main aspects of the case transpired in a foreign jurisdiction or the
 217

material witnesses have their residence there;

2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum shopping[,] merely to secure procedural advantages or to convey or
harass the defendant;

3) The unwillingness to extend local judicial facilities to non residents or aliens when the docket may already be overcrowded;

4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained; and

5) The difficulty of ascertaining foreign law. 69

In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals,70 this court underscored that a Philippine court may properly assume jurisdiction
over a case if it chooses to do so to the extent: "(1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a
position to make an intelligent decision as to the law and the facts; and (3) that the Philippine Court has or is likely to have power to enforce its decision." 71

The use of the word "may" (i.e., "may refuse impositions on its jurisdiction" 72) in the decisions shows that the matter of jurisdiction rests on the sound discretion of a
court. Neither the mere invocation of forum non conveniens nor the averment of foreign elements operates to automatically divest a court of jurisdiction. Rather, a court
should renounce jurisdiction only "after 'vital facts are established, to determine whether special circumstances' require the court's desistance." 73 As the propriety of
applying forum non conveniens is contingent on a factual determination, it is, therefore, a matter of defense. 74

The second sentence of Rule 9, Section 1 of the 1997 Rules of Civil Procedure is exclusive in its recital of the grounds for dismissal that are exempt from the omnibus
motion rule: (1) lack of jurisdiction over the subject matter; (2) litis pendentia; (3) res judicata; and (4) prescription. Moreover, dismissal on account offorum non
conveniens is a fundamentally discretionary matter. It is, therefore, not a matter for a defendant to foist upon the court at his or her own convenience; rather, it must
be pleaded at the earliest possible opportunity.

On the matter of pleading forum non conveniens, we state the rule, thus: Forum non conveniens must not only be clearly pleaded as a ground for dismissal; it must be
pleaded as such at the earliest possible opportunity. Otherwise, it shall be deemed waived.

This court notes that in Hasegawa,76 this court stated that forum non conveniens is not a ground for a motion to dismiss. The factual ambience of this case however
does not squarely raise the viability of this doctrine. Until the opportunity comes to review the use of motions to dismiss for parallel litigation, Hasegawa remains
existing doctrine.

Consistent with forum non conveniens as fundamentally a factual matter, it is imperative that it proceed from & factually established basis. It would be improper to
dismiss an action pursuant to forum non conveniens based merely on a perceived, likely, or hypothetical multiplicity of fora. Thus, a defendant must also plead and
show that a prior suit has, in fact, been brought in another jurisdiction .

The existence of a prior suit makes real the vexation engendered by duplicitous litigation, the embarrassment of intruding into the affairs of another sovereign, and the
squandering of judicial efforts in resolving a dispute already lodged and better resolved elsewhere. As has been noted:chanroblesvirtuallawlibrary

A case will not be stayed o dismissed on [forum] non conveniens grounds unless the plaintiff is shown to have an available alternative forum elsewhere. On this, the
moving party bears the burden of proof.
 218

A number of factors affect the assessment of an alternative forum's adequacy. The statute of limitations abroad may have run, of the foreign court may lack either
subject matter or personal jurisdiction over the defendant. . . . Occasionally, doubts will be raised as to the integrity or impartiality of the foreign court (based, for
example, on suspicions of corruption or bias in favor of local nationals), as to the fairness of its judicial procedures, or as to is operational efficiency (due, for example,
to lack of resources, congestion and delay, or interfering circumstances such as a civil unrest). In one noted case, [it was found] that delays of 'up to a quarter of a
century' rendered the foreign forum... inadequate for these purposes. 77cralawlawlibrary

We deem it more appropriate and in the greater interest of prudence that a defendant not only allege supposed dangerous tendencies in litigating in this jurisdiction;
the defendant must also show that such danger is real and present in that litigation or dispute resolution has commenced in another jurisdiction and that a foreign
tribunal has chosen to exercise jurisdiction.

III

Forum non conveniens finds no application and does not operate to divest Philippine tribunals of jurisdiction and to require the application of foreign law.

Saudia invokes forum non conveniens to supposedly effectuate the stipulations of the Cabin Attendant contracts that require the application of the laws of Saudi Arabia.

Forum non conveniens relates to forum, not to the choice of governing law. Thai forum non conveniensmay ultimately result in the application of foreign law is merely
an incident of its application. In this strict sense, forum non conveniens is not applicable. It is not the primarily pivotal consideration in this case.

In any case, even a further consideration of the applicability of forum non conveniens on the incidental matter of the law governing respondents' relation with Saudia
leads to the conclusion that it is improper for Philippine tribunals to divest themselves of jurisdiction.

Any evaluation of the propriety of contracting parties' choice of a forum and'its incidents must grapple with two (2) considerations: first, the availability and adequacy of
recourse to a foreign tribunal; and second, the question of where, as between the forum court and a foreign court, the balance of interests inhering in a dispute weighs
more heavily.

The first is a pragmatic matter. It relates to the viability of ceding jurisdiction to a foreign tribunal and can be resolved by juxtaposing the competencies and practical
circumstances of the tribunals in alternative fora. Exigencies, like the statute of limitations, capacity to enforce orders and judgments, access to records, requirements
for the acquisition of jurisdiction, and even questions relating to the integrity of foreign courts, may render undesirable or even totally unfeasible recourse to a foreign
court. As mentioned, we consider it in the greater interest of prudence that a defendant show, in pleading forum non conveniens, that litigation has commenced in
another jurisdiction and that a foieign tribunal has, in fact, chosen to exercise jurisdiction.

Two (2) factors weigh into a court's appraisal of the balance of interests inhering in a dispute: first, the vinculum which the parties and their relation have to a given
jurisdiction; and second, the public interest that must animate a tribunal, in its capacity as an agent of the sovereign, in choosing to assume or decline jurisdiction. The
first is more concerned with the parties, their personal circumstances, and private interests; the second concerns itself with the state and the greater social order.

In considering the vinculum, a court must look into the preponderance of linkages which the parties and their transaction may have to either jurisdiction. In this respect,
factors, such as the parties' respective nationalities and places of negotiation, execution, performance, engagement or deployment, come into play.

In considering public interest, a court proceeds with a consciousness that it is an organ of the state. It must, thus, determine if the interests of the sovereign (which
acts through it) are outweighed by those of the alternative jurisdiction. In this respect, the court delves into a consideration of public policy. Should it find that public
 219

interest weighs more heavily in favor of its assumption of jurisdiction, it should proceed in adjudicating the dispute, any doubt or .contrary view arising from the
preponderance of linkages notwithstanding.

Our law on contracts recognizes the validity of contractual choice of law provisions. Where such provisions exist, Philippine tribunals, acting as the forum court, generally
defer to the parties' articulated choice.

This is consistent with the fundamental principle of autonomy of contracts. Article 1306 of the Civ:l Code expressly provides that "[t]he contracting parties may establish
'such stipulations, clauses, terms and conditions as they may deem convenient." 78 Nevertheless, while a Philippine tribunal (acting as the forum court) is called upon to
respect the parties' choice of governing law, such respect must not be so permissive as to lose sight of considerations of law, morals, good customs, public order, or
public policy that underlie the contract central to the controversy.

Specifically with respect to public policy, in Pakistan International Airlines Corporation v. Ople,79 this court explained that:chanroblesvirtuallawlibrary

counter-balancing the principle of autonomy of contracting parties is the equally general rule that provisions of applicable law, especially provisions relating to matters
affected with public policy, are deemed written inta the contract. Put a little differently, the governing principle is that parties may not contract away applicable
provisions of law especially peremptory provisions dealing with matters heavily impressed with public interest. 80(Emphasis supplied)

Article II, Section 14 of the 1987 Constitution provides that "[t]he State ... shall ensure the fundamental equality before the law of women and men." Contrasted with
Article II, Section 1 of the 1987 Constitution's statement that "[n]o person shall ... be denied the equal protection of the laws," Article II, Section 14 exhorts the State to
"ensure." This does not only mean that the Philippines shall not countenance nor lend legal recognition and approbation to measures that discriminate on the basis of
one's being male or female. It imposes an obligation to actively engage in securing the fundamental equality of men and women.

The Convention on the Elimination of all Forms of Discrimination against Women (CEDAW), signed and ratified by the Philippines on July 15, 1980, and on August 5,
1981, respectively,81 is part of the law of the land. In view of the widespread signing and ratification of, as well as adherence (in practice) to it by states, it may even be
said that many provisions of the CEDAW may have become customary international law. The CEDAW gives effect to the Constitution's policy statement in Article II,
Section 14. Article I of the CEDAW defines "discrimination against women" as:chanroblesvirtuallawlibrary

any distinction, exclusion or restriction made on the basis of sex which has the effect or purpose of impairing or nullifying the recognition, enjoyment or exercise by
women, irrespective of their marital status, on a basis of equality of men and women, of human rights and fundamental freedoms in the political, economic, social,
cultural, civil or any other field.82cralawlawlibrary

The constitutional exhortation to ensure fundamental equality, as illumined by its enabling law, the CEDAW, must inform and animate all the actions of all personalities
acting on behalf of the State. It is, therefore, the bounden duty of this court, in rendering judgment on the disputes brought before it, to ensure that no discrimination is
heaped upon women on the mere basis of their being women. This is a point so basic and central that all our discussions and pronouncements — regardless of whatever
averments there may be of foreign law — must proceed from this premise.

So informed and animated, we emphasize the glaringly discriminatory nature of Saudia's policy. As argued by respondents, Saudia's policy entails the termination of
employment of flight attendants who become pregnant. At the risk of stating the obvious, pregnancy is an occurrence that pertains specifically to women. Saudia's
policy excludes from and restricts employment on the basis of no other consideration but sex.

We do not lose sight of the reality that pregnancy does present physical limitations that may render difficult the performance of functions associated with being a flight
attendant. Nevertheless, it would be the height of iniquity to view pregnancy as a disability so permanent and immutable that, it must entail the termination of one's
 220

employment. It is clear to us that any individual, regardless of gender, may be subject to exigencies that limit the performance of functions. However, we fail to
appreciate how pregnancy could be such an impairing occurrence that it leaves no other recourse but the complete termination of the means through which a woman
earns a living.

Apart from the constitutional policy on the fundamental equality before the law of men and women, it is settled that contracts relating to labor and employment are
impressed with public interest. Article 1700 of the Civil Code provides that "[t]he relation between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good."

Consistent with this, this court's pronouncements in Pakistan International Airlines Corporation83 are clear and unmistakable:chanroblesvirtuallawlibrary

Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly, the law of Pakistan as the applicable law of the agreement, and,
secondly, lays the venue for settlement of any dispute arising out of or in connection with the agreement " only [in] courts of Karachi, Pakistan". The first clause of
paragraph 10 cannot be invoked to prevent the application of Philippine labor laws and'regulations to the subject matter of this case, i.e., the employer-employee
relationship between petitioner PIA and private respondents. We have already pointed out that the relationship is much affected with public interest and that the
otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon some other law to govern their relationship . . . . Under
these circumstances, paragraph 10 of the employment agreement cannot be given effect so as to oust Philippine agencies and courts of the jurisdiction vested upon
them by Philippine law.84 (Emphasis supplied)

As the present dispute relates to (what the respondents allege to be) the illegal termination of respondents' employment, this case is immutably a matter of public
interest and public policy. Consistent with clear pronouncements in law and jurisprudence, Philippine laws properly find application in and govern this case. 'Moreover, as
this premise for Saudia's insistence on the application forum non conveniens has been shattered, it follows that Philippine tribunals may properly assume jurisdiction
over the present controversy. Philippine jurisprudence provides ample illustrations of when a court's renunciation of jurisdiction on account of forum non conveniens is
proper or improper.'

In Philsec Investment Corporation v. Court of Appeals,85 this court noted that the trial court failed to consider that one of the plaintiffs was a domestic corporation, that
one of the defendants was a Filipino, and that it was the extinguishment of the latter's debt that was the object of the transaction subject of the litigation. Thus, this
court held, among others, that the trial court's refusal to assume jurisdiction was not justified by forum non conveniens and remanded the case to the trial court.

In Raytheon International, Inc. v. Rouzie, Jr.,86 this court sustained the trial court's assumption of jurisdiction considering that the trial court could properly enforce
judgment on the petitioner which was a foreign corporation licensed to do business in the Philippines.

In Pioneer International, Ltd. v. Guadiz, Jr.,87 this court found no reason to disturb the trial court's assumption of jurisdiction over a case in which, as noted by the trial
court, "it is more convenient to hear and decide the case in the Philippines because Todaro [the plaintiff] resides in the Philippines and the contract allegedly breached
involve[d] employment in the Philippines." 88

In Pacific Consultants International Asia, Inc. v. Schonfeld,89 this court held that the fact that the complainant in an illegal dismissal case was a Canadian citizen and a
repatriate did not warrant the application of forum non conveniens considering that: (1) the Labor Code does not include forum non conveniens as a ground for the
dismissal of a complaint for illegal dismissal; (2) the propriety of dismissing a case based on forum non conveniens requires a factual determination; and (3) the
requisites for assumption of jurisdiction as laid out in Bank of America, NT&SA90 were all satisfied.

In contrast, this court ruled in The Manila Hotel Corp. v. National Labor Relations Commission 91 that the National Labor Relations Q Commission was a seriously
inconvenient forum. In that case, private respondent Marcelo G. Santos was working in the Sultanate of Oman when he received a letter from Palace Hotel recruiting
 221

him for employment in Beijing, China. Santos accepted the offer. Subsequently, however, he was released from employment supposedly due to business reverses
arising from political upheavals in China (i.e., the Tiananmen Square incidents of 1989). Santos later filed a Complaint for illegal dismissal impleading Palace Hotel's
General Manager, Mr. Gerhard Schmidt, the Manila Hotel International Company Ltd. (which was, responsible for training Palace Hotel's personnel and staff), and the
Manila Hotel Corporation (which owned 50% of Manila Hotel International Company Ltd.'s capital stock).

In ruling against the National Labor Relations Commission's exercise of jurisdiction, this court noted that the main aspects of the case transpired in two (2) foreign
jurisdictions, Oman and China, and that the case involved purely foreign elements. Specifically, Santos was directly hired by a foreign employer through correspondence
sent to Oman. Also, the proper defendants were neither Philippine nationals nor engaged in business in the Philippines, while the main witnesses were not residents of
the Philippines. Likewise, this court noted that the National Labor Relations Commission was in no position to conduct the following: first, determine the law governing
the employment contract, as it was entered into in foreign soil; second, determine the facts, as Santos' employment was terminated in Beijing; and third, enforce its
judgment, since Santos' employer, Palace Hotel, was incorporated under the laws of China and was not even served with summons.

Contrary to Manila Hotel, the case now before us does not entail a preponderance of linkages that favor a foreign jurisdiction.

Here, the circumstances of the parties and their relation do not approximate the circumstances enumerated in Puyat,92 which this court recognized as possibly justifying
the desistance of Philippine tribunals from exercising jurisdiction.

First, there is no basis for concluding that the case can be more conveniently tried elsewhere. As established earlier, Saudia is doing business in the Philippines. For their
part, all four (4) respondents are Filipino citizens maintaining residence in the Philippines and, apart from their previous employment with Saudia, have no other
connection to the Kingdom of Saudi Arabia. It would even be to respondents' inconvenience if this case were to be tried elsewhere.

Second, the records are bereft of any indication that respondents filed their Complaint in an effort to engage in forum shopping or to vex and inconvenience Saudia.

Third, there is no indication of "unwillingness to extend local judicial facilities to non-residents or aliens." 93 That Saudia has managed to bring the present controversy all
the way to this court proves this.

Fourth, it cannot be said that the local judicial machinery is inadequate for effectuating the right sought to be maintained. Summons was properly served on Saudia and
jurisdiction over its person was validly acquired.

Lastly, there is not even room for considering foreign law. Philippine law properly governs the present dispute.

As the question of applicable law has been settled, the supposed difficulty of ascertaining foreign law (which requires the application of forum non conveniens) provides
no insurmountable inconvenience or special circumstance that will justify depriving Philippine tribunals of jurisdiction.

Even if we were to assume, for the sake of discussion, that it is the laws of Saudi Arabia which should apply, it does not follow that Philippine tribunals should refrain
from exercising jurisdiction. To. recall our pronouncements in Puyat, 94 as well as in Bank of America, NT&SA,95 it is not so much the mere applicability of foreign law
which calls into operation forum non conveniens. Rather, what justifies a court's desistance from exercising jurisdiction is "[t]he difficulty of ascertaining foreign law"96 or
the inability of a "Philippine Court to make an intelligent decision as to the law[.]" 97

Consistent with lex loci intentionis, to the extent that it is proper and practicable (i.e., "to make an intelligent decision" 98), Philippine tribunals may apply the foreign law
 222

selected by the parties. In fact, (albeit without meaning to make a pronouncement on the accuracy and reliability of respondents' citation) in this case, respondents
themselves have made averments as to the laws of Saudi Arabia. In their Comment, respondents write:chanroblesvirtuallawlibrary

Under the Labor Laws of Saudi Arabia and the Philippines[,] it is illegal and unlawful to terminate the employment of any woman by virtue of pregnancy. The law in
Saudi Arabia is even more harsh and strict [sic] in that no employer can terminate the employment of a female worker or give her a warning of the same while on
Maternity Leave, the specific provision of Saudi Labor Laws on the matter is hereto quoted as follows:chanroblesvirtuallawlibrary

"An employer may not terminate the employment of a female worker or give her a warning of the same while on maternity leave." (Article 155, Labor Law of the
Kingdom of Saudi Arabia, Royal Decree No. M/51.) 99cralawlawlibrary

All told, the considerations for assumption of jurisdiction by Philippine tribunals as outlined in Bank of America, NT&SA100 have been satisfied. First, all the parties are
based in the Philippines and all the material incidents transpired in this jurisdiction. Thus, the parties may conveniently seek relief from Philippine tribunals. Second,
Philippine tribunals are in a position to make an intelligent decision as to the law and the facts. Third, Philippine tribunals are in a position to enforce their decisions.
There is no compelling basis for ceding jurisdiction to a foreign tribunal. Quite the contrary, the immense public policy considerations attendant to this case behoove
Philippine tribunals to not shy away from their duty to rule on the case.chanRoblesvirtualLawlibrary

IV

Respondents were illegally terminated.

In Bilbao v. Saudi Arabian Airlines,101 this court defined voluntary resignation as "the voluntary act of an employee who is in a situation where one believes that personal
reasons cannot be sacrificed in favor of the exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a formal
pronouncement or relinquishment of an office, with the intention of relinquishing the office accompanied by the act of relinquishment." 102 Thus, essential to the act of
resignation is voluntariness. It must be the result of an employee's exercise of his or her own will.

In the same case of Bilbao, this court advanced a means for determining whether an employee resigned voluntarily:chanroblesvirtuallawlibrary

As the intent to relinquish must concur with the overt act of relinquishment, the acts of the employee before and after the alleged resignation must be considered in
determining whether he or she, in fact, intended, to sever his or her employment.103 (Emphasis supplied)

On the other hand, constructive dismissal has been defined as "cessation of work because 'continued employment is rendered impossible, unreasonable or unlikely, as
an offer involving a demotion in rank or a diminution in pay' and other benefits." 104

In Penaflor v. Outdoor Clothing Manufacturing Corporation,105 constructive dismissal has been described as tantamount to "involuntarily [sic] resignation due to the
harsh, hostile, and unfavorable conditions set by the employer." 106 In the same case, it was noted that "[t]he gauge for constructive dismissal is whether a reasonable
person in the employee's position would feel compelled to give up his employment under the prevailing circumstances." 107

Applying the cited standards on resignation and constructive dismissal, it is clear that respondents were constructively dismissed. Hence, their termination was illegal.

The termination of respondents' employment happened when they were pregnant and expecting to incur costs on account of child delivery and infant rearing. As noted
by the Court of Appeals, pregnancy is a time when they need employment to sustain their families. 108 Indeed, it goes against normal and reasonable human behavior to
 223

abandon one's livelihood in a time of great financial need.

It is clear that respondents intended to remain employed with Saudia. All they did was avail of their maternity leaves. Evidently, the very nature of a maternity leave
means that a pregnant employee will not report for work only temporarily and that she will resume the performance of her duties as soon as the leave allowance
expires.

It is also clear that respondents exerted all efforts to' remain employed with Saudia. Each of them repeatedly filed appeal letters (as much as five [5] letters in the case
of Rebesencio109) asking Saudia to reconsider the ultimatum that they resign or be terminated along with the forfeiture of their benefits. Some of them even went to
Saudia's office to personally seek reconsideration.110

Respondents also adduced a copy of the "Unified Employment Contract for Female Cabin Attendants." 111This contract deemed void the employment of a flight attendant
who becomes pregnant and threatened termination due to lack of medical fitness. 112 The threat of termination (and the forfeiture of benefits that it entailed) is enough
to compel a reasonable person in respondents' position to give up his or her employment.

Saudia draws attention to how respondents' resignation letters were supposedly made in their own handwriting. This minutia fails to surmount all the other indications
negating any voluntariness on respondents' part. If at all, these same resignation letters are proof of how any supposed resignation did not arise from respondents' own
initiative. As earlier pointed out, respondents' resignations were executed on Saudia's blank letterheads that Saudia had provided. These letterheads already had the
word "RESIGNATION" typed on the subject portion of their respective headings when these were handed to respondents. 113ChanRoblesVirtualawlibrary

"In termination cases, the burden of proving just or valid cause for dismissing an employee rests on the employer." 114 In this case, Saudia makes much of how
respondents supposedly completed their exit interviews, executed quitclaims, received their separation pay, and took more than a year to file their Complaint. 115 If at all,
however, these circumstances prove only the fact of their occurrence, nothing more. The voluntariness of respondents' departure from Saudia is non sequitur.

Mere compliance with standard procedures or processes, such as the completion of their exit interviews, neither negates compulsion nor indicates voluntariness.

As with respondent's resignation letters, their exit interview forms even support their claim of illegal dismissal and militates against Saudia's arguments. These exit
interview forms, as reproduced by Saudia in its own Petition, confirms the unfavorable conditions as regards respondents' maternity leaves. Ma. Jopette's and Loraine's
exit interview forms are particularly telling:chanroblesvirtuallawlibrary

a. From Ma. Jopette's exit interview form:

3. In what respects has the job met or failed to meet your expectations?

THE SUDDEN TWIST OF DECISION REGARDING THE MATERNITY LEAVE.116

b. From Loraine's exit interview form:

1. What are your main reasons for leaving Saudia? What company are you joining?

xxx xxx xxx

 224

Others

CHANGING POLICIES REGARDING MATERNITY LEAVE (PREGNANCY)117

As to respondents' quitclaims, in Phil. Employ Services and Resources, Inc. v. Paramio,118 this court noted that "[i]f (a) there is clear proof that the waiver was wangled
from an unsuspecting or gullible person; or (b) the terms of the settlement are unconscionable, and on their face invalid, such quitclaims must be struck down as invalid
or illegal."119 Respondents executed their quitclaims after having been unfairly given an ultimatum to resign or be terminated (and forfeit their
benefits).chanRoblesvirtualLawlibrary

Having been illegally and unjustly dismissed, respondents are entitled to full backwages and benefits from the time of their termination until the finality of this Decision.
They are likewise entitled to separation pay in the amount of one (1) month's salary for every year of service until the fmality of this Decision, with a fraction of a year
of at least six (6) months being counted as one (1) whole year.

Moreover, "[m]oral damages are awarded in termination cases where the employee's dismissal was attended by bad faith, malice or fraud, or where it constitutes an act
oppressive to labor, or where it was done in a manner contrary to morals, good customs or public policy." 120 In this case, Saudia terminated respondents' employment in
a manner that is patently discriminatory and running afoul of the public interest that underlies employer-employee relationships. As such, respondents are entitled to
moral damages.

To provide an "example or correction for the public good" 121 as against such discriminatory and callous schemes, respondents are likewise entitled to exemplary
damages.

In a long line of cases, this court awarded exemplary damages to illegally dismissed employees whose "dismissal[s were] effected in a wanton, oppressive or malevolent
manner."122 This court has awarded exemplary damages to employees who were terminated on such frivolous, arbitrary, and unjust grounds as membership in or
involvement with labor unions,123 injuries sustained in the course of employment,124development of a medical condition due to the employer's own violation of the
employment contract,125and lodging of a Complaint against the employer. 126 Exemplary damages were also awarded to employees who were deemed illegally dismissed
by an employer in an attempt to evade compliance with statutorily established employee benefits. 127 Likewise, employees dismissed for supposedly just causes, but in
violation of due process requirements, were awarded exemplary damages. 128

These examples pale in comparison to the present controversy. Stripped of all unnecessary complexities, respondents were dismissed for no other reason than simply
that they were pregnant. This is as wanton, oppressive, and tainted with bad faith as any reason for termination of employment can be. This is no ordinary case of
illegal dismissal. This is a case of manifest gender discrimination. It is an affront not only to our statutes and policies on employees' security of tenure, but more so, to
the Constitution's dictum of fundamental equality between men and women. 129

The award of exemplary damages is, therefore, warranted, not only to remind employers of the need to adhere to the requirements of procedural and substantive due
process in termination of employment, but more importantly, to demonstrate that gender discrimination should in no case be countenanced.

Having been compelled to litigate to seek reliefs for their illegal and unjust dismissal, respondents are likewise entitled to attorney's fees in the amount of 10% of the
total monetary award.130
 225

VI

Petitioner Brenda J. Betia may not be held liable.

A corporation has a personality separate and distinct from those of the persons composing it. Thus, as a rule, corporate directors and officers are not liable for the illegal
termination of a corporation's employees. It is only when they acted in bad faith or with malice that they become solidarity liable with the corporation. 131

In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang Manggagawa ng Ever Electrical,132 this court clarified that "[b]ad faith does not connote bad judgment or
negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty through some motive or interest or
ill will; it partakes of the nature of fraud." 133

Respondents have not produced proof to show that Brenda J. Betia acted in bad faith or with malice as regards their termination. Thus, she may not be held solidarity
liable with Saudia.cralawred

WHEREFORE, with the MODIFICATIONS that first, petitioner Brenda J. Betia is not solidarity liable with petitioner Saudi Arabian Airlines, and second, that petitioner
Saudi Arabian Airlines is liable for moral and exemplary damages. The June 16, 2011 Decision and the September 13, 2011 Resolution of the Court of Appeals in CA-
G.R. SP. No. 113006 are hereby AFFIRMED in all other respects. Accordingly, petitioner Saudi Arabian Airlines is ordered to pay respondents:

(1) Full backwages and all other benefits computed from the respective dates in which each of the respondents were illegally terminated until the finality of this
Decision;

(2) Separation pay computed from the respective dates in which each of the respondents commenced employment until the finality of this Decision at the rate of
one (1) month's salary for every year of service, with a fraction of a year of at least six (6) months being counted as one (1) whole year;

(3) Moral damages in the amount of P100,000.00 per respondent;

(4) Exemplary damages in the amount of P200,000.00 per respondent; and

(5) Attorney's fees equivalent to 10% of the total award.

Interest of 6% per annum shall likewise be imposed on the total judgment award from the finality of this Decision until full satisfaction thereof.

This case is REMANDED to the Labor Arbiter to make a detailed computation of the amounts due to respondents which petitioner Saudi Arabian Airlines should pay
without delay.

SO ORDERED.chanroblesvirtuallawlibrary

G.R. No.178055 July 2, 2014

 226

AMECOS INNOVATIONS, INC. and ANTONIO F. MATEO, Petitioners,

vs.
ELIZA R. LOPEZ, Respondent.

DECISION

DEL CASTILLO, J.:

Assailed in this Petition for Review on Certiorari 1 are the March 22, 2007 Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP No. 96959 which affirmed the June 30,
2006 Decision3 of the Regional Trial Court (RTC) of Caloocan City, Branch 121, dismissing the Complaint 4 for lack of jurisdiction, and its May 23, 2007
Resolution5 denying petitioners' Motion for Reconsideration.6

Factual Antecedents

Petitioner Amecos Innovations, Inc. (Amecos) is a corporation duly incorporated under Philippine laws engaged in the business of selling assorted products created by its
President and herein co-petitioner, Antonio F. Mateo (Mateo). On May 30, 2003, Amecos received a Subpoena 7 from the Office of the City Prosecutor of Quezon City in
connection with a complaint filed by the Social Security System (SSS) for alleged delinquency in the remittance of SSS contributions and penalty liabilities in violation of
Section 22(a) and 22(d) in relation to Section 28(e) of the SSS law, as amended.

By way of explanation, Amecos attributed its failure to remit the SSS contributions to herein respondent Eliza R. Lopez (respondent). Amecos claimed that it hired
respondent on January 15, 2001 as Marketing Assistant to promote its products; that upon hiring, respondent refused to provide Amecos with her SSS Number and to
be deducted her contributions; that on the basis of the foregoing, Amecos no longer enrolled respondent with the SSS and did not deduct her corresponding
contributions up to the time of her termination in February 2002.

Amecos eventually settled its obligations with the SSS; consequently, SSS filed a Motion to Withdraw Complaint 8which was approved by the Office of the City
Prosecutor.9

Thereafter, petitioners sent a demand letter 10 to respondent for ₱27,791.65 representing her share in the SSS contributions and expenses for processing, but to no
avail. Thus, petitioners filed the instant Complaint for sum of money and damages against respondent docketed as Civil Case No. 04-27802 and raffled to Branch 51 of
the Metropolitan Trial Court (MeTC) of Caloocan City. Petitioners claimed that because of respondent’s misrepresentation, they suffered actual damages in the amount of
₱27,791.65 allegedly incurred by Amecos by way of settlement and payment of its obligations with the SSS. 11 Mateo also allegedly suffered extreme embarrassment and
besmirched reputation as a result of the filing of the complaint by the SSS. Hence they prayed for ₱50,000.00 as moral damages, ₱50,000.00 as exemplary damages,
₱50,000.00 as attorney’s fees, and costs of the suit.

Respondent filed her Answer with Motion to Dismiss 12 claiming that she was formerly an employee of Amecos until her illegal dismissal in February 2002; that Amecos
deliberately failed to deduct and remit her SSS contributions; and that petitioners filed the instant Complaint in retaliation to her filing of an illegal dismissal case.
Respondent also averred that the regular courts do not have jurisdiction over the instant case as it arose out of their employer-employee relationship.

The parties then submitted their respective Position Papers. 13

Ruling of the Metropolitan Trial Court

On March 24, 2006, the MeTC issued its Decision,14 which decreed as follows:
 227

All viewed from the foregoing, the court hereby dismisses the complaint for lack of jurisdiction.

SO ORDERED.15

Ruling of the Regional Trial Court

Petitioners appealed to the RTC. On June 30, 2006, the RTC rendered its Decision 16 disposing as follows:

WHEREFORE, premises considered, the instant appeal is accordingly DISMISSED for lack of merit.

SO ORDERED.17

The RTC affirmed the view taken by the MeTC that under Article 217(a)(4) of the Labor Code, 18 claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relationship are under the jurisdiction of the Labor Arbiters or the National Labor Relations Commission (NLRC); that since petitioners and
respondent were in an employer-employee relationship at the time, the matter of SSS contributions was thus an integral part of that relationship; and as a result,
petitioners’ cause of action for recovery of damages from respondent falls under the jurisdiction of the Labor Arbiters, pursuant to Article 217(a)(4) of the Labor Code.

Petitioners filed a Motion for Reconsideration19 which the RTC denied.20

Ruling of the Court of Appeals

Petitioners thus instituted a Petition for Review 21 with the CA claiming that the RTC seriously erred in sustaining the dismissal of the Complaint by the MeTC on the
ground of lack of jurisdiction. On March 22, 2007, the CA rendered the assailed Resolution, viz:

ACCORDINGLY, the petition for review is DENIED DUE COURSE and this case is DISMISSED.

SO ORDERED.22

Finding no error in the Decision of the RTC, the CA held that:

x x x The matter of whether the SSS employer’s contributive shares required of the petitioners to be paid due to the complaint of the respondent necessarily flowed
from the employer-employee relationship between the parties. As such, the lower courts were correct in ruling that jurisdiction over the claim pertained to the Labor
Arbiter and the National Labor Relations Commission, not to the regular courts, even if the claim was initiated by the employer against the employee. 23

Petitioners moved to reconsider, but in the second assailed Resolution 24 dated May 23, 2007, the CA denied petitioners’ Motion for Reconsideration. 25 Hence, the instant
Petition.

Issues

The issues raised in this Petition are:

WHETHER THE REGULAR CIVIL COURT AND NOT THE LABOR ARBITER OR X X X THE NATIONAL LABOR RELATIONS COMMISSION HAS JURISDICTION OVER CLAIM[S]
FOR REIMBURSEMENT ARISING FROM EMPLOYER-EMPLOYEE RELATIONS.
 228

WHETHER THE REGULAR CIVIL COURT AND NOT THE LABOR ARBITER OR X X X THE NATIONAL LABOR RELATIONS COMMISSION HAS JURISDICTION OVER CLAIM[S]
FOR DAMAGES FOR MISREPRESENTATION ARISING FROM EMPLOYER-EMPLOYEE RELATIONS. 26

Petitioners’ Arguments

In praying that the assailed CA Resolutions be set aside, petitioners argue that their Complaint is one for recovery of a sum of money and damages based on Articles
19,27 22,28 and 215429 of the Civil Code; that their cause of action is based on solutio indebitior unjust enrichment, which arose from respondent’s misrepresentation that
there was no need to enroll her with the SSS as she was concurrently employed by another outfit, Triple A Glass and Aluminum Company, and that she was self-
employed as well. They argue that the employer-employee relationship between Amecos and respondent is merely incidental, and does not necessarily place their
dispute within the exclusive jurisdiction of the labor tribunals; the true source of respondent’s obligation is derived from Articles 19, 22, and 2154 of the Civil Code. They
add that by reason of their payment of respondent’s counterpart or share in the SSS premiums even as it was not their legal obligation to do so, respondent was
unjustly enriched, for which reason she must return what petitioners paid to the SSS.

Petitioners cite the pronouncements of the Court to the effect that where the employer-employee relationship is merely incidental and the cause of action proceeds from
a different source of obligation, such as tort, malicious prosecution or breach of contract, the regular courts have jurisdiction; 30 that when the cause of action is based
on Articles 19 and 21 of the Civil Code, the case is not cognizable by the labor tribunals; 31 that money claims of workers which fall within the original and exclusive
jurisdiction of Labor Arbiters are those money claims which have some reasonable causal connection with the employer-employee relationship; 32 and that when a person
unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good
conscience, a case of solutio indebiti arises.33

Respondent’s Arguments

Respondent, on the other hand, maintains that jurisdiction over petitioners’ case lies with the Labor Arbiter, as their cause of action remains necessarily connected to
and arose from their employer-employee relationship. At any rate, respondent insists that petitioners, as employers, have the legal duty to enroll her with the SSS as
their employee and to pay or remit the necessary contributions.

Our Ruling

The Court denies the Petition.

This Court holds that as between the parties, Article 217(a)(4) of the Labor Code is applicable. Said provision bestows upon the Labor Arbiter original and exclusive
jurisdiction over claims for damages arising from employer-employee relations. The observation that the matter of SSS contributions necessarily flowed from the
employer-employee relationship between the parties – shared by the lower courts and the CA – is correct; thus, petitioners’ claims should have been referred to the
labor tribunals. In this connection, it is noteworthy to state that "the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws, but also damages
governed by the Civil Code."34

At the same time, it cannot be assumed that since the dispute concerns the payment of SSS premiums, petitioners’ claim should be referred to the Social Security
Commission (SSC) pursuant to Republic Act No. 1161, as amended by Republic Act No. 8282. 35 As far as SSS is concerned, there is no longer a dispute with respect to
petitioners’ accountability to the System; petitioners already settled their pecuniary obligations to it. Since there is no longer any dispute regarding coverage, benefits,
contributions and penalties to speak of, the SSC need not be unnecessarily dragged into the picture. 36 Besides, it cannot be made to act as a collecting agency for
petitioners’ claims against the respondent; the Social Security Law should not be so interpreted, lest the SSC be swamped with cases of this sort.
 229

At any rate, it appears that petitioners do not have a cause of action against respondent. The Complaint in Civil Case No. 04-27802 reads in part:

STATEMENT OF FACTS AND CAUSES OF ACTION

4. On or about 15 January 2001, [petitioners] hired [respondent] as a Marketing Assistant to promote the products of [petitioners].

5. Immediately, [respondent] represented that she had other gainful work and that she was also self-employed for which reason, she refused to divulge her [SSS]
Number and refused to be deducted her share in the [SSS] contributions. In her bio-data submitted to [petitioners], she did not even indicate her SSS [N]umber. x x x
[These] representations were later found out to be untrue and [respondent]knew that.

6. Misled by such misrepresentation, [petitioners’] employees no longer deducted her corresponding SSS contributions up to the time of her termination from
employment on or about 18 February 2002.

7. On or about 30 May 2003, to the unpleasant surprise and consternation of [petitioner] Mateo, he received a Subpoena x x x pursuant to a criminal complaint against
[petitioner] Dr. Antonio Mateo for alleged un-remitted SSS Contributions including that corresponding to the [respondent]. Upon subsequent clarification with the Social
Security System, only that portion corresponding to the [respondent’s] supposed unremitted contribution remained as the demandable amount. The total amount
demanded was ₱18,149.95. x x x

8. On or about 24 July 2003, [petitioner] Mateo had to explain to the Social Security System the circumstances as to why no contributions reflected for [respondent]. x
xx

9. On or about 31 July 2003, [petitioners] had to pay the Social Security System the amount of ₱18,149.95 including the share which should have been deducted from
[respondent] in the amount of ₱12,291.62. x x x

10. With this development, some of [petitioners’] employees felt troubled and started to doubt x x x whether or not their SSS contributions were being remitted or paid
by the [petitioners]. [Petitioner] Mateo had to explain to them why there was an alleged deficiency in SSS contributions and had to assure them that their contributions
were properly remitted.

11. As a result of these events, [petitioner] Mateo, for days, felt deep worry and fear leading to sleepless nights that the Social Security System might prosecute him for
a possible criminal offense.

12. [Petitioner] Mateo also felt extreme embarrassment and besmirched reputation as he, being a recognized inventor, a dean of a reputable university and a dedicated
teacher, was made the butt of ridicule and viewed as a shrewd businessman capitalizing on even the SSS contributions of his employees. x x x

13. On or about 15 January 2004, in order to [recover] what is due [petitioners], they sent a demand letter to [respondent] for her to pay the amount of ₱27,791.65 as
her share in the SSS contributions and other expenses for processing. x x x

14. This demand, however, fell on deaf ears as [respondent] did not pay and has not paid to date the amount of her share in the SSS contributions and other amounts
demanded.

15. For such malicious acts and the suffering befalling [petitioner] Mateo, [respondent] is liable for moral damages in the amount of FIFTY THOUSAND PESOS
(₱50,000.00).
 230

16. For having made gross misrepresentation, she is liable for exemplary damages in the amount of FIFTY THOUSAND PESOS ( ₱50,000.00) to serve as a warning for
the public not to follow her evil example.

17. As [petitioners] were compelled to file the instant suit to protect and vindicate [their] right and reputation, [respondent] should also be held liable for attorney’s fees
in the amount of FIFTY THOUSAND PESOS (₱50,000.00) in addition to the costs of this suit.

PRAYER

[Petitioners] respectfully [pray] that a judgment, in [their] favor and against [respondent], be rendered by this Honorable Court, ordering [respondent]:

1. To pay the amount due of TWENTY SEVEN THOUSAND SEVEN HUNDRED NINETY ONE AND 65/100 (₱27,791.65) representing her share in the SSS contributions and
processing costs, with interest, at legal rate, from the time of the filing of this Complaint;

2. To pay FIFTY THOUSAND PESOS (₱50,000.00) for moral damages;

3. To pay FIFTY THOUSAND PESOS (₱50,000.00) for exemplary damages;

4. To pay FIFTY THOUSAND PESOS (₱50,000.00) as attorney’s fees;

5. To pay the costs of this suit.

[Petitioners] further [pray] for such other relief as are just and equitable under the circumstances. 37

In fine, petitioners alleged that respondent misrepresented that she was simultaneously employed by another company; consequently, they did not enroll her with the
SSS or pay her SSS contributions. Likewise, when petitioners eventually paid respondent’s SSS contributions as a result of the filing of a complaint by the SSS,
respondent was unjustly enriched because the amount was not deducted from her wages in Amecos.

The evidence, however, indicates that while respondent was employed, Amecos did not remit premium contributions – both employer and employees’ shares – to the
SSS; the SSS demand letter38 sent to it covers non-payment of SSS premium contributions from January 2001 up to April 2002, amounting to ₱85,687.84.39 The
Amecos payroll40covering the period from January 30 to November 29, 2001 likewise shows that no deductions for SSS contributions were being made from
respondent’s salaries. This can only mean that during the period, Amecos was not remitting SSS contributions – whether the employer or employees’ shares –
pertaining to respondent. As such, during her employment with Amecos, respondent was never covered under the System as SSS did not know in the first instance that
petitioners employed her, since the petitioners were not remitting her contributions. Petitioners were forced to remit monthly SSS contributions only when SSS filed I.S.
No. 03-6068 with the Quezon City Prosecutor’s Office. By that time, however, respondent was no longer with Amecos, as her employment was terminated sometime in
mid-February of 2002.

Given the above facts, it is thus clear that petitioners have no cause of action against the respondent in Civil Case No. 04-27802.1âwphi1 Since Amecos did not remit
respondent’s full SSS contributions, the latter was never covered by and protected under the System. If she was never covered by the System, certainly there is no
sense in making her answerable for the required contributions during the period of her employment. And it follows as a matter of consequence that claims for other
damages founded on the foregoing non-existent cause of action should likewise fail.

WHEREFORE, premises considered, the Petition is DENIED. The assailed March 22, 2007 and the May 23, 2007 Resolutions of the Court of Appeals in CA-G.R. SP No.
96959 are AFFIRMED.
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SO ORDERED.

G.R. No. 202974, February 07, 2018

NORMA D. CACHO AND NORTH STAR INTERNATIONAL TRAVEL, INC., Petitioners, v. VIRGINIA D. BALAGTAS, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, as amended, seeking to reverse and set aside the Decision 1 dated November
9, 2011 and Resolution 2 dated August 6, 2012 of the Court of Appeals in CA-G.R. SP No. 111637, which affirmed the Labor Arbiter's Decision 3dated March 28, 2005.

This case stemmed from a Complaint4 for constructive dismissal filed by respondent Virginia D. Balagtas (Balagtas) against petitioners North Star International Travel,
Inc. (North Star) and its President Norma D. Cacho (Cacho) before the Labor Arbiter docketed as NLRC-NCR Case No. 04-04736-04.

The facts as narrated by the Court of Appeals are as follows:

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In her Position Paper submitted before the Labor Arbiter, petitioner [Balagtas] alleged that she was a former employee of respondent TQ3 Travel Solutions/North Star
International Travel, Inc., a corporation duly registered with the Securities and Exchange Commission (SEC) on February 12, 1990. She also alleged that she was one of
the original incorporators-directors of the said corporation and, when it started its operations in 1990, she was the General Manager and later became the Executive
Vice President/Chief Executive Officer.

On March 19, 2004 or after 14 years of service in the said corporation, petitioner was placed under 30 days preventive suspension pursuant to a Board Resolution
passed by the Board of Directors of the respondent Corporation due to her alleged questionable transactions. On March 20, 2004, she was notified by private respondent
Norma Cacho of her suspension and ordered to explain in writing to the Board of Directors her alleged fraudulent transactions within 5 days from said notice. Petitioner
promptly heeded the order on March 29, 2004.

On April 5, 2004, while under preventive suspension, petitioner wrote a letter to private respondent Norma Cacho informing the latter that she was assuming her
position as Executive Vice-President/Chief Executive Officer effective on that date; however, she was prevented from re-assuming her position. Petitioner also wrote a
letter dated April 12, 2004 to the Audit Manager inquiring about the status of the examination of the financial statement of respondent corporation for the year 2003,
which request was, however, ignored. Consequently, petitioner filed a complaint claiming that she was constructively and illegally dismissed effective on April 12, 2004.

In their defense, respondents averred that, on March 19, 2004, the majority of the Board of Directors of respondent corporation decided to suspend petitioner for 30
days due to the questionable documents and transactions she entered into without authority. The preventive suspension was meant to prevent petitioner from
influencing potential witnesses and to protect the respondent corporation's property. Subsequently, the Board of Directors constituted an investigation committee tasked
with the duty to impartially assess the charges against petitioner.

Respondents alleged that petitioner violated her suspension when, on several occasions, she went to the respondent corporation's office and insisted on working despite
respondent Norma Cacho's protestation. Respondents also alleged that the complaint for constructive dismissal was groundless. They asserted that petitioner was not
illegally dismissed but was merely placed under preventive suspension. 5

The Decision of the Labor Arbiter

In his Decision dated March 28, 2005, the Labor Arbiter found that respondent Balagtas was illegally dismissed from North Star, viz.:

WHEREFORE, judgment is hereby made finding the complainant to have been illegally dismissed from employment on July 15, 2004 and concomitantly ordering the
respondent North Star International Travel, Inc., to pay her a separation pay computed at thirty (30) days pay for every year of service with backwages, plus
commissions and such other benefits which she should have received had she not been dismissed at all.

The respondent North Star International Travel, Inc. is further ordered to pay complainant three (3) million pesos as moral damages and two (2) million pesos as
exemplary damages plus ten (10%) percent attorney's fees. 6

Subsequently, petitioners appealed the case to the National Labor Relations Commission (NLRC). In their Notice of Appeal, 7 they prayed that Balagtas's Complaint be
dismissed for lack of jurisdiction. While they maintained that Balagtas was never dismissed, they also alleged that she was a corporate officer, incorporator, and
member of the North Star's Board of Directors (The Board). Thus, the NLRC cannot take cognizance of her illegal dismissal case, the same being an intra-corporate
controversy, which properly falls within the original and exclusive jurisdiction of the ordinary courts.

The Ruling of the NLRC

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In its Resolution8 dated September 30, 2008, the NLRC ruled in favor of petitioners, viz.:

WHEREFORE, the questioned Decision of the Labor Arbiter is REVERSED and SET ASIDE and the complaint is DISMISSED for lack of jurisdiction. 9

The NLRC's findings are as follows: First, through a Board resolution passed on March 31, 2003, Balagtas was elected as North Star's Executive Vice President and Chief
Executive Officer, as evidenced by a Secretary's Certificate dated April 22, 2003. Second, in her Counter Affidavit executed sometime in 2004 in relation to the criminal
charges against her, respondent Balagtas had in fact admitted occupying these positions, apart from being one of North Star's incorporators. And, third, the position of
"Vice President" is a corporate office provided in North Star's by-laws. 10

Based on these findings, the NLRC ruled that respondent Balagtas was a corporate officer of North Star at the time of her dismissal and not a mere employee. A
corporate officer's dismissal is always an intra-corporate controversy, 11 a subject matter falling within the Regional Trial Court's (RTC) jurisdiction. 12 Thus, the Labor
Arbiter and the NLRC do not have jurisdiction over Balagtas's Complaint.

The NLRC also held that petitioners North Star and Cacho were not estopped from raising the issue of lack of jurisdiction. Citing Dy v. National Labor Relations
Commission,13 the NLRC explained that the Labor Arbiter heard and decided the case upon the theory that he had jurisdiction over the Complaint. Thus, the Labor
Arbiter's jurisdiction may be raised as an issue on appeal.

Aggrieved, respondent Balagtas moved for reconsideration but was denied. Thus, she elevated the case to the Court of Appeals via a petition for certiorari.

The Ruling of the Court of Appeals

In its assailed Decision, the Court of Appeals found merit in Balagtas's petition, viz.:

WHEREFORE, the petition is hereby GRANTED. The assailed Resolution, dated September 30, 2008 of the National Labor Relations Commission dismissing the
petitioner's complaint for lack of jurisdiction, is hereby REVERSED and SET ASIDE. The Decision, dated March 28, 2005 of the Labor Arbiter is AFFIRMED and this case is
ordered REMANDED to the NLRC for the re-computation of petitioner's backwages and attorney's fees in accordance with this Decision. 14

In ruling that the present case does not involve an intra-corporate controversy, the Court of Appeals applied a two-tier test, viz.: (a) the relationship test,
and (b) the nature of controversy test.

Applying the relationship test, the Court of Appeals explained that no intra-corporate relationship existed between respondent Balagtas and North Star. While
respondent Balagtas was North Star's Chief Executive Officer and Executive Vice President, petitioners North Star and Cacho failed to establish that occupying these
positions made her a corporate officer. First, respondent Balagtas held the Chief Executive Officer position as a mere corporate title for the purpose of enlarging North
Star's corporate image. According to North Star's by-laws, the company President shall assume the position of Chief Executive Officer. Thus, respondent Balagtas was
not empowered to exercise the functions of a corporate officer, which was lawfully delegated to North Star's President, petitioner Cacho. 15 And, second, petitioner North
Star's By-laws only enumerate the position of Vice President as one of its corporate officers. The NLRC should not have assumed that the Vice President position is the
same as the Executive Vice President position that respondent Balagtas admittedly occupied. Following Matling Industrial and Commercial Corporation v. Coros,16 the
appellate court reminded that "a position must be expressly mentioned in the by-laws in order to be considered a corporate office." 17

On the other hand, the Court of Appeals elucidated that based on the allegations in herein respondent Balagtas's complaint filed before the Labor Arbiter, the present
 234

case involved labor issues. Thus, even using the nature of controversy test, it cannot be regarded as an intra-corporate dispute. 18

The subsequent motions for reconsideration were denied.19 Hence, the present petition.

The Issues

Petitioners North Star and Cacho come before this Court raising the following issues:

A.

WHETHER RESPONDENT BALAGTAS IS A CORPORATE OFFICER AS DEFINED BY THE CORPORATION CODE, CASE LAW, AND NORTH STAR'S BY-LAWS

B.

WHETHER THE APPELLATE COURT'S DECISION REVERSING THE NLRC'S FINDING THAT BALAGTAS WAS A CORPORATE OFFICER FOR WHICH HER ACTION FOR ILLEGAL
DISMISSAL WAS INAPPROPRIATE FOR IT TO RESOLVE, WAS CORRECT ESPECIALLY BECAUSE NO DISCUSSION OF THAT CONCLUSION WAS MADE BY THE APPELLATE
COURT IN ITS DECISION

C.

WHETHER THE AWARD BY THE APPELLATE COURT OF SEPARATION PAY, BACKWAGES, DAMAGES, AND LAWYER'S FEES TO BALAGTAS WAS APPROPRIATE 20

Petitioners Cacho and North Star insist that the present case's subject matter is an intra-corporate controversy. They maintain that respondent Balagtas, as petitioner
North Star's Executive Vice Presidentand Chief Executive Officer, was its corporate officer. Particularly, they argue that: first, under petitioner North Star's by-laws, vice-
presidents are listed as corporate officers. Thus, the NLRC erred when it differentiated between: (a) " vice president" as a corporate office provided in petitioner North
Star's by-laws, and (b) "Executive Vice President," the position occupied by respondent Balagtas. Its interpretation unduly supplanted the Board's wisdom and authority
in handling its corporate affairs. Her appointment as one of petitioner North Star's vice presidents is evidenced by the Secretary's Certificate dated April 22, 2003. As
held in Mailing, if the position or office is created by the by-laws and the appointing authority is the board of directors, then it is a corporate office. Second, she had
already been a corporate officer of petitioner North Star for quite some time, having been appointed as General Managerthrough a Board Resolution in 1997 and,
subsequently, as Executive Vice President and General Manager in 2001, as evidenced by the Secretary's Certificate dated March 23, 2001. And third, respondent
Balagtas has openly admitted her appointments to these positions. She even acknowledged being a member of the Board and at the same time petitioner North
Star's Executive Vice President and General Manager.21

Considering all these in applying the relationship test, petitioners Cacho and North Star assert that respondent Balagtas is not petitioner North Star's mere employee but
a corporate officer thereof whose dismissal is categorized as an intra-corporate matter. 22

Petitioners Cacho and North Star further cite Espino v. National Labor Relations Commission 23 where the Court held that a corporate officer's dismissal is always a
corporate act. It cannot be considered as a simple labor case. Thus, under the nature of the controversy test, the present case is an intra-corporate dispute because the
 235

primary subject matter herein is the dismissal of a corporate officer.

In refuting petitioners Cacho and North Star's allegations, respondent Balagtas avers that: first, she was not a corporate officer of petitioner North Star. The Board
Resolution and Secretary's Certificates that purportedly support petitioners Cacho and North Star's claims were falsified, forged, and invalid. Petitioners Cacho and North
Star failed to show that the Executive Vice President position she had occupied was a corporate office. Said position was a mere nomenclature as she was never
empowered to exercise the functions of a corporate officer. In fact, in the 2003 General Information Sheet (GIS) of petitioner North Star, the field "corporate position"
opposite respondent Balagtas's name was filled out as "not applicable." Second, she was no longer a stockholder and director of petitioner North Star. Third, she was
merely an employee. Petitioner Cacho was the one who hired her, determined her compensation, directed and controlled the manner she performed her work, and
ultimately, dismissed her from employment. Fourth, the issue of whether or not she was a corporate officer is irrelevant because her claim for back wages,
commissions, and other monies is clearly categorized as a labor dispute, not an intra-corporate controversy. 24 And fifth, petitioners Cacho and North Star are already
estopped from questioning the jurisdiction of the Labor Arbiter. They actively participated in the proceedings before the Labor Arbiter and cannot assail the validity of
such proceedings only after obtaining an unfavorable judgment. 25

The Ruling of the Court

The petition is meritorious.

The sole issue before the Court is whether or not the present case is an intra-corporate controversy within the jurisdiction of the regular courts or an ordinary labor
dispute that the Labor Arbiter may properly take cognizance of.

Respondent Balagtas's dismissal is an intra-corporate controversy

At the onset, We agree with the appellate court's ruling that a two-tier test must be employed to determine whether an intra-corporate controversy exists in the present
case, viz.: (a) the relationship test, and (b) the nature of the controversy test. This is consistent with the Court's rulings in Reyes v. Regional Trial Court of Makati,
Branch 142,26Speed Distributing Corporation v. Court of Appeals,27 and Real v. Sangu Philippines, Inc.28

A. Relationship Test

A dispute is considered an intra-corporate controversy under the relationship test when the relationship between or among the disagreeing parties is any one of the
following: (a) between the corporation, partnership, or association and the public; (b) between the corporation, partnership, or association and its stockholders,
partners, members, or officers; (c) between the corporation, partnership, or association and the State as far as its franchise, permit or license to operate is concerned;
and (d) among the stockholders, partners, or associates themselves. 29

In the present case, petitioners Cacho and North Star allege that respondent Balagtas, as petitioner North Star's Executive Vice President, was its corporate officer. On
the other hand, while respondent Balagtas admits to have occupied said position, she argues she was Executive Vice President merely by name and she did not
discharge any of the responsibilities lodged in a corporate officer.

Given the parties' conflicting views, We must now determine whether or not the Executive Vice President position is a corporate office so as to establish the intra-
corporate relationship between the parties.

In Easy call Communications Phils., Inc. v. King,30 the Court ruled that a corporate office is created by the charter of the corporation and the officer is elected thereto by
 236

the directors or stockholders. In other words, one shall be considered a corporate officer only if two conditions are met, viz.: (1) the position occupied was created by
charter/by-laws, and (2) the officer was elected (or appointed) by the corporation's board of directors to occupy said position.

1. The Executive Vice President position is one of the corporate offices provided in petitioner North Star's By-laws

The rule is that corporate officers are those officers of a corporation who are given that character either by the Corporation Code or by the corporation's by-laws.31

Section 25 of the Corporation Code32 explicitly provides for the election of the corporation's president, treasurer, secretary, and such other officers as may be provided
for in the by-laws. In interpreting this provision, the Court has ruled that if the position is other than the corporate president, treasurer, or secretary, it must
be expressly mentioned in the bylaws in order to be considered as a corporate office. 33

In this regard, petitioner North Star's by-laws 34 provides the following:

ARTICLE IV

OFFICERS

Section 1. Election/Appointment - Immediately after their election, the Board of Directors shall formally organize by electing the Chairman, the President, one or more
Vice-President (sic), the Treasurer, and the Secretary, at said meeting.

The Board may, from time to time, appoint such other officers as it may determine to be necessary or proper.

Any two (2) or more positions may be held concurrently by the same person, except that no one shall act as President and Treasurer or Secretary at the same time.

Clearly, there may be one or more vice president positions in petitioner North Star and, by virtue of its by-laws, all such positions shall be corporate offices.

Consequently, the next question that begs to be asked is whether or not the phrase "one or more vice president" in the above-cited provision of the by-laws includes
the Executive Vice President position held by respondent Balagtas.

In ruling that respondent Balagtas was not a corporate officer of petitioner North Star, the Court of Appeals pointed out that the NLRC should not have assumed that the
"Vice President" position is the same as the "Executive Vice President" position that Balagtas admittedly occupied. In other words, that the exact and complete name of
the position must appear in the by-laws, otherwise it is an ordinary office whose occupant shall be regarded as a regular employee rather than a corporate officer.

The appellate court's interpretation of the phrase "one or more vice president" unduly restricts one of petitioner North Star's inherent corporate powers, viz.: to adopt its
own by-laws, provided that it is not contrary to law, morals, or public policy 35 for its internal affairs, to regulate the conduct and prescribe the rights and duties of its
members towards itself and among themselves in reference to the management of its affairs. 36

The use of the phrase "one or more" in relation to the establishment of vice president positions without particular exception indicates an intention to give petitioner
North Star's Board ample freedom to make several vice-president positions available as it may deem fit and in consonance with sound business practice.

To require that particular designation/variation of each vice-president (i.e., executive vice president) be specified and enumerated is to invalidate the by-laws' true
 237

intention and to encroach upon petitioner North Star's inherent right and authority to adopt its own set of rules and regulations to govern its internal affairs. Whether
the creation of several vice-president positions in a company is reasonable is a question of policy that courts of law should not interfere with. Where the reasonableness
of a by-law is a mere matter of judgment, and one upon which reasonable minds must necessarily differ, a court would not be warranted in substituting its judgment
instead of the judgment of those who are authorized to make bylaws and who have exercised their authority. 37

Thus, by name, the Executive Vice President position is embraced by the phrase "one or more vice president" in North Star's by-laws.

2. Respondent Balagtas was appointed by the Board as petitioner North Star's Executive Vice President

While a corporate office is created by an express provision either in the Corporation Code or the By-laws, what makes one a corporate officer is
his election or appointment thereto by the board of directors. Thus, there must be documentary evidence to prove that the person alleged to be a corporate officer was
appointed by action or with approval of the board. 38

In the present case, petitioners Cacho and North Star assert that respondent Balagtas was elected as Executive Vice President by the Board as evidenced by the
Secretary's Certificate dated April 22, 2003, which provides:

I, MOLINA A. CABA, of legal age, Filipino citizen, x x x after being duly sworn to in accordance with law, depose and state: That —

I am the duly appointed Corporate Secretary of North Star International Travel, Inc. x x x.

As such Corporate Secretary of the Corporation, I hereby certify that at the Regular/Special meeting of the Board of Directors and Stockholders of the Corporation which
was held on March 31, 2003 during which meeting a quorum was present and majority of the stockholders were in attendance, the following resolutions were
unanimously passed and adopted:

"RESOLVED, AS IT IS HEREBY RESOLVED, that during a meeting of the Board of Directors held last March 31, 2003, the following members of the Board were elected to
the corporate position opposite their names:"

POSITION
NAME

NORMA D. CACHO Chairman

VIRGINIA D. BALAGTAS Executive Vice President39

(Emphasis supplied)

On the other hand, respondent Balagtas assails the validity of the above-cited Secretary's Certificate for being forged and fabricated. However, aside from these bare
allegations, the NLRC observed that she did not present other competent proof to support her claim. To the contrary, respondent Balagtas even admitted that she was
elected by the Board as petitioner North Star's Executive Vice President and argued that she could not be removed as such without another valid board resolution to that
effect. To support this claim, respondent Balagtas submitted the very same Secretary's Certificate as an attachment to her Position Paper before the Labor
 238

Arbiter.40 That she is now casting doubt over a document she herself has previously relied on belies her own claim that the Secretary's Certificate is a fake.

Thus, the above-cited Secretary's Certificate overcomes respondent Balagtas's contention that she was merely the Executive Vice President by name and was never
empowered to exercise the functions of a corporate officer. Notably, she did not offer any proof to show that her duties, functions, and compensation were all
determined by petitioner Cacho as petitioner North Star's President.

In any case, that the Executive Vice President's duties and responsibilities are determined by the President instead of the Board is irrelevant. In determining whether a
position is a corporate office, the board of directors' appointment or election thereto is controlling. Article IV, Section 4 of North Star's By-laws provides:

Section 4. The Vice-President(s) - If one or more Vice-Presidents are appointed, he/they shall have such powers and shall perform such duties as may from time to time
be assigned to him/them by the Board of Directors or by the President. [Emphasis supplied.]

When Article IV, Section 4 is read together with Section 1 thereof, it is clear that while petitioner North Star may have one or more vice presidents and the President is
authorized to determine each one's scope of work, their appointment or election still devolves upon the Board.

At this point, it is best to emphasize that the manner of creation (i.e., under the express provisions of the Corporation Code or by-laws) and the manner by which it is
filled (i.e., by election or appointment of the board of directors) are sufficient in vesting a position the character of a corporate office.

Respondent Balagtas also denies her status as one of petitioner North Star's corporate officers because she was not listed as such in petitioner North Star's 2003
General Information Sheet (GIS).

This is of no moment.

The GIS neither governs nor establishes whether or not a position is an ordinary or corporate office. At best, if one is listed in the GIS as an officer of a corporation,
his/her position as indicated therein could only be deemed a regular office, and not a corporate office as it is defined under the Corporation Code. 41

Based on the above discussion, as Executive Vice President, respondent Balagtas was one of petitioner North Star's corporate officers. Thus, there is an intra-corporate
relationship existing between the parties.

B. Nature of the Controversy Test

The existence of an intra-corporate controversy does not wholly rely on the relationship of the parties. The incidents of their relationship must also be considered. Thus,
under the nature of the controversy test, the disagreement must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the
enforcement of the parties' correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. If the
relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the relationship does not exist, then no intra-corporate
controversy exists.42

Verily, in a long line of cases, 43 the Court consistently ruled that a corporate officer's dismissal is alwaysa corporate act, or an intra-corporate controversy which arises
between a stockholder and a corporation. However, a closer look at these cases will reveal that the intra-corporate nature of the disputes therein did not hinge solely on
the fact that the subject of the dismissal was a corporate officer.

In Philippine School of Business Administration v. Leano,44 the complainant questioned the validity of his dismissal after his position was declared vacant and he was not
 239

re-elected thereto. The cases of Fortune Cement Corporation v. National Labor Relations Commission 45 and Locsin v. Nissan Lease Phils. Inc.46also share similar factual
milieu.

On the other hand, the complainant in Espino v. National Labor Relations Commission 47 also contested the failure of the board of directors to re-elect him as a corporate
officer. The Court found that the board of directors deferred his re-election in light of previous administrative charges filed against the complainant. Later on, the board
of directors deemed him resigned from service and his position was subsequently abolished.

Finally, in Pearson and George, (S.E. Asia), Inc. v. National Labor Relations Commission,48 the complainant lost his corporate office primarily because he was not re-
elected as a member of the corporation's board of directors. The Court found that the corporate office in question required the occupant to be at the same time a
director. Thus, he should lose his position as a corporate officer because he ceased to be a director for any reason (e.g., he was not re-elected as such), such loss is not
dismissal but failure to qualify or to maintain a prerequisite for that position.

The dismissals in these cases were all considered intra-corporate controversies not only because the complainants were corporate officers, but also, and more
importantly, because they were not re-elected to their respective corporate offices and, thus, terminated from the corporation. "The matter of whom to elect is a
prerogative that belongs to the Board, and involves the exercise of deliberate choice and the faculty of discriminative selection. Generally speaking, the relationship of a
person to a corporation, whether as officer or as agent or employee, is not determined by the nature of the services performed, but by the incidents of the relationship
as they actually exist."49

In other words, the dismissal must relate to any of the circumstances and incidents surrounding the parties' intra-corporate relationship. To be considered an intra-
corporate controversy, the dismissal of a corporate officer must have something to do with the duties and responsibilities attached to his/her corporate office or
performed in his/her official capacity.50

In respondent Balagtas's Position Paper filed before the Labor Arbiter she alleged as follows: (a) petitioner Cacho informed her, through a letter, that she had been
preventively suspended by the Board; (b) she opposed the suspension, was unduly prevented from re-assuming her position as Executive Vice President,51 and
thereafter constructively dismissed; (c) the Board did not authorize either her suspension and removal from office; and (d) as a result of her illegal dismissal, she is
entitled to separation pay in lieu of her reinstatement to her previous positions, plus back wages, allowances, and other benefits. 52

The foregoing allegations mainly relate to incidents involving her capacity as Executive Vice President, a position above-declared as a corporate office, viz.: first,
respondent Balagtas's claim of dismissal without prior authority from the Board reveals her understanding that the appointment and removal of a corporate officer like
the Executive Vice President could only be had through an official act by the Board. And, second, she sought separation pay in lieu of reinstatement to her former
positions, one of which was as Executive Vice President. Even her prayer for full back wages, allowances, commissions, and other monetary benefits all relate to her
corporate office.53

On the other hand, petitioners Cacho and North Star terminated respondent Balagtas for the following reasons: (a) for allegedly appropriating company funds for her
personal gain; (b) for abandonment of work; (c) violation of a lawful order of the corporation; and (d) loss of trust and confidence. 54 In their Position Paper, petitioners
Cacho and North Star described in detail the latter's fund disbursement process, 55 emphasizing respondent Balagtas's role as the one who approves payment vouchers
and the signatory on issued checks—responsibilities specifically devolved upon her as the vice president. And as the vice president, respondent Balagtas actively
participated in the whole process, if not controlled it altogether. As a result, petitioners Cacho and North Star accused respondent Balagtas of gravely abusing the
confidence the Board has reposed in her as vice president and misappropriating company funds for her own personal gain.

From these, it is clear that the termination complained of is intimately and inevitably linked to respondent Balagtas's role as petitioner North Star's Executive Vice
 240

President: first, the alleged misappropriations were committed by respondent Balagtas in her capacity as vice president, one of the officers responsible for approving the
disbursements and signing the checks. And, second, these alleged misappropriations breached petitioners Cacho's and North Star's trust and confidence specifically
reposed in respondent Balagtas as vice president.

That all these incidents are adjuncts of her corporate office lead the Court to conclude that respondent Balagtas's dismissal is an intra-corporate controversy, not a mere
labor dispute.

Petitioners Cacho and North Star not estopped from questioning jurisdiction

Respondent Balagtas insists that petitioners belatedly raised the issue of the Labor Arbiter's lack of jurisdiction before the NLRC. Relying on Tijam v. Sibonghanoy,56 she
avers that petitioners, after actively participating in the proceedings before the Labor Arbiter and obtaining an unfavorable judgment, are barred by laches from
attacking the latter's jurisdiction.

We disagree with respondent Balagtas.

The Court has already held that the ruling in Tijam v. Sibonghanoy remains only as an exception to the general rule. Estoppel by laches will only bar a litigant from
raising the issue of lack of jurisdiction in exceptional cases similar to the factual milieu of Tijam v. Sibonghanoy. To recall, the Court in Tijam v. Sibonghanoy ruled that
the plea of lack of jurisdiction may no longer be raised for being barred by laches because it was raised for the first time in a motion to dismiss filed almost 15 years
after the questioned ruling had been rendered. 57

These exceptional circumstances are not present in this case. Thus, the general rule must apply: that the issue of jurisdiction may be raised at any stage of the
proceedings, even on appeal, and is not lost by waiver or by estoppel. In Espino v. National Labor Relations Commission,58 We ruled:

The principle of estoppel cannot be invoked to prevent this Court from taking up the question, which has been apparent on the face of the pleadings since the start of
the litigation before the Labor Arbiter. In the case of Dy v. NLRC, supra, the Court, citing the case of Calimlim v. Ramirez, reiterated that the decision of a tribunal not
vested with appropriate jurisdiction is null and void. Again, the Court in Southeast Asian Fisheries Development Center-Aquaculture Department v. NLRC restated the
rule that the invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel does not apply to confer jurisdiction upon a tribunal that has
none over the cause of action. The instant case does not provide an exception to the said rule. 59 (Emphasis supplied.)

All told, the issue in the present case is an intra-corporate controversy, a matter outside the Labor Arbiter's jurisdiction.

WHEREFORE, the petition is hereby GRANTED. The Decision dated November 9, 2011 and Resolution dated August 6, 2012 of the Court of Appeals in CA-G.R. SP No.
111637 are SET ASIDE. NLRC-NCR Case No. 04-04736-04 is dismissed for lack of jurisdiction, without prejudice to the filing of an appropriate case before the proper
tribunal.

SO ORDERED.
241
 242

PHILIPPINE AIRLINES, INC., petitioner, vs. AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES, respondent.

DECISION

YNARES-SANTIAGO, J.:

This is a petition for review on certiorari seeking to annul and set aside the March 2, 2000 Decision [1] and the June 19, 2000 Resolution [2] of the Court of Appeals[3] in CA-
G.R. SP No. 54403 which affirmed the Order [4] dated June 13, 1998 and Resolution[5] dated June 1, 1991 of the Secretary of Labor and Employment in NCMB-NCR-N.S.
12-514-97.

The instant labor dispute between petitioner Philippine Airlines, Inc. (PAL) and respondent Airline Pilots Association of the Philippines (ALPAP), the exclusive bargaining
representative of all commercial airline pilots of petitioner, stemmed from petitioner's act of unilaterally retiring airline pilot Captain Albino Collantes under Section 2,
Article VII, of the 1967 PAL-ALPAP Retirement Plan. Contending, inter alia, that the retirement of Captain Collantes constituted illegal dismissal and union busting,
ALPAP filed a Notice of Strike with the Department of Labor and Employment (DOLE). Pursuant to Article 263 (g) of the Labor Code, the Secretary of the DOLE
(hereafter referred to as Secretary) assumed jurisdiction over the labor dispute.

On June 13, 1998, the Secretary issued the assailed order upholding PALs action of unilaterally retiring Captain Collantes and recognizing the same as a valid exercise of
its option under Section 2, Article VII, of the 1967 PAL-ALPAP Retirement Plan. The Secretary further ordered that the basis of the computation of
Captain Collantes retirement benefits should be Article 287 of the Labor Code (as amended by Republic Act No. 7641) and not Section 2, Article VII, of the PAL-ALPAP
Retirement Plan. The Secretary added that in the exercise of its option to retire pilots, PAL should first consult the pilot concerned before implementing his
retirement. The dispositive portion of the said order reads:

WHEREFORE, premises considered, this Office hereby issues the following resolutions:

(1) PALs action on Captain Albino Collantes is hereby recognized as a valid exercise of its option under Sections 1 and 2, Article VII of the 1976 Retirement
Plan. However, the retirement benefits provided under Section 2 shall be adjusted to comply with Section 5, of Republic Act No. 7641.

(2) Said 1967 Retirement Plan which was incorporated as Article XXVII of the PAL-ALPAP Collective Bargaining Agreement, is hereby sustained. In the interest of justice,
however, this Office holds that whenever PAL exercises its option under Section 2, it shall consult the pilot involved before the retirement is implemented.

(3) PAL is not guilty of gross violation of the CBA insofar as the Wet Lease Agreement is concerned; and

(4) The coverage of Section 6, Article 1 of the PAL-ALPAP Collective Bargaining Agreement is limited only to union dues and other fees and assessments which are
rightfully remitted to and are due ALPAP.

The above dispositions shall be without prejudice to the parties arriving at a voluntary settlement of the dispute, especially in connection with employer-employee
relations in PAL. Accordingly, the National Conciliation and Mediation Board (NCMB) is hereby directed to continue assisting the parties in arriving at such a settlement.

The department takes notice of the Ex-parte Manifestation filed by PAL on June 10, 1998.

SO ORDERED.[6]

A motion for reconsideration of the foregoing order was denied by the Secretary on June 1, 1991.
 243

On September 24, 1999, PAL filed with the Court of Appeals a petition for certiorari with prayer for injunction and temporary restraining order. On March 2, 2000,
and June 19, 2000, however, the Court of Appeals denied the petition and the motion for reconsideration of petitioner, respectively. Hence, PAL appealed to this Court,
contending that:

THE QUESTION OF WHETHER OR NOT THE AMOUNT OF RETIREMENT PAY TO BE PAID UNDER SECTION 2, ARTICLE VII OF THE PAL-ALPAP RETIREMENT PLAN OF 1967
SHOULD BE INCREASED WAS NOT IN NCMB-NCR CASE NO. 12514-97.

II

A JUDGMENT THAT GOES BEYOND THE ISSUES AND PURPORTS TO ADJUDICATE SOMETHING UPON WHICH THE PARTIES WERE NOT HEARD IS IRREGULAR AND
INVALID SINCE IT AMOUNTS TO A DENIAL OF DUE PROCESS.

III

THE LAW GRANTS TO THE CONTRACTING PARTIES THE EXCLUSIVE RIGHT TO DETERMINE FOR THEMSELVES THE PROVISIONS OF A COLLECTIVE BARGAINING
AGREEMENT.

IV

THE SECRETARY OF LABOR AND EMPLOYMENT CANNOT AMEND THE CBA AND THE PAL-ALPAP RETIREMENT PLAN OF 1967 WITHOUT VIOLATING THE PROSCRIPTION
AGAINST THE IMPAIRMENT OF CONTRACTS.

ON THE ASSUMPTION THAT THE SECRETARY OF LABOR AND EMPLOYMENT MAY AMEND THE CBA AND THE PAL-ALPAP RETIREMENT PLAN OF 1967, IT IS LEGALLY
INCORRECT AND INIQUITOUS TO COMPEL PETITIONER TO PAY RETIREMENT PAY IN ACCORDANCE WITH ARTICLE 287 OF THE LABOR CODE.

VI

ON THE ASSUMPTION THAT THE SECRETARY OF LABOR AND EMPLOYMENT MAY AMEND THE CBA AND THE PAL-ALPAP RETIREMENT PLAN OF 1967, IT IS LEGALLY
INCORRECT TO COMPEL PETITIONER TO CONSULT THE PILOT CONCERNED BEFORE RETIREMENT IS IMPLEMENTED. [7]

The Court of Appeals, applying the second paragraph of Article 287 of the Labor Code, held that an employees retirement benefits under any collective bargaining and
other agreement shall not be less than those provided in the Labor Code. [8] Hence, Article 287 of the Labor Code and not the 1967 PAL-ALPAP Retirement Plan, should
govern the computation of the benefits to be awarded to Captain Collantes.

The pertinent provision of the 1967 PAL-ALPAP Retirement Plan states:

SECTION 1. Normal Retirement. (a) Any member who completed twenty (20) years of service as a pilot for PAL or has flown 20,000 hours for PAL shall be eligible for
normal retirement. The normal retirement date is the date on which he completes twenty (20) years of service, or on which he logs his 20,000 hours as a pilot for
 244

PAL. The member who retires on his normal retirement shall be entitled to either (a) a lump sum payment of P100,000.00 or (b) to such termination pay benefits to
which he may be entitled to under existing laws, whichever is the greater amount.

SECTION 2. Late Retirement. Any member who remains in the service of the Company after his normal retirement date may retire either at his option or at the option of
the Company and when so retired he shall be entitled either (a) to a lump sum payment of P5,000.00 for each completed year of service rendered as a pilot, or (b) to
such termination pay benefits to which he may be entitled under existing laws, whichever is the greater amount. [9]

A pilot who retires after twenty years of service or after flying 20,000 hours would still be in the prime of his life and at the peak of his career, compared to one who
retires at the age of 60 years old. Based on this peculiar circumstance that PAL pilots are in, the parties provided for a special scheme of retirement different from that
contemplated in the Labor Code.Conversely, the provisions of Article 287 of the Labor Code could not have contemplated the situation of PALs pilots. Rather, it was
intended for those who have no more plans of employment after retirement, and are thus in need of financial assistance and reward for the years that they have
rendered service.

In any event, petitioner contends that its pilots who retire below the retirement age of 60 years not only receive the benefits under the 1967 PAL-ALPAP Retirement Plan
but also an equity of the retirement fund under the PAL Pilots Retirement Benefit Plan, [10] entered into between petitioner and respondent on May 30, 1972.

The PAL Pilots Retirement Benefit Plan [11] is a retirement fund raised from contributions exclusively from petitioner of amounts equivalent to 20% of each pilots gross
monthly pay. Upon retirement, each pilot stands to receive the full amount of the contribution. In sum, therefore, the pilot gets an amount equivalent to 240% of his
gross monthly income for every year of service he rendered to petitioner. This is in addition to the amount of not less than P100,000.00 that he shall receive under the
1967 Retirement Plan.

On the other hand, Article 287 of the Labor Code:

Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment
contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: provided, however, That an employees retirement benefits under any collective bargaining and other agreements shall not be less
than those provided herein.

In the absence of a retirement plan or agreement plan providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared as the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year.

Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and
the cash equivalent of not more than five (5) days of service incentive leaves. xxx xxx xxx.

In short, the retirement benefits that a pilot would get under the provisions of the above-quoted Article 287 of the Labor Code are less than those that he would get
under the applicable retirement plans of petitioner.
 245

Finally, on the issue of whether petitioner should consult the pilot concerned before exercising its option to retire pilots, we rule that this added requirement, in effect,
amended the terms of Article VII, Section 2 of the 1976 PAL-ALPAP Retirement Plan. The option of an employer to retire its employees is recognized as valid. [12] In the
earlier case of Bulletin Publishing Corp. v. Sanchez,[13] this Court held:

The aforestated sections explicitly declare, in no uncertain terms, that retirement of an employee may be done upon initiative and option of the management. And
where there are cases of voluntary retirement, the same is effective only upon the approval of management. The fact that there are some supervisory employees who
have not yet been retired after 25 years with the company or have reached the age of sixty merely confirms that it is the singular prerogative of management, at its
option, to retire supervisors or rank-and-file members when it deems fit. There should be no unfair labor practice committed by management if the retirement of private
respondents were made in accord with the agreed option. That there were numerous instances wherein management exercised its option to retire employees pursuant
to the aforementioned provisions, appears to be a fact which private respondents have not controverted. It seems only now when the question of the legality of a
supervisors union has arisen that private respondents attempt to inject the dubious theory that the private respondents are entitled to form a union or go on strike
because there is allegedly no retirement policy provided for their benefit. As above noted, this assertion does not appear to have any factual basis. [14]

Surely, the requirement to consult the pilots prior to their retirement defeats the exercise by management of its option to retire the said employees. It gives the pilot
concerned an undue prerogative to assail the decision of management. Due process only requires that notice be given to the pilot of petitioners decision to retire
him. Hence, the Secretary of Labor overstepped the boundaries of reason and fairness when he imposed on petitioner the additional requirement of consulting each pilot
prior to retiring him.

Furthermore, when the Secretary of Labor and Employment imposed the added requirement that petitioner should consult its pilots prior to retirement, he resolved a
question which was outside of the issues raised, thereby depriving petitioner an opportunity to be heard on this point. [15]

WHEREFORE, in view of all the foregoing, the petition is GRANTED. The March 2, 2000 Decision and the June 19, 2000 Resolution of the Court of Appeals in CA-G.R. SP
No. 54403 are REVERSED and SET ASIDE. The Order of the Secretary of Labor in NCMB-NCR-N.S. 12-514-97, dated June 13, 1998, is MODIFIED as follows: The
retirement benefits to be awarded to Captain Albino Collantes shall be based on the 1967 PAL-ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan. The
directive contained in subparagraph (2) of the dispositive portion thereof, which required petitioner to consult the pilot involved before exercising its option to retire him,
is DELETED. The said Order is AFFIRMED in all other respects.

SO ORDERED.

G.R. No. 188047, November 28, 2016

LIGHT RAIL TRANSIT AUTHORITY, Petitioner, v. BIENVENIDO R. ALVAREZ, CARLOS S. VELASCO, ASCENCION A. GARGALICANO, MARLON E. AGUINALDO, PETRONILO
T. LEGASPI, BONIFACIO A. ESTOPIA, ANDRE A. DELA MERCED, JOSE NOVIER D. BAYOT, ROLANDO AMAZONA AND MARLINO HERRERA, Respondents.

DECISION
 246

JARDELEZA, J.:

This is a Petition for Review on Certiorari1 assailing the Decision2 and Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 103278 dated February 20, 2009 and
May 22, 2009, respectively. The Decision and Resolution dismissed the Petition for Certiorari4 filed by the Light Rail Transit Authority (LRTA), which sought to annul and
reverse the Resolution5 of the National Labor Relations Commission (NLRC) in NLRC CA Case No. 046112-05 dated November 5, 2007.chanroblesvirtuallawlibrary

The Facts

LRTA is a government-owned and controlled corporation created by virtue of Executive Order No. 603, 6for the purpose of the construction, operation, maintenance,
and/or lease of light rail transit system in the Philippines. 7 Private respondents Bienvenido R. Alvarez, Carlos S. Velasco, Ascencion A. Gargalicano, Marlon E. Aguinaldo,
Petronilo T. Legaspi, Bonifacio A. Estopia, Andre A. Dela Merced, Jose Novier D. Bayot, Rolando C. Amazona and Marlino G. Herrera (private respondents) are former
employees of Meralco Transit Organization, Inc. (METRO). 8

On June 8, 1984, METRO and LRTA entered into an agreement called "Agreement for the Management and Operation of the Light Rail Transit System" (AMO-LRTS) for
the operation and management of the light rail transit system. 9 LRTA shouldered and provided for all the operating expenses of METRO. 10 Also, METRO signed a
Collective Bargaining Agreement (CBA) with its employees wherein provisions on wage increases and benefits were approved by LRTA's Board of Directors. 11

However, on April 7, 1989, the Commission on Audit (COA) nullified and voided the AMO-LRTS. 12 To resolve the issue, LRTA decided to acquire METRO by purchasing all
of its shares of stocks on June 8, 1989. METRO, thus, became a wholly-owned subsidiary of LRTA. Since then, METRO has been renamed to Metro Transit Organization,
Inc.13 Also, by virtue of the acquisition, LRTA appointed the new set of officers, from chairman to members of the board, and top management of METRO. 14 LRTA and
METRO declared and continued the implementation of the AMO-LRTS and the non-interruption of employment relations of the employees of METRO. They likewise
continued the establishment and funding of the Metro, Inc. Employees Retirement Plan which covers the past services of all METRO regular employees from the date of
their employment. They confirmed that all CBAs remained in force and effect. LRTA then sanctioned the CBA's of the union of rank and file employees and the union of
supervisory employees.15

On November 17, 1997, the METRO general manager (who was appointed by LRTA) announced in a memorandum that its board of directors approved the
severance/resignation benefit of METRO employees at one and a half (1 1/2) months salaries for every year of service. 16

On July 25, 2000, the union of rank and file employees of METRO declared a strike over a retirement fund dispute. 17 By virtue of its ownership of METRO, LRTA assumed
the obligation to update the Metro, Inc. Employees Retirement Fund with the Bureau of Treasury. 18

A few months later, or on September 30, 2000, LRTA stopped the operation of METRO. 19 On April 5, 2001, METRO's Board of Directors approved the release and
payment of the first fifty percent (50%) of the severance pay to the displaced METRO employees, including private respondents, who were issued certifications of
eligibility for severance pay along with the memoranda to receive the same. 20

Upon the request of the COA corporate auditor assigned at LRTA, COA issued an Advisory Opinion through its Legal Department, and an Advise ( sic) from Chairman
Guillermo N. Carague, that LRTA is liable, as owner of its wholly-owned subsidiary METRO, to pay the severance pay of the latter's employees. 21

LRTA earmarked an amount of P271,000,000.00 for the severance pay of METRO employees in its approved corporate budget for the year 2002. 22 However, METRO only
paid the first fifty percent (50%) of the severance pay of private respondents, thus, the following balance:chanRoblesvirtualLawlibrary
 247

NAME MAN NO. 50% (Php)

1. Marlon E. Aguinaldo 0303 243,482.55

2. Bie[n]venido R. Alvarez 0304 193,952.82

3. Bonifacio A. Estopia 0313 242,456.29

4. Petronilo J. Legaspi 0323 245,566.24

5. Andre A. [Dela] Merced 0328 322,187.70

6. Marlino G. Herrera 0400 239,055.57

7. Rolando C. Amazona 0485 231,432.00

8. Jose Novier D. Bayot 1201 231,494.17

9. Ascencion A. Gargalicano 1212 175,733.82

10. Carlos S. Velasco 1863 103,330.08

2,228,691.2423

Private respondents repeatedly and formally asked LRTA, being the principal owner of METRO, to pay the balance of their severance pay, but to no avail. 24 Thus, they
filed a complaint before the Arbitration Branch of the NLRC, docketed as NLRC NCR Case No. 00-08-09472-04, praying for the payment of 13 thmonth pay, separation
pay, and refund of salary deductions, against LRTA and METRO. 25cralawred

In a Decision26 dated July 22, 2005, Labor Arbiter (LA) Elias H. Salinas ruled in favor of private respondents. In arriving at his Decision, the LA adopted the ruling
in Light Rail Transit Authority v. National Labor Relations Commission, Ricardo B. Malanao, et al. 27 (Malanao), which at that time was affirmed by the CA (Twelfth
Division). The LA adopted the ruling in Malanao because it involved the same claims, facts, and issues as in this case. 28Malanao ordered respondents LRTA and METRO to
jointly and severally pay the balance of the severance pay of the complainants therein. Thus, the dispositive portion 29 of the LA Decision
reads:chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, judgment is hereby rendered ordering respondents Light Rail Transit Authority and Metro Transit Organization, Inc. to pay
complainants the balance of their severance pay as follows:cralawlawlibrary
 248

NAME 50% Balance of Severance Pay

1. Marlon E. Aguinaldo P 243,482.55

2. Bie[n]venido R. Alvarez P 193,952.82

3. Bonifacio A. Estopia P 242,456.29

4. Petronilo J. Legaspi P 245,566.24

5. Andre A. [Dela] Merced P 322,187.70

6. Marlino G. Herrera P 239,055.57

7. Rolando C. Amazona P 231,432.00

8. Jose Novier D. Bayot P 231,494.17

9. Ascencion A. Gargalicano P 175,733.82

10. Carlos S. Velasco P 103,330.08

P 2,228,691.24

Respondents are further ordered to pay the sum equivalent to ten per cent of the foregoing amount as and by way of attorney's fees.

All other claims are ordered dismissed for lack of merit.

SO ORDERED.30

On September 29, 2005, LRTA and METRO separately appealed the LA's Decision before the NLRC, docketed as NLRC CA Case No. 046112-05. 31

In its Resolution dated November 5, 2007, the NLRC dismissed METRO's appeal for failure to file the required appeal bond:Therefore, the NLRC ruled that the appealed
Decision of the LA (as regards METRO) is declared final and executory. 32 In the same Resolution, the NLRC sustained the Decision of the LA in toto, and therefore
dismissed LRTA's appeal for lack of merit. The dispositive portion reads:chanRoblesvirtualLawlibrary
 249

WHEREFORE, premises considered, the Metro, Inc[.]'s Appeal is DISMISSED for failure to get perfected. LRTA's Appeal is likewise DISMISSED for lack of merit.
Accordingly, the Decision appealed from is SUSTAINED in toto.33

LRTA's motion for reconsideration of the Resolution was denied. 34 Thus, LRTA filed a Petition for Certiorari35 with the CA.chanroblesvirtuallawlibrary

CA Decision

The CA denied LRTA's petition. First, the CA ruled that since LRTA failed to comply with the mandatory appeal bond, it lost its right to appeal. 36 Consequently, the LA's
ruling already became final and executory. 37

On the merits of the case, the CA noted that the monetary claims emanated from the CBA; hence, the controversy must be settled in light of the CBA. As the CBA
controls, it is clear that LRTA has to pay the remaining fifty percent (50%) of the retirement benefits due to the private respondents. The CA held that whether the NLRC
has jurisdiction to hear the case, the result would be the same: that LRTA has financial obligations to private respondents. 38

Finally, on the issue of jurisdiction, the CA found that METRO, even if it is a subsidiary of LRTA, remains a private corporation. This being the case, the money claim
brought against it falls under the original and exclusive jurisdiction of the LA. Also, the CA agreed with the NLRC that the principle of stare decisisapplies to this case.
The NLRC applied the CA's Decision in Malanao, ruling that LRTA is liable for the fifty percent (50%) balance of the separation pay of the private respondents therein. 39

LRTA filed a Motion for Reconsideration 40 arguing that contrary to what the CA declared, it filed the mandatory appeal bond. 41 It also claimed that the NLRC had no
jurisdiction over LRTA, and that the NLRC erred in applying stare decisis.42 The CA, however, denied LRTA's motion for lack of merit. 43

Hence, this petition.

Pending resolution of the case by this Court, private respondents filed with the NLRC a Motion for Issuance of a Writ of Execution 44 dated September 4, 2009.

On August 5, 2010, private respondents filed an Urgent Manifestation 45 with this Court, informing us that a Writ of Execution 46 has been issued on July 9, 2010 by the
LA, since no Temporary Restraining Order was issued by the CA or this Court. There being no response from LRTA after service of the writ, and upon motion of private
respondents, the LA ordered47 the release of the cash bond deposited by LRTA, and which was subsequently released to the private respondents. Thus, they prayed that
the case be dismissed for having been moot and academic. 48 In a Reply (To Respondents' Urgent Manifestation), 49LRTA argued that the case has not become moot and
academic.chanroblesvirtuallawlibrary

The Petition

LRTA now appeals the CA Decision and argues50 that the CA erred in:cralawlawlibrary

1) Ruling that the LA and NLRC have jurisdiction over LRTA;

2) Holding LRTA jointly and severally liable for private respondents' money claims; and
 250

3) Wrongly applying the doctrine of stare decisis.

The Court's Ruling

We deny the petition.

The same factual setting, (save for the identity of private respondents) and issues raised in this case also obtained in Light Rail Transit Authority v.
Mendoza51 (Mendoza). In that case, this Court ruled that LRTA is solidarily liable for the remaining fifty percent (50%) of the respondents' separation pay. The doctrine
of stare decisis, therefore, warrants the dismissal of this petition. The rule of stare decisis is a bar to any attempt to re-litigate the same issue where the same questions
relating to the same event have been put forward by parties similarly situated as in a previous case litigated and decided by a competent court. 52Thus, the Court's ruling
in Mendoza regarding LRTA's solidary liability for respondents' monetary claims arising from the very same AMO-LRTS which private respondents sought to enforce in
the proceedings a quo applies to the present case. Consequently, LRTA's appeal must be dismissed.

The LA and the NLRC have jurisdiction over private respondents' money claims.

LRTA argues that the LA and NLRC do not have jurisdiction over the case. LRTA cites Light Rail Transit Authority v. Venus, Jr. 53 (Venus) to support its claim.

We disagree. LRTA's reliance on Venus is misplaced. Venus involves the illegal dismissal of the complainants. The proceedings a quo is not for an illegal dismissal case,
but for the monetary claims of respondents against METRO and LRTA. Thus, unlike in Venus, this case does not involve the issue of respondents' employment with
METRO or LRTA. In fact, in Mendoza, this Court held, "[a]s we see it, the jurisdictional issue should not have been brought up in the first place because the respondents'
claim does not involve their employment with LRTA. There is no dispute on this aspect of the case. The respondents were hired by METRO and, were, therefore its
employees."54

The only issue, therefore, as in Mendoza, is whether LRTA can be made liable by the labor tribunals for private respondents' money claim despite the absence of an
employer-employee relationship, and though LRTA is a government-owned and controlled corporation.

We rule in the affirmative. In Mendoza, this Court upheld the jurisdiction of the labor tribunals over LRTA, citing Philippine National Bank v.
Pabalan:55chanroblesvirtuallawlibrary

x x x By engaging in a particular business thru the instrumentality of a corporation, the government divests itself pro hac vice of its sovereign character, so as to render
the corporation subject to the rules of law governing private corporations. 56

This Court further ruled that LRTA must submit itself to the provisions governing private corporations, including the Labor Code, for having conducted business through
a private corporation, in this case, METRO. 57

In this case, the NLRC accordingly declared, "[LRTA's] contractual commitments with [METRO] and its employees arose out of its business relations with [METRO] which
is private in nature. Such private relation was not changed notwithstanding the subsequent acquisition by [LRTA] of full ownership of [METRO] and take-over of its
business operations at LRT."58
 251

In view of the foregoing, we rule that the CA did not err when it upheld the jurisdiction of the labor tribunals over private respondents' money claims against LRTA. 59

LRTA is solidarily liable with METRO for the payment of private respondents' separation pay.

LRTA claims that it is not the real or actual or indirect employer of private respondents. 60 It argues that there being no employer-employee relationship, it is legally
inconceivable how LRTA can be held solidarity liable with METRO for the payment of private respondents' separation differentials. 61

Again, we disagree. LRTA IS liable for the balance of private respondents' separation pay.

First, LRTA is contractually obligated to pay the retirement or severance/resignation pay of METRO employees. Citing evidence on record, the LA found
that:chanRoblesvirtualLawlibrary

x x x On November 17, 1997, the Metro, Inc. general manager appointed by LRTA announced in a memorandum that its Board of Directors approved the
severance/resignation benefit of Metro, Inc. employees at one and a half (1.5) months salaries for every year of service. x x x By virtue of its ownership of Metro,
Inc. LRTA officially and formally assumed by authority of its board the obligation to update the Metro, Inc. Employees Retirement Fund with the Bureau of Treasury, to
ensure that the fund fully covers all retirement benefits payable to Metro, Inc[.] employees x x x. [T]he LRTA's appointed Board of Directors for Metro, Inc. approved
the release and payment of the first fifty (50%) per cent of the severance pay to the displaced Metro. Inc. employees x x x and complainants were issued the
certifications of eligibility for severance pay/benefit and the memoranda to receive the same x x x. 62

On this same issue, we again quote this Court's ruling in Mendoza:chanRoblesvirtualLawlibrary

First. LRTA obligated itself to fund METRO's retirement fund to answer for the retirement or severance/resignation of METRO employees as part of METRO's "operating
expenses." Under Article 4.05.1 of the O & M agreement between LRTA and Metro, "The Authority shall reimburse METRO for x x x "OPERATING EXPENSES x x x." In the
letter to LRTA dated July 12, 2001, the Acting Chairman of the METRO Board of Directors at the time, Wilfredo Trinidad, reminded LRTA that funding provisions for the
retirement fund have always been considered operating expenses of Metro. The coverage of operating expenses to include provisions for the retirement fund has never
been denied by LRTA.

In the same letter, Trinidad stressed that as a consequence of the nonrenewal of the O & M agreement by LRTA, METRO was compelled to close its business operations
effective September 30, 2000. This created, Trinidad added, a legal obligation to pay the qualified employees separation benefits under existing company policy and
collective bargaining agreements. The METRO Board of Directors approved the payment of 50% of the employees' separation pay because that was only what the
Employees' Retirement Fund could accommodate.

The evidence supports Trinidad's position. We refer principally to Resolution No. 00-44 issued by the LRTA Board of Directors on July 28, 2000, in anticipation of and in
preparation for the expiration of the O & M agreement with METRO on July 31, 2000.

Specifically, the LRTA anticipated and prepared for the (1) non-renewal (at its own behest) of the agreement, (2) the eventual cessation of METRO operations, and (3)
the involuntary loss of jobs of the METRO employees; thus, (1) the extension of a two-month bridging fund for METRO from August 1, 2000, to coincide with the
agreement's expiration on July 31, 2000; (2) METRO's cessation of operations - it closed on September 30, 2000, the last day of the bridging fund - and most
significantly to the employees adversely affected; (3) the updating of the "Metro, Inc., Employee Retirement Fund with the Bureau of Treasury to ensure that the fund
fully covers all retirement benefits payable to the employees of Metro, Inc."
 252

The clear language of Resolution No. 00-44, to our mind, established the LRTA's obligation for the 50% unpaid balance of the respondents' separation pay. Without
doubt, it bound itself to provide the necessary funding to METRO's Employee Retirement Fund to fully compensate the employees who had been involuntary retired by
the cessation of operations of METRO. This is not at all surprising considering that METRO was a wholly owned subsidiary of the LRTA. 63

Second, assuming arguendo that LRTA is not contractually liable to pay the separation benefits, it is solidarily liable as an indirect employer of private respondents.

Articles 107 and 109 of the Labor Code provide:chanRoblesvirtualLawlibrary

Art. 107. Indirect employer. - The provisions of the immediately preceding article shall likewise apply to any person, partnership, association or corporation which, not
being an employer, contracts with an independent contractor for the performance of any work, task, job or project.chanroblesvirtuallawlibrary

xxx

Art. 109. Solidary liability. - The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his
contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be
considered as direct employers.

Based on the foregoing provisions, LRTA qualifies as an indirect employer by contracting METRO to manage and operate the Metro Manila light rail transit. Being an
indirect employer, LRTA is solidarily liable with METRO in accordance with Article 109 of the Labor Code. The fact that there is no actual and direct employer-employee
relationship between LRTA and private respondents does not absolve the former from liability for the latter's monetary claims. 64 The owner of the project is not the
direct employer but merely an indirect employer, by operation of law, of his contractor's employees. 65

More, this Court has already ruled on this issue in Mendoza:chanRoblesvirtualLawlibrary

Second. Even on the assumption that the LRTA did not obligate itself to fully cover the separation benefits of the respondents and others similarly situated, it still cannot
avoid liability for the respondents' claim. It is solidari[l]y liable as an indirect employer under the law for the respondents' separation pay. This liability arises from the O
& M agreement it had with METRO, which created a principal-job contractor relationship between them, an arrangement it admitted when it argued before the CA that
METRO was an independent job contractor who, it insinuated, should be solely responsible for the respondents' claim.

Under Article 107 of the Labor Code, an indirect employer is "any person, partnership, association or corporation which, not being an employer, contracts with an
independent contractor for the performance of any work, task, job or project."

On the other hand, Article 109 on solidary liability, mandates that x x x "every employer or indirect employer shall be held responsible with his contractor or
subcontractor for any violation of any provisions of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered
as direct employers."

Department Order No. 18-02, S. 2002, the rules implementing Articles 106 to 109 of the Labor Code, provides in its Section 19 that "the principal shall also be solidarity
liable in case the contract between the principal is preterminated for reasons not attributable to the contractor or subcontractor."

Although the cessation of METRO's operations was due to a nonrenewal of the O & M agreement and not a pretermination of the contract, the cause of the nonrenewal
and the effect on the employees are the same as in the contract pretermination contemplated in the rules. The agreement was not renewed through no fault of METRO,
 253

as it was solely at the behest of LRTA. The fact is, under the circumstances, METRO really had no choice on the matter, considering that it was a mere subsidiary of
LRTA.

Nevertheless, whether it is a pretermination or a nonrenewal of the contract, the same adverse effect befalls the workers affected, like the respondents in this case - the
involuntary loss of their employment, one of the contingencies addressed and sought to be rectified by the rules. 66

In view of the foregoing, we affirm the CA in sustaining the decisions of the LA and the NLRC ordering LRTA to pay the balance of private respondents' separation pay.

WHEREFORE, the Petition is DENIED. The Decision dated February 20, 2009 of the Court of Appeals in CA-G.R. SP No. 103278 is AFFIRMED.

SO ORDERED.ChanRoblesVirtualawlibrary

[G.R. No. 152611. August 5, 2003]

LAND BANK OF THE PHILIPPINES, petitioner, vs. SEVERINO LISTANA, SR., respondent.

DECISION

YNARES-SANTIAGO, J.:
 254

This is a petition for review of the decision of the Court of Appeals in CA-G.R. SP No. 65276 dated December 11, 2001, [1] which annulled the Orders dated January 29,
2001 and April 2, 2001 of the Regional Trial Court of Sorsogon, Sorsogon, Branch 51. [2]

Respondent Severino Listana is the owner of a parcel of land containing an area of 246.0561 hectares, located in Inlagadian, Casiguran, Sorsogon, covered by Transfer
Certificate of Title No. T-20193. He voluntarily offered to sell the said land to the government, through the Department of Agrarian Reform (DAR), [3] under Section 20 of
R.A. 6657, also known as the Comprehensive Agrarian Reform Law of 1988 (CARL). The DAR valued the property at P5,871,689.03, which was however rejected by the
respondent. Hence, the Department of Agrarian Reform Adjudication Board (DARAB) of Sorsogon commenced summary administrative proceedings to determine the
just compensation of the land.

On October 14, 1998, the DARAB rendered a Decision, the dispositive portion of which reads as follows:

WHEREFORE, taking into consideration the foregoing computation, the prior valuation made by the Land Bank of the Philippines is hereby set aside and a new valuation
in the amount of TEN MILLION NINE HUNDRED FIFTY SIX THOUSAND NINE HUNDRED SIXTY THREE PESOS AND 25 CENTAVOS (P10,956,963.25) for the acquired area
of 240.9066 hectares. The Land Bank of the Philippines is hereby ordered to pay the same to the landowner in the manner provided for by law.

SO ORDERED.[4]

Thereafter, a Writ of Execution was issued by the PARAD directing the manager of Land Bank to pay the respondent the aforesaid amount as just compensation in the
manner provided by law.[5]

On September 2, 1999, respondent filed a Motion for Contempt with the PARAD, alleging that petitioner Land Bank failed to comply with the Writ of Execution issued on
June 18, 1999.He argued that such failure of the petitioner to comply with the writ of execution constitutes contempt of the DARAB.

Meanwhile, on September 6, 1999, petitioner Land Bank filed a petition with the Regional Trial Court of Sorsogon, Branch 52, sitting as a Special Agrarian Court (SAC),
for the determination of just compensation, as provided for in Section 16 (f) of the CARL. [6]

On August 20, 2000, the PARAD issued an Order granting the Motion for Contempt, as follows:

WHEREFORE, premises considered, the motion for contempt is hereby GRANTED, thus ALEX A. LORAYES, as Manager of respondent LAND BANK, is cited for indirect
contempt and hereby ordered to be imprisoned until he complies with the Decision of the case dated October 14, 1998.

SO ORDERED.[7]

Petitioner Land Bank filed a Motion for Reconsideration of the aforequoted Order, [8] which was however denied by the PARAD on September 20, 2000. [9] Thus, petitioner
filed a Notice of Appeal with the PARAD, manifesting its intention to appeal the decision to the DARAB Central, pursuant to Rule XI, Section 3 of the 1994 DARAB New
Rules of Procedure.[10]

On the other hand, the Special Agrarian Court dismissed the petition for the determination of just compensation filed by petitioner Land Bank in an Order dated October
25, 2000.Petitioners Motion for Reconsideration of said dismissal was likewise denied.

In a Resolution dated November 27, 2000, PARAD Capellan denied due course to petitioners Notice of Appeal and ordered the issuance of an Alias Writ of Execution for
the payment of the adjudged amount of just compensation to respondent. [11] On January 3, 2001, he directed the issuance of an arrest order against Manager Alex A.
Lorayes.[12]
 255

Petitioner Land Bank filed a petition for injunction before the Regional Trial Court of Sorsogon, Sorsogon, with application for the issuance of a writ of preliminary
injunction to restrain PARAD Capellan from issuing the order of arrest. [13] The case was raffled to Branch 51 of said court. On January 29, 2001, the trial court issued an
Order, the dispositive portion of which reads:

WHEREFORE, premises considered, the respondent Provincial Adjudicator of the DARAB or anyone acting in its stead is enjoined as it is hereby enjoined from enforcing
its order of arrest against Mr. Alex A. Lorayes pending the final termination of the case before RTC Branch 52, Sorsogon upon the posting of a cash bond by the Land
Bank.

SO ORDERED.[14]

Respondent filed a Motion for Reconsideration of the trial courts order, which was denied in an Order dated April 2, 2001. [15]

Thus, respondent filed a special civil action for certiorari with the Court of Appeals,[16] docketed as CA-G.R. SP No. 65276. On December 11, 2001, the Court of Appeals
rendered the assailed decision which nullified the Orders of the Regional Trial Court of Sorsogon, Sorsogon, Branch 51.

Hence, the instant petition for review on the following issues:

I. WHETHER OR NOT THE CA DEPARTED FROM THE ACCEPTED COURSE OF JUDICIAL PROCEEDINGS IN ENTERTAINING THE RESPONDENTS SPECIAL CIVIL ACTION FOR
CERTIORARI TO QUESTION THE FINAL ORDER OF THE RTC WHICH, HOWEVER, WAS SUBJECT TO APPEAL UNDER THE 1997 RULES OF CIVIL PROCEDURE.

II. WHETHER OR NOT THE CA DECIDED IN A WAY NOT IN ACCORD WITH LAW AND SUBSTANTIAL JUSTICE IN ANNULLING AND SETTING ASIDE THE RTC FINAL ORDER
OF INJUNCTION, CONSIDERING THAT:

A. THE PARAD DID NOT ACQUIRE COMPETENT JURISDICTION OVER THE CONTEMPT PROCEEDINGS INASMUCH AS IT WAS INITIATED BY MERE MOTION FOR
CONTEMPT AND NOT BY VERIFIED PETITION, IN VIOLATION OF SECTION 2, RULE XI OF THE NEW DARAB RULES OF PROCEDURE AND OF RULE 71 OF THE REVISED
RULES OF COURT.

B. THE PARAD CONTEMPT ORDER CANNOT BE CONSIDERED FINAL AND EXECUTORY, BECAUSE THE PARAD ITSELF DISALLOWED THE PETITIONERS APPEAL TO THE
DARAB CENTRAL OFFICE, IN DISREGARD OF THE BASIC RULE THAT THE APPELLATE TRIBUNAL DETERMINES THE MERITS OF THE APPEAL.

C. THE PARAD ORDER OF ARREST AGAINST LBP MANAGER ALEX LORAYES WAS IN GROSS AND PATENT VIOLATION OF HIS PERSONAL, CONSTITUTIONAL AND CIVIL
RIGHTS AGAINST UNJUST ARREST AND IMPRISONMENT, INASMUCH AS, UNDER THE 1987 CONSTITUTION, ONLY JUDGES CAN ISSUE WARRANTS OF ARREST AGAINST
CITIZENS, AND THE PROPER SUBJECT OF THE CONTEMPT PROCEEDING WAS THE PETITIONER ITSELF AND NOT THE LBP MANAGER, AND YET THE CONTEMPT ORDER
WAS AGAINST THE LBP MANAGER.

D. THE PARAD ORDER OF CONTEMPT WAS PATENTLY NULL AND VOID, AS IT ATTEMPTED TO ENFORCE COMPLIANCE WITH THE PARAD DECISION THAT WAS
ADMITTEDLY NOT FINAL AND EXECUTORY, AS THE MATTER OF JUST COMPENSATION BEFORE THE SPECIAL AGRARIAN COURT WAS ON APPEAL WITH THE COURT OF
APPEALS.[17]

As regards the first issue, petitioner submits that the special civil action for certiorari filed by respondent before the Court of Appeals to nullify the injunction issued by
the trial court was improper, considering that the preliminary injunction issued by the trial court was a final order which is appealable to the Court of Appeals via a
notice of appeal.[18]
 256

Petitioners submission is untenable. Generally, injunction is a preservative remedy for the protection of ones substantive right or interest. It is not a cause of action in
itself but merely a provisional remedy, an adjunct to a main suit. Thus, it has been held that an order granting a writ of preliminary injunction is an interlocutory
order. As distinguished from a final order which disposes of the subject matter in its entirety or terminates a particular proceeding or action, leaving nothing else to be
done but to enforce by execution what has been determined by the court, an interlocutory order does not dispose of a case completely, but leaves something more to be
adjudicated upon.[19]

Clearly, the grant of a writ of preliminary injunction is in the nature of an interlocutory order, hence, unappealable. Therefore, respondents special civil action
for certiorari before the Court of Appeals was the correct remedy under the circumstances. Certiorari is available where there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law.[20]

The order granting a writ of preliminary injunction is an interlocutory order; as such, it cannot by itself be subject of an appeal or a petition for review on certiorari. The
proper remedy of a party aggrieved by such an order is to bring an ordinary appeal from an adverse judgment in the main case, citing therein the grounds for assailing
the interlocutory order. However, the party concerned may file a petition for certiorari where the assailed order is patently erroneous and appeal would not afford
adequate and expeditious relief.[21]

On the substantive issue of whether the order for the arrest of petitioners manager, Mr. Alex Lorayes by the PARAD, was valid, Rule XVIII of the 2003 DARAB Rules
reads, in pertinent part:

SECTION 2. Indirect Contempt. The Board or any of its members or its Adjudicator may also cite and punish any person for indirect contempt on any of the grounds and
in the manner prescribed under Rule 71 of the Revised Rules of Court.

In this connection, Rule 71, Section 4 of the 1997 Rules of Civil Procedure, which deals with the commencement of indirect contempt proceedings, provides:

Sec. 4. How proceedings commenced. Proceedings for indirect contempt may be initiated motu proprio by the court against which the contempt was committed by an
order or any other formal charge requiring the respondent to show cause why he should not be punished for contempt.

In all other cases, charges for indirect contempt shall be commenced by a verified petition with supporting particulars and certified true copies of documents or papers
involved therein, and upon full compliance with the requirements for filing initiatory pleadings for civil actions in the court concerned. If the contempt charges arose out
of or are related to a principal action pending in the court, the petition for contempt shall allege that fact but said petition shall be docketed, heard and decided
separately, unless the court in its discretion orders the consolidation of the contempt charge and the principal action for joint hearing and decision.

xxxxxxxxx

The requirement of a verified petition is mandatory. Justice Florenz D. Regalado, Vice-Chairman of the Revision of the Rules of Court Committee that drafted the 1997
Rules of Civil Procedure explains this requirement:

1. This new provision clarifies with a regulatory norm the proper procedure for commencing contempt proceedings. While such proceeding has been classified as a
special civil action under the former Rules, the heterogeneous practice, tolerated by the courts, has been for any party to file a mere motion without paying any docket
or lawful fees therefor and without complying with the requirements for initiatory pleadings, which is now required in the second paragraph of this amended section.

xxxxxxxxx
 257

Henceforth, except for indirect contempt proceedings initiated motu proprio by order of or a formal charge by the offended court, all charges shall be commenced by a
verified petition with full compliance with the requirements therefor and shall be disposed of in accordance with the second paragraph of this section. [22]

Therefore, there are only two ways a person can be charged with indirect contempt, namely, (1) through a verified petition; and (2) by order or formal charge initiated
by the court motu proprio.

In the case at bar, neither of these modes was adopted in charging Mr. Lorayes with indirect contempt.

More specifically, Rule 71, Section 12 of the 1997 Rules of Civil Procedure, referring to indirect contempt against quasi-judicial entities, provides:

Sec. 12. Contempt against quasi-judicial entities. Unless otherwise provided by law, this Rule shall apply to contempt committed against persons, entities, bodies or
agencies exercising quasi-judicial functions, or shall have suppletory effect to such rules as they may have adopted pursuant to authority granted to them by law to
punish for contempt. The Regional Trial Court of the place wherein the contempt has been committed shall have jurisdiction over such charges as may be filed therefore.
(emphasis supplied)

The foregoing amended provision puts to rest once and for all the questions regarding the applicability of these rules to quasi-judicial bodies, to wit:

1. This new section was necessitated by the holdings that the former Rule 71 applied only to superior and inferior courts and did not comprehend contempt committed
against administrative or quasi-judicial officials or bodies, unless said contempt is clearly considered and expressly defined as contempt of court, as is done in the
second paragraph of Sec. 580, Revised Administrative Code. The provision referred to contemplates the situation where a person, without lawful excuse, fails to appear,
make oath, give testimony or produce documents when required to do so by the official or body exercising such powers.For such violation, said person shall be subject
to discipline, as in the case of contempt of court, upon application of the official or body with the Regional Trial Court for the corresponding sanctions. [23](emphasis in the
original)

Evidently, quasi-judicial agencies that have the power to cite persons for indirect contempt pursuant to Rule 71 of the Rules of Court can only do so by initiating them in
the proper Regional Trial Court. It is not within their jurisdiction and competence to decide the indirect contempt cases. These matters are still within the province of the
Regional Trial Courts. In the present case, the indirect contempt charge was filed, not with the Regional Trial Court, but with the PARAD, and it was the PARAD that cited
Mr. Lorayes with indirect contempt.

Hence, the contempt proceedings initiated through an unverified Motion for Contempt filed by the respondent with the PARAD were invalid for the following reasons:
[24]
First, the Rules of Court clearly require the filing of a verified petition with the Regional Trial Court, which was not complied with in this case. The charge was not
initiated by the PARAD motu proprio;rather, it was by a motion filed by respondent. Second, neither the PARAD nor the DARAB have jurisdiction to decide the contempt
charge filed by the respondent. The issuance of a warrant of arrest was beyond the power of the PARAD and the DARAB. Consequently, all the proceedings that
stemmed from respondents Motion for Contempt, specifically the Orders of the PARAD dated August 20, 2000 and January 3, 2001 for the arrest of Alex A. Lorayes, are
null and void.

WHEREFORE, in view of the foregoing, the petition for review is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 65276, dated December 11, 2001, is
REVERSED and SET ASIDE. The Order of the Regional Trial Court of Sorsogon, Sorsogon, Branch 51, dated January 29, 2001, which enjoined the Provincial Adjudicator
of the DARAB or anyone acting in its stead from enforcing its order of arrest against Mr. Alex A. Lorayes pending the final termination of the case before Regional Trial
Court of Sorsogon, Sorsogon, Branch 52, is REINSTATED.

SO ORDERED.
258
 259

FEDERICO S. ROBOSA, ROLANDO E. PANDY, NOEL D. G.R. No. 176085

ROXAS, ALEXANDER ANGELES, VERONICA GUTIERREZ,
FERNANDO EMBAT, and NANETTE H. PINTO,

Petitioners,

Present:

CARPIO, J., Chairperson,

- versus - BRION,

PEREZ,

SERENO, and

REYES, JJ.

NATIONAL LABOR RELATIONS COMMISSION (First Division),

CHEMO-TECHNISCHE MANUFACTURING, INC. and its
responsible officials led by FRANKLIN R. DE LUZURIAGA, and
PROCTER & GAMBLE PHILIPPINES, INC.,

Respondents.

Promulgated:

February 8, 2012
 260

x------------------------------------------------------------------------------------------x

DECISION

BRION, J.:

We resolve the petition for review on certiorari[1] seeking the reversal of the resolutions of the Court of Appeals (CA) rendered on February 24, 2006[2] and December 14,
2006[3] in CA-G.R. SP No. 80436.

Factual Background

Federico S. Robosa, Rolando E. Pandy, Noel D. Roxas, Alexander Angeles, Veronica Gutierrez, Fernando Embat and Nanette H. Pinto ( petitioners) were rank-and-file
employees of respondent Chemo-Technische Manufacturing, Inc. (CTMI), the manufacturer and distributor of Wella products. They were officers and members of the
CTMI Employees Union-DFA (union). Respondent Procter and Gamble Philippines, Inc. (P & GPI) acquired all the interests, franchises and goodwill of CTMI during the
pendency of the dispute.

Sometime in the first semester of 1991, the union filed a petition for certification election at CTMI. On June 10, 1991, Med-Arbiter Rasidali Abdullah of the Office of the
Department of Labor and Employment in the National Capital Region (DOLE-NCR) granted the petition. The DOLE-NCR conducted a consent election on July 5, 1991, but
the union failed to garner the votes required to be certified as the exclusive bargaining agent of the company.
 261

On July 15, 1991, CTMI, through its President and General Manager Franklin R. de Luzuriaga, issued a memorandum [4] announcing that effective that day: (1) all sales
territories were demobilized; (2) all vehicles assigned to sales representatives should be returned to the company and would be sold; (3) sales representatives would
continue to service their customers through public transportation and would be given transportation allowance; (4) deliveries of customers orders would be undertaken
by the warehouses; and (5) revolving funds for ex-truck selling held by sales representatives should be surrendered to the cashier (for Metro Manila) or to the
supervisor (for Visayas and Mindanao), and truck stocks should immediately be surrendered to the warehouse.

On the same day, CTMI issued another memorandum[5] informing the companys sales representatives and sales drivers of the new system in the Salon Business Groups
selling operations.

The union asked for the withdrawal and deferment of CTMIs directives, branding them as union busting acts constituting unfair labor practice. CTMI ignored the
request. Instead, it issued on July 23, 1991 a notice of termination of employment to the sales drivers, due to the abolition of the sales driver positions. [6]

On August 1, 1991, the union and its affected members filed a complaint for illegal dismissal and unfair labor practice, with a claim for damages, against CTMI, De
Luzuriaga and other CTMI officers. The union also moved for the issuance of a writ of preliminary injunction and/or temporary restraining order (TRO).

The Compulsory Arbitration Proceedings

The labor arbiter handling the case denied the unions motion for a stay order on the ground that the issues raised by the petitioners can best be ventilated during the
trial on the merits of the case. This prompted the union to file on August 16, 1991 with the National Labor Relations Commission (NLRC), a petition for the issuance of a
preliminary mandatory injunction and/or TRO.[7]

On August 23, 1991, the NLRC issued a TRO. [8] It directed CTMI, De Luzuriaga and other company executives to (1) cease and desist from dismissing any member of
the union and from implementing the July 23, 1991 memorandum terminating the services of the sales drivers, and to immediately reinstate them if the dismissals have
been effected; (2) cease and desist from implementing the July 15, 1991 memorandum grounding the sales personnel; and (3) restore the status quo ante prior to the
formation of the union and the conduct of the consent election.

Allegedly, the respondents did not comply with the NLRCs August 23, 1991 resolution. They instead moved to dissolve the TRO and opposed the unions petition for
preliminary injunction.
 262

On September 12, 1991, the NLRC upgraded the TRO to a writ of preliminary injunction. [9] The respondents moved for reconsideration. The union opposed the motion
and urgently moved to cite the responsible CTMI officers in contempt of court.

On August 25, 1993, the NLRC denied the respondents motion for reconsideration and directed Labor Arbiter Cristeta Tamayo to hear the motion for contempt. In
reaction, the respondents questioned the NLRC orders before this Court through a petition for certiorari and prohibition with preliminary injunction. The Court dismissed
the petition for being premature. It also denied the respondents motion for reconsideration, as well as a second motion for reconsideration, with finality. This
notwithstanding, the respondents allegedly refused to obey the NLRC directives. The respondents defiance, according to the petitioners, resulted in the loss of their
employment.

Meanwhile, the NLRC heard the contempt charge. On October 31, 2000, it issued a resolution [10] dismissing the charge. It ordered the labor arbiter to proceed hearing
the main case on the merits.

The petitioners moved for, but failed to secure, a reconsideration from the NLRC on the dismissal of the contempt charge. They then sought relief from the CA by way of
a petition for certiorari under Rule 65.

The CA Decision

The CA saw no need to dwell on the issues raised by the petitioners as the question it deemed appropriate for resolution is whether the NLRCs dismissal of the contempt
charge against the respondents may be the proper subject of an appeal. It opined that the dismissal is not subject to review by an appellate court. Accordingly, the CA
Special Sixth Division dismissed the petition in its resolution of February 24, 2006.[11]

The CA considered the prayer of P & GPI to be dropped as party-respondent moot and academic.

The petitioners sought a reconsideration, but the CA denied the motion in its resolution of December 14, 2006.[12] Hence, the present Rule 45 petition.
 263

The Petition

The petitioners charge the CA with grave abuse of discretion in upholding the NLRC resolutions, despite the reversible errors the labor tribunal committed in dismissing
the contempt charge against the respondents. They contend that the respondents were guilty of contempt for their failure (1) to observe strictly the NLRC status
quo order; and (2) to reinstate the dismissed petitioners and to pay them their lost wages, sales commissions, per diems, allowances and other employee benefits. They
also claim that the NLRC, in effect, overturned this Courts affirmation of the TRO and of the preliminary injunction.

The petitioners assail the CAs reliance on the Courts ruling that a contempt charge partakes of a criminal proceeding where an acquittal is not subject to appeal. They
argue that the facts obtaining in the present case are different from the facts of the cases where the Courts ruling was made. They further argue that by the nature of
this case, the Labor Code and its implementing rules and regulations should apply, but in any event, the appellate court is not prevented from reviewing the factual
basis of the acquittal of the respondents from the contempt charges.

The petitioners lament that the NLRC, in issuing the challenged resolutions, had unconstitutionally applied the law. They maintain that not only did the NLRC
unconscionably delay the disposition of the case for more than twelve (12) years; it also rendered an unjust, unkind and dubious judgment. They bewail that [f]or some
strange reason, the respondent NLRC made a queer [somersault] from its earlier rulings which favor the petitioners. [13]

The Case for the Respondents

Franklin K. De Luzuriaga

De Luzuriaga filed a Comment[14] on May 17, 2007 and a Memorandum on December 4, 2008,[15] praying for a dismissal of the petition.

De Luzuriaga argues that the CA committed no error when it dismissed the petition for certiorari since the dismissal of the contempt charge against the respondents
amounted to an acquittal where review by an appellate court will not lie. In any event, he submits, the respondents were charged with indirect contempt which may be
initiated only in the appropriate regional trial court, pursuant to Section 12, Rule 71 of the Rules of Court. He posits that the NLRC has no jurisdiction over an indirect
contempt charge. He thus argues that the petitioners improperly brought the contempt charge before the NLRC.
 264

Additionally, De Luzuriaga points out that the petition raises only questions of facts which, procedurally, is not allowed in a petition for review on certiorari. Be this as it
may, he submits that pursuant to Philippine Long Distance Telephone Company, Inc. v. Tiamson,[16] factual findings of labor officials, who are deemed to have acquired
expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality. He stresses that the CA committed no reversible error
in not reviewing the NLRCs factual findings.

Further, De Luzuriaga contends that the petitioners verification and certification against forum shopping is defective because it was only Robosa and Pandy who
executed the document. There was no indication that they were authorized by Roxas, Angeles, Gutierrez, Embat and Pinto to execute the required verification and
certification.

Lastly, De Luzuriaga maintains that the petitioners are guilty of forum shopping as the reliefs prayed for in the petition before the CA, as well as in the present petition,
are the same reliefs that the petitioners may be entitled to in the complaint before the labor arbiter. [17]

P & GPI

As it did with the CA when it was asked to comment on the petitioners motion for reconsideration, [18] P & GPI prays in its Comment [19] and Memorandum[20] that it be
dropped as a party-respondent, and that it be excused from further participating in the proceedings. It argues that inasmuch as the NLRC resolved the contempt charge
on the merits, an appeal from its dismissal through a petition for certiorari is barred. Especially in its case, the dismissal of the petition for certiorari is correct because it
was never made a party to the contempt proceedings and, thus, it was never afforded the opportunity to be heard. It adds that it is an entity separate from CTMI. It
submits that it cannot be made to assume any or all of CTMIs liabilities, absent an agreement to that effect but even if it may be liable, the present proceedings are not
the proper venue to determine its liability, if any.

On December 16, 2008, the petitioners filed a Memorandum [21] raising essentially the same issues and arguments laid down in the petition.

The Courts Ruling

 265

Issues

The parties submissions raise the following issues:

(1) whether the NLRC has contempt powers;

(2) whether the dismissal of a contempt charge is appealable; and

(3) whether the NLRC committed grave abuse of discretion in dismissing the contempt charge against the respondents.

On the first issue, we stress that under Article 218 [22] of the Labor Code, the NLRC (and the labor arbiters) may hold any offending party in contempt, directly or
indirectly, and impose appropriate penalties in accordance with law. The penalty for direct contempt consists of either imprisonment or fine, the degree or amount
depends on whether the contempt is against the Commission or the labor arbiter. The Labor Code, however, requires the labor arbiter or the Commission to deal with
indirect contempt in the manner prescribed under Rule 71 of the Rules of Court. [23]

Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt proceedings before the trial court. This mode is to be observed
only when there is no law granting them contempt powers. [24] As is clear under Article 218(d) of the Labor Code, the labor arbiter or the Commission is empowered or
has jurisdiction to hold the offending party or parties in direct or indirect contempt. The petitioners, therefore, have not improperly brought the indirect contempt
charges against the respondents before the NLRC.

The second issue pertains to the nature of contempt proceedings, especially with respect to the remedy available to the party adjudged to have committed indirect
contempt or has been absolved of indirect contempt charges. In this regard, Section 11, Rule 71 of the Rules of Court states that the judgment or final order of a court
in a case of indirect contempt may be appealed to the proper court as in a criminal case. This is not the point at issue, however, in this petition. It is rather the question
of whether the dismissal of a contempt charge, as in the present case, is appealable. The CA held that the NLRCs dismissal of the contempt charges against the
respondents amounts to an acquittal in a criminal case and is not subject to appeal.

The CA ruling is grounded on prevailing jurisprudence.

 266

In Yasay, Jr. v. Recto,[25] the Court declared:

A distinction is made between a civil and [a] criminal contempt. Civil contempt is the failure to do something ordered by a court to be done for the benefit of a party. A
criminal contempt is any conduct directed against the authority or dignity of the court. [26]

The Court further explained in Remman Enterprises, Inc. v. Court of Appeals[27] and People v. Godoy[28] the character of contempt proceedings, thus

The real character of the proceedings in contempt cases is to be determined by the relief sought or by the dominant purpose. The proceedings are to be regarded as
criminal when the purpose is primarily punishment and civil when the purpose is primarily compensatory or remedial.

Still further, the Court held in Santiago v. Anunciacion, Jr.[29] that:

But whether the first or the second, contempt is still a criminal proceeding in which acquittal, for instance, is a bar to a second prosecution. The distinction is for the
purpose only of determining the character of punishment to be administered.

In the earlier case of The Insurance Commissioner v. Globe Assurance Co., Inc.,[30] the Court dismissed the appeal from the ruling of the lower court denying a petition
to punish the respondent therein from contempt for lack of evidence. The Court said in that case:

It is not the sole reason for dismissing this appeal. In the leading case of In re Mison, Jr. v. Subido, it was stressed by Justice J.B.L. Reyes as ponente, that the
contempt proceeding far from being a civil action is of a criminal nature and of summary character in which the court exercises but limited jurisdiction. It was then
explicitly held: Hence, as in criminal proceedings, an appeal would not lie from the order of dismissal of, or an exoneration from, a charge of contempt of court.
[footnote omitted]
 267

Is the NLRCs dismissal of the contempt charges against the respondents beyond review by this Court? On this important question, we note that the petitioners, in
assailing the CA main decision, claim that the appellate court committed grave abuse of discretion in not ruling on the dismissal by the NLRC of the contempt charges.
[31]
They also charge the NLRC of having gravely abused its discretion and having committed reversible errors in:

(1) setting aside its earlier resolutions and orders, including the writ of preliminary injunction it issued, with its dismissal of the petition to cite the respondents in
contempt of court;

(2) overturning this Courts resolutions upholding the TRO and the writ of preliminary injunction;

(3) failing to impose administrative fines upon the respondents for violation of the TRO and the writ of preliminary injunction; and

(4) failing to order the reinstatement of the dismissed petitioners and the payment of their accrued wages and other benefits.

In view of the grave abuse of discretion allegation in this case, we deem it necessary to look into the NLRCs dismissal of the contempt charges against the respondents.
As the charges were rooted into the respondents alleged non-compliance with the NLRC directives contained in the TRO [32] and the writ of preliminary injunction, [33] we
first inquire into what really happened to these directives.

The assailed NLRC resolution of October 31, 2000[34] gave us the following account on the matter -

On the first directive, x x x We find that there was no violation of the said order. A perusal of the records would show that in compliance with the temporary restraining
order (TRO), respondents reinstated back to work the sales drivers who complained of illegal dismissal (Memorandum of Respondents, page 4).

Petitioners allegation that there was only payroll reinstatement does not make the respondents guilty of contempt of court. Even if the drivers were just in the garage
doing nothing, the same does not make respondents guilty of contempt nor does it make them violators of the injunction order. What is important is that they were
reinstated and receiving their salaries.

As for petitioners Danilo Real, Roberto Sedano and Rolando Manalo, they have resigned from their jobs and were paid their separation pay xxx (Exhibits 6, 6-A, 7, 7-A,
8, 8-A, Respondents Memorandum dated August 12, 1996). The issue of whether they were illegally dismissed should be threshed out before the Labor Arbiter in whose
sala the case of unfair labor practice and illegal dismissal were (sic) filed. Records also show that petitioner Antonio Desquitado during the pendency of the case
executed an affidavit of desistance asking that he be dropped as party complainant in as much as he has already accepted separation benefits totaling to P63,087.33.
 268

With respect to the second directive ordering respondents to cease and desist from implementing the memoranda dated July 15, 1991 designed to ground sales
personnel who are members of the union, respondents alleged that they can no longer be restrained or enjoined and that the status quo can no longer be restored, for
implementation of the memorandum was already consummated or was a fait accompli. x x x

All sales vehicles were ordered to be turned over to management and the same were already sold[.] xxx [I]t would be hard to undo the sales transactions, the same
being valid and binding. The memorandum of July 15, 1991 authorized still all sales representatives to continue servicing their customers using public transportation and
a transportation allowance would be issued.

xxxx

The third directive of the Commission is to preserve the status quo ante between the parties.

Records reveal that WELLA AG of Germany terminated its Licensing Agreement with respondent company effective December 31, 1991 (Exhibit 11, Respondents
Memorandum).

On January 31, 1992, individual petitioners together with the other employees were terminated xxx. In fact, this event resulted to the closure of the respondent
company. The manufacturing and marketing operations ceased. This is evidenced by the testimony of Rosalito del Rosario and her affidavit (Exh. 9, memorandum of
Respondents) as well as Employers Monthly Report on Employees Termination/dismissals/suspension xxx (Exhibits 12-A to 12-F, ibid) as well as the report that there is
a permanent shutdown/total closure of all units of operations in the establishment (Ibid). A letter was likewise sent to the Department of Labor and Employment (Exh.
12, Ibid) in compliance with Article 283 of the Labor Code, serving notice that it will cease business operations effective January 31, 1992.

The petitioners strongly dispute the above account. They maintain that the NLRC failed to consider the following:
 269

1. CTMI violated the status quo ante order when it did not restore to their former work assignments the dismissed sales drivers. They lament that their being garaged
deprived them of benefits, and they were subjected to ridicule and psychological abuse. They assail the NLRC for considering the payroll reinstatement of the drivers as
compliance with its stay order.

They also bewail the NLRCs recognition of the resignation of Danilo Real, Roberto Sedano, Rolando Manalo and Antonio Desquitado as they were just compelled by
economic necessity to resign from their employment. The quitclaims they executed were contrary to public policy and should not bar them from claiming the full
measure of their rights, including their counsel who was unduly deprived of his right to collect attorneys fees.

2. It was error for the NLRC to rule that the memorandum, grounding the sales drivers, could no longer be restrained or enjoined because all sales vehicles were already
sold. No substantial evidence was presented by the respondents to prove their allegation, but even if there was a valid sale of the vehicles, it did not relieve the
respondents of responsibility under the stay order.

3. The alleged termination of the licensing agreement between CTMI and WELLA AG of Germany, which allegedly resulted in the closure of CTMIs manufacturing and
marketing operations, occurred after the NLRCs issuance of the injunctive reliefs. CTMI failed to present substantial evidence to support its contention that it folded up
its operations when the licensing agreement was terminated. Even assuming that there was a valid closure of CTMIs business operations, they should have been paid
their lost wages, allowances, incentives, sales commissions, per diems and other employee benefits from August 23, 1991 up to the date of the alleged termination of
CTMIs marketing operations.

Did the NLRC commit grave abuse of discretion in dismissing the contempt charges against the respondents? An act of a court or tribunal may only be considered as
committed in grave abuse of discretion when it was performed in a capricious or whimsical exercise of judgment which is equivalent to lack of jurisdiction. The abuse of
discretion must be so patent and gross as to amount to an evasion of a positive duty enjoined by law, or to act at all in contemplation of law, as where the power is
exercised in an arbitrary and despotic manner by reason of passion or personal hostility. [35]

The petitioners insist that the respondents violated the NLRC directives, especially the status quo ante order, for their failure to reinstate the dismissed petitioners and
to pay them their benefits. In light of the facts of the case as drawn above, we cannot see how the status quo ante or the employer-employee situation before the
formation of the union and the conduct of the consent election can be maintained. As the NLRC explained, CTMI closed its manufacturing and marketing operations after
the termination of its licensing agreement with WELLA AG of Germany. In fact, the closure resulted in the termination of CTMIs remaining employees on January 31,
1992, aside from the sales drivers who were earlier dismissed but reinstated in the payroll, in compliance with the NLRC injunction. The petitioners termination of
employment, as well as all of their money claims, was the subject of the illegal dismissal and unfair labor practice complaint before the labor arbiter. The latter was
ordered by the NLRC on October 31, 2000 to proceed hearing the case. [36] The NLRC thus subsumed all other issues into the main illegal dismissal and unfair labor
practice case pending with the labor arbiter. On this point, the NLRC declared:
 270

Note that when the injunction order was issued, WELLA AG of Germany was still under licensing agreement with respondent company. However, the situation has
changed when WELLA AG of Germany terminated its licensing agreement with the respondent, causing the latter to close its business.

Respondents could no longer be ordered to restore the status quo as far as the individual petitioners are concerned as these matters regarding the termination of the
employees are now pending litigation with the Arbitration Branch of the Commission. To resolve the incident now regarding the closure of the respondent company and
the matters alleged by petitioners such as the creations of three (3) new corporations xxx as successor-corporations are matters best left to the Labor Arbiter hearing
the merits of the unfair labor practice and illegal dismissal cases. [37]

We find no grave abuse of discretion in the assailed NLRC ruling. It rightly avoided delving into issues which would clearly be in excess of its jurisdiction for they are
issues involving the merits of the case which are by law within the original and exclusive jurisdiction of the labor arbiter. [38] To be sure, whether payroll reinstatement of
some of the petitioners is proper; whether the resignation of some of them was compelled by dire economic necessity; whether the petitioners are entitled to their
money claims; and whether quitclaims are contrary to law or public policy are issues that should be heard by the labor arbiter in the first instance. The NLRC can inquire
into them only on appeal after the merits of the case shall have been adjudicated by the labor arbiter.

The NLRC correctly dismissed the contempt charges against the respondents. The CA likewise committed no grave abuse of discretion in not disturbing the NLRC
resolution.

In light of the above discussion, we find no need to dwell into the other issues the parties raised.

WHEREFORE, premises considered, we hereby DENY the petition for lack of merit and AFFIRM the assailed resolutions of the Court of Appeals.

SO ORDERED.
 271

G.R. No. 230682

JOLO'S KIDDIE CARTS/ FUN4KIDS/ MARLO U. CABILI, Petitioners

vs.
EVELYN A. CABALLA and ANTHONY M. BAUTISTA, Respondents

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Resolutions dated July 28, 20162 and February 22, 20173 of the Court of Appeals (CA) in CA-G.R. SP No. 146460
which dismissed the petition for certiorari4 filed by petitioners Jolo's Kiddie Carts/Fun4Kids/Marlo U. Cabili (petitioners), due to a technical ground, i.e., non-filing of a
motion for reconsideration before filing a petition for certiorari.

The Facts

The instant case stemmed from a complaint 5 for illegal dismissal, underpayment of salaries/wages and 13th month pay, non-payment of overtime pay, holiday pay, and
separation pay, damages, and attorney's fees filed by Evelyn A. Caballa (Caballa), Anthony M. Bautista (Bautista; collectively, respondents), and one Jocelyn 6 S. Colisao
(Colisao) against petitioners before the National Labor Relations Commission (NLRC). Respondents and Colisao alleged that petitioners hired them as staff members in
the latter's business; Caballa and Bautista were assigned to man petitioners' stalls in SM Bacoor and SM Rosario in Cavite, respectively, while Colisao was assigned in
several SM branches, the most recent of which was in SM North EDSA. 7 They were paid a daily salary that reached ₱330.00 for a six (6)-day work week from 9:45 in the
morning until 9:00 o'clock in the evening.8 They claimed that they were never paid the monetary value of their unused service incentive leaves, 13th month pay,
overtime pay, and premium pay for work during holidays; and that when petitioners found out that they inquired from the Department of Labor and Employment about
the prevailing minimum wage rates, they were prohibited from reporting to their work assignment without any justification. 9
 272

For their part,10 petitioners denied dismissing respondents and Colisao, and maintained that they were the ones who abandoned their work. 11 They likewise maintained
that they paid respondents and Colisao their wages and other benefits in accordance with the law and that their money claims were bereft of factual and legal bases. 12

The Labor Arbiter's (LA) Ruling

In a Decision13 dated November 27, 2015, the LA dismissed the case insofar as Colisao is concerned for failure to prosecute. 14 However, the LA ruled in favor of
respondents, and accordingly, ordered petitioners to solidarily pay them the following, plus attorney's fees equivalent to ten percent (10%) ofthe total monetary
awards:

Separation Back-wages Wage Di- 13th month Moral Exemplary Total

Pay fferential pay damages damages

Caballa 60,580.00 109,870.80 75,156.12 10,608.00 10,000.00 5,000.00 ₱271,214.92

Bautista 60,580.00 112,294.00 74,480.12 10,608.00 10,000.00 5,000.00 272,962.12

544,177.04

Plus 10% Attorney's Fees 54,417.70

GRAND TOTAL ₱598,594.7415

The LA found that respondents' adequate substantiation of their claim that they were no longer given any work assignment and were not allowed to go anywhere near
their respective workstations, coupled with petitioners' failure to prove abandonment, justifies the finding that respondents were indeed dismissed without just cause
nor due process.16

Aggrieved, petitioners appealed17 to the NLRC.

The NLRC Ruling

In a Decision18 dated April 28, 2016, the NLRC modified the LA ruling, finding no illegal dismissal nor abandonment of work. Accordingly, the NLRC ordered petitioners to
reinstate respondents to their former or substantially equivalent positions without loss of seniority rights and privileges; deleted the awards for payment of backwages,
separation pay, and moral and exemplary damages; and affirmed the rest of the awards. 19 For this purpose, the NLRC attached a Computation of Monetary A
ward20 detailing the monetary awards due to respondents, as follows: (a) for Caballa, ₱15,623.00 as holiday pay, ₱109,870.80 as wage differential, and ₱75,156.12 as
 273

13th month pay; (b) for Bautista, ₱15,623.00 as holiday pay, ₱l12,294.00 as wage differential, and ₱74,480.12 as 13th month pay; and (c) attorney's fees amounting
to ten percent (10%) of the total monetary value awarded.21

Anent the procedural matters raised by petitioners, the NLRC ruled that: (a) petitioners waived the issue of improper venue when they failed to raise the same before
the filing of position papers; and (b) respondents substantially complied with the requirement of verifying their position papers, and thus, the same is not fatal to their
complaint.22As to the merits, while the NLRC agreed with the LA's finding that there was no abandonment on the part of respondents, the latter were unable to adduce
any proof that petitioners indeed committed any overt or positive act operative of their dismissal. 23 In view of the finding that there was neither dismissal on the part of
petitioners nor abandonment on the part of respondents, the NLRC ordered the latter's reinstatement but without backwages. Finally, the NLRC held that respondents
should be entitled to their holiday pay as it is a statutory benefit which payment petitioners failed to prove. 24

Dissatisfied, petitioners directly filed a petition for certiorari25 before the CA, without moving for reconsideration before the NLRC.

The CA Ruling

In a Resolution26 dated July 28, 2016, the CA denied the petition due to petitioners' failure to file a motion for reconsideration before the NLRC prior to the filing of a
petition for certiorari before the CA. It held that the prior filing of such motion before the lower tribunal is an indispensable requisite in elevating the case to the CA
via certiorari, and that petitioners' failure to do so resulted in the NLRC ruling attaining finality. 27

Petitioners moved for reconsideration,28 but the same was denied in a Resolution29 dated February 22, 2017; hence, this petition.30

The Court's Ruling

The petition is partly meritorious.

I.

As a rule, the filing of a motion for reconsideration is a condition sine qua non to the filing of a petition for certiorari.31The rationale for this requirement is that "the law
intends to afford the tribunal, board or office an opportunity to rectify the errors and mistakes it may have lapsed into before resort to the courts of justice can be
had."32 Notably, however, there are several recognized exceptions to the rule, one of which is when the order is a patent nullity. 33

In this case, records show that the LA ruled in favor of respondents, and accordingly, ordered petitioners to pay them the following monetary awards:

Separation Back-wages Wage Di- 13th month Moral Exemplary Total

Pay fferential pay damages damages

Caballa 60,580.00 109,870.80 75,156.12 10,608.00 10,000.00 5,000.00 ₱271,214.92

Bautista 60,580.00 112,294.00 74,480.12 10,608.00 10,000.00 5,000.00 272,962.12

544,177.04
 274

Plus 10% Attorney's Fees 54,417.70

GRAND TOTAL ₱598,594.74

Upon petitioners' appeal to the NLRC, the LA ruling was modified, deleting the awards for separation pay, backwages, moral damages, and exemplary damages, while
affirming the awards for wage differential and 13th month pay. In the Computation of Monetary Award 34 attached to the NLRC ruling - which according to the NLRC
itself, shall form part of its decision 35 - it was indicated that Caballa's awards for wage differential and 13th month pay are in the amounts of ₱109,870.80 and
₱75,156.12, respectively; while the awards in Bautista's favor were pegged at ₱l12,294.00 and ₱74,480.12, respectively. However, a simple counterchecking of the
NLRC's computation with the LA ruling readily reveals that: (a) the amounts of ₱l09,870.80 and ₱l12,294.00 clearly pertain to the awards of backwages, which were
already deleted in the NLRC ruling; (b) the amounts of ₱75,156.12 and ₱74,480.12 pertain to the awards of wage differential; and (c) the amount of ₱l0,608.00 which
pertain to the awards of 13th month pay for both respondents, were no longer reflected in the NLRC computation. While this is obviously just an oversight on the part of
the NLRC, it is not without any implications as such oversight resulted in an unwarranted increase in the monetary awards due to respondents. Clearly, such an increase
is a patent nullity as it is bereft of any factual and/or legal basis.

Verily, the CA erred in dismissing the petition for certiorari filed before it based on the aforesaid technical ground, as petitioners were justified in pursuing a direct
recourse to the CA even without first moving for reconsideration before the NLRC. In such instance, court procedure dictates that the case be remanded to the CA for a
resolution on the merits. However, when there is already enough basis on which a proper evaluation of the merits may be had, as in this case, the Court may dispense
with the time-consuming procedure of remand in order to prevent further delays in the disposition of the case and to better serve the ends of justice. 36 In view of the
foregoing - as well as the fact that petitioners pray for a resolution on the merits 37 - the Court finds it appropriate to exhaustively resolve the instant case.

II.

It must be stressed that to justify the grant of the extraordinary remedy of certiorari, petitioners must satisfactorily show that the court or quasi-judicial authority
gravely abused the discretion conferred upon it. Grave abuse of discretion connotes judgment exercised in a capricious and whimsical manner that is tantamount to lack
of jurisdiction. To be considered "grave," discretion must be exercised in a despotic manner by reason of passion or personal hostility, and must be so patent and gross
as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation of law. 38

In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and conclusions are not supported by substantial evidence, which refers to that
amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion. Thus, if the NLRC's ruling has basis in the evidence and the
applicable law and jurisprudence, then no grave abuse of discretion exists and the CA should so declare and, accordingly, dismiss the petition. 39

Guided by the foregoing considerations and as will be explained hereunder, the Court finds that the NLRC did not gravely abuse its discretion in ruling that: (a)
petitioners are barred from raising improper venue and that the verification requirement in respondents' position paper was substantially complied with; and (b)
respondents were neither dismissed by petitioners nor considered to have abandoned their jobs. However and as already discussed, the NLRC committed grave abuse of
discretion amounting to lack or excess of jurisdiction when it awarded respondents increased monetary benefits without any factual and/or legal bases.

III.

Anent the first procedural issue, petitioners insist that since respondents worked in Cavite, they should have filed their complaint before the Regional Arbitration Branch
IV of the NLRC and not in Manila, pursuant to Section 1, Rule IV of the 2011 NLRC Rules of Procedure. As such, the LA in Manila where the complaint was filed had no
jurisdiction to rule on the same.40 However, such insistence is misplaced as the aforesaid provision of the 2011 Rules of Procedure clearly speaks of venue and not
 275

jurisdiction. Moreover, paragraph (c) of the same provision explicitly provides that "[w]hen venue is not objected to before the first scheduled mandatory conference,
such issue shall be deemed waived." Here, the NLRC aptly pointed out that petitioners only raised improper venue for the first time in their position paper, 41 and as
such, they are deemed to have waived the same.

In this relation, Article 224 (formerly Article 217) 42 of the Labor Code, as amended, clearly provides that the LAs shall have exclusive and original jurisdiction to hear and
decide, inter alia, termination disputes and money claims arising from employer-employee relations, as in this case. As such, the LA clearly had jurisdiction to resolve
respondents' complaint.

Another procedural issue raised by petitioners is that respondents signed the Verification and Affidavit of Non-Forum Shopping attached to their Position Paper a day
earlier than the date such pleading was filed by their counsel. In this regard, petitioners assert that such is a fatal infirmity that necessitates the dismissal of
respondents' complaint.43However, the NLRC correctly ruled that respondents' substantial compliance with the requirement, coupled with their meritorious claims against
petitioners, necessitates dispensation with the strict compliance with the rules on verification and certification against forum shopping in order to better serve the ends
of justice. In Fernandez v. Villegas,44 the Court held:

The Court laid down the following guidelines with respect to noncompliance with the requirements on or submission of a defective verification and certification against
forum shopping, viz.:

1) A distinction must be made between non-compliance with the requirement on or submission of defective verification, and noncompliance with the requirement on or
submission of defective certification against forum shopping.

2) As to verification, non-compliance therewith or a defect therein does not necessarily render the pleading fatally defective. The court may order its submission or
correction or act on the pleading if the attending circumstances are such that strict compliance with the Rule may be dispensed with in order that the ends of justice
may be served thereby.

3) Verification is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the
verification, and when matters alleged in the petition have been made in good faith or are true and correct.

4) As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in verification, is generally not curable by its subsequent submission
or correction thereof, unless there is a need to relax the Rule on the ground of "substantial compliance" or presence of "special circumstances or compelling reasons."

5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in a case; otherwise, those who did not sign will be dropped as parties to
the case. Under reasonable or justifiable circumstances, however, as when all the plaintiffs or petitioners share a common interest and involve a common cause of
action or defense, the signature of only one of them in the certification against forum shopping substantially complies with the Rule.

6) Finally, the certification against forum shopping must be executed by the party-pleader, not by his counsel.1âwphi1 If, however, for reasonable or justifiable reasons,
the party-pleader is unable to sign, he must execute a Special Power of Attorney designating his counsel of record to sign on his behalf.

xxxx

Besides, it is settled that the verification of a pleading is only a formal, not a jurisdictional requirement intended to secure the assurance that the matters alleged in a
pleading are true and correct. Therefore, the courts may simply order the correction of the pleadings or act on them and waive strict compliance with the rules, as in
this case.
 276

xxxx

Similar to the rules on verification, the rules on forum shopping are designed to promote and facilitate the orderly administration of justice; hence, it should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate objectives. The requirement of strict compliance with the provisions on
certification against forum shopping merely underscores its mandatory nature to the effect that the certification cannot altogether be dispensed with or its requirements
completely disregarded. It does not prohibit substantial compliance with the rules under justifiable circumstances, as also in this case. 45 (Emphases and underscoring
supplied)

IV.

In Claudia's Kitchen, Inc. v. Tanguin, 46 the Court was faced with a situation where, on the one hand, the employee claimed she was illegally dismissed by her employer;
on the other, the employer denied ever dismissing such employee and even accused the latter of abandoning her job, as in this case. In resolving the matter, the Court
extensively discussed:

In cases of illegal dismissal, the employer bears the burden of proof to prove that the termination was for a valid or authorized cause. But before the employer must
bear the burden of proving that the dismissal was legal, the employees must first establish by substantial evidence that indeed they were dismissed. If there is no
dismissal, then there can be no question as to the legality or illegality thereof. In Machica v. Roosevelt Services Center, Inc., the Court enunciated:

The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were burdened to prove their allegation that respondents dismissed them from
their employment. It must be stressed that the evidence to prove this fact must be clear, positive and convincing. The rule that the employer bears the burden of proof
in illegal dismissal cases :finds no application here because the respondents deny having dismissed the petitioners.

xxxx

The Court further agrees with the findings of the LA, the NLRC[,] and the CA that Tanguin was not guilty of abandonment. Tan Brothers Corporation of Basilan City v.
Escudero extensively discussed abandonment in labor cases:

As defined under established jurisprudence, abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It constitutes neglect of
duty and is a just cause for tem1ination of employment under paragraph (b) of Article 282 [now Article 296] of the Labor Code. To constitute abandonment, however,
there must be a clear and deliberate intent to discontinue one's employment without any intention of returning. In this regard, two elements must concur: (1) failure to
report for work or absence without valid or justifiable reason; and (2) a clear intention to sever the employer-employee relationship, with the second element as the
more determinative factor and being manifested by some overt acts. Otherwise stated, absence must be accompanied by overt acts unerringly pointing to the fact that
the employee simply does not want to work anymore. It has been ruled that the employer has the burden of proof to show a deliberate and unjustified refusal of the
employee to resume his employment without any intention of returning. 47(Emphases and underscoring supplied)

As aptly ruled by the NLRC, respondents failed to prove their allegation that petitioners dismissed them from work, as there was no indication as to how the latter
prevented them from reporting to their work stations; or that the petitioners made any overt act that would suggest that they indeed terminated respondents'
employment.48 In the same vein, petitioners failed to prove that respondents committed unequivocal acts that would clearly constitute intent to abandon their
employment. It may even be said that respondents' failure to report for work may have been a direct result of their belief, albeit misplaced, that they had already been
dismissed by petitioners. Such mistaken belief on the part of the employee should not lead to a drastic conclusion that he has chosen to abandon his work. 49More
importantly, respondents' filing of a complaint for illegal dismissal negates any intention on their part to sever their employment relations with petitioners. 50 To reiterate,
abandonment of position is a matter of intention and cannot be lightly inferred, much less legally presumed, from certain equivocaI acts. 51
 277

In light of the finding that respondents neither abandoned their employment nor were illegally dismissed by petitioners, it is only proper for the former to report back to
work and for the latter to reinstate them to their former positions or a substantially-equivalent one in their stead. In this regard, jurisprudence provides that in instances
where there was neither dismissal by the employer nor abandonment by the employee, the proper remedy is to reinstate the employee to his former position but
without the award of backwages.52

As for respondents' money claims for holiday pay, wage differential, and 13th month pay, the NLRC properly observed that petitioners failed to show that payment has
been made. As such, they must be held liable for the same. It is well-settled that "with respect to labor cases, the burden of proving payment of monetary claims rests
on the employer, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar documents - which will show that overtime,
differentials, service incentive leave and other claims of workers have been paid - are not in the possession of the worker but in the custody and absolute control of the
employer."53However and as already adverted to earlier, the awards of wage differential and 13th month pay due to respondents must be adjusted to properly reflect
the computation made by the LA, in that: (a) Caballa is entitled to wage differential and 13th month pay in the amounts of ₱75,156.12 and ₱10,608.00, respectively;
while (b) Bautista's entitlement to such claims are in the amounts of ₱74,480.12 and ₱10,608.00, respectively.

In the same manner, the NLRC correctly awarded attorney's fees to respondents, in light of Article 111(a) of the Labor Code which states that: "[i]n cases of unlawful
withholding of wages, the culpable party may be assessed attorney's fees equivalent to ten percent (10%) of the amount of wages recovered," as in this case.

Finally, all monetary awards due to respondents shall earn legal interest at the rate of six percent (6%) per annumfrom the finality of this Decision until fully paid,
pursuant to prevailing jurisprudence.54

WHEREFORE, the petition is PARTLY GRANTED. The Resolutions dated July 28, 2016 and February 22, 2017 of the Court of Appeals in CA-G.R. SP No. 146460 are
hereby SET ASIDE. Accordingly, the Decision dated April 28, 2016 of the National Labor Relations Commission is AFFIRMED with MODIFICATION, ordering petitioners
Jolo's Kiddie Carts/Fun4Kids/Marlo U. Cabili to pay:

a) Respondent Evelyn A. Caballa the amounts of ₱15,623.00 as holiday pay, ₱75,156.12 as wage differential, and ₱10,608.00 as 13th month pay, plus attorney's fees
amounting to ten percent (10%) of the aforesaid monetary awards. Further, said amounts shall then earn legal interest at the rate of six percent (6%) per annum from
the finality of the Decision until fully paid; and

b) Respondent Anthony M. Bautista the amounts of ₱15,623.00 as holiday pay, ₱74,480.12 as wage differential, and ₱10,608.00 as 13th month pay, plus attorney's fees
amounting to ten percent (10%) of the aforesaid monetary awards. Further, said amounts shall then earn legal interest at the rate of six percent (6%) per annum from
the finality of the Decision until fully paid.

Finally, the Temporary Restraining Order dated May 26, 2017 issued in relation to this case is hereby LIFTED. The Decision dated April 28, 2016 of the National Labor
Relations Commission in NLRC NCR Case No. 03-03168-15 (NLRC LAC No. 02-000701-16), as modified, shall be implemented in accordance with this Decision.

SO ORDERED.
278
 279

G.R. No. 178379

CRISPIN S. FRONDOZO,* DANILO M. PEREZ, JOSE A. ZAFRA, ARTURO B. VITO, CESAR S. CRUZ, NAZARIO C. DELA CRUZ, and LUISITO R. DILOY, Petitioners,
vs.
MANILA ELECTRIC COMPANY,, Respondent.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review on certiorari1 assailing the 6 March 2007 Decision2 and the 14 June 2007 Resolution3 of the Court of Appeals in CA-G.R. SP No.
95747. The Court of Appeals affirmed the 28 February 2006 Resolution 4 and the 26 May 2006 Resolution 5 of the National Labor Relations Commission (NLRC) which
granted the prayer for preliminary injunction of respondent Manila Electric Company (MERALCO) and denied therein petitioners' motion for reconsideration.

The Antecedent Facts

 280

The case originated from a Notice of Strike (first strike) filed on 16 May 1991 by the MERALCO Employees and Workers Association (MEWA), composed of MERALCO’s
rank-and-file employees, on the ground of Unfair Labor Practice (ULP). Conciliation conferences conducted by the National Conciliation and Mediation Board (NCMB)
failed to settle the dispute and resulted to a strike staged by MEWA on 6 June 1991. In an Order dated 6 June 1991, 6 then Acting Secretary·Nieves R. Confesor of the
Department of Labor and Employment (DOLE) certified the labor dispute to the NLRC for compulsory arbitration, ordered all the striking workers to return to work, and
directed MERALCO to accept the striking workers back to work under the same terms and conditions existing prior to the work stoppage.

On 26 July 1991, MERALCO terminated the services of Crispin S. Frondozo (Frondozo ), Danilo M. Perez (Perez), Jose A. Zafra (Zafra), Arturo B. Vito (Vito ), 7 Cesar S.
Cruz (Cruz), Nazario C. dela Cruz (N. dela Cruz), Luisito R. Diloy (Diloy), and Danilo D. Dizon (Dizon) for having committed unlawful acts and violence during the strike.

On 25 July 1991, MEWA filed a second Notice of Strike (second strike) on the ground of discrimination and union busting that resulted to the dismissal from employment
of 25 union officers and workers. Then DOLE Secretary Ruben D. Torres issued an Order dated 8 August 1991 8 that certified the issues raised in the second strike to the
NLRC for consolidation with the first strike and strictly enjoined any strike or lockout pending resolution of the labor dispute. The Order also directed MERALCO to
suspend the effects of termination of the employees and re-admit the employees under the same terms and conditions without loss of seniority rights.

The labor dispute resulted to the filing of two complaints for illegal dismissal:

(l)NLRC NCR Case No. 00-08-04146-92 filed by Dizon, Diloy, Patricio Maniacop, Wilfredo Lagason, Venancio Arguzon, Jr., Rogelio Antonio, Lauro Garcia, Alfredo Badilla,
Jr., and Reynaldo Javier; and

(2)NLRC NCR Case No. 00-12-06878-92 filed by MEWA, Reynaldo M. Caberte (Caberte), Alfredo dela Cruz (A. dela Cruz), Nataner F. Pingol (Pingol), Vincent G. Rallos,
Enrique T. Barrientos (Barrientos), Melchor E. Banaga (Banaga), Zafra, Perez, Vito, N. dela Cruz, Cruz, and Frondozo.

The NLRC consolidated the two illegal dismissal cases with NLRC NCR CC No. 000021-91 ( In the Matter of the Labor Dispute at the Manila Electric Company) and NLRC
NCR Case No. 00-05-03381-93 (MEWA v. MERALCO). On 23 January 1998, the NLRC's First Division rendered a Decision, 9 the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered:

1. denying the motion for reconsideration of Patricio Maniacop, et al. [the nine (9) quitclaiming complainants] in NLRC Case No. 00-08- 04146-92;

2. upholding Meralco's dismissal of Jose A. Zafra, Alfredo dela Cruz, Reynaldo M. Caberte, Nataner F. Pingol, Vincent G. Rallos, Enrique Barrientos, Danilo M. Perez,
Arturo B. Vito, Nazario C. dela Cruz, Melchor E. Banaga, Cesar S. Cruz, and Crispin S. Frondozo in view of the illegal acts they committed during the subject strike;

3. directing complainants Danilo Dizort and Luisi to Diloy as well as respondent Meralco to submit a memorandum of arguments relative to NLRC NCR Case No. 00-08-
04146-92; and

4. directing MEWA and Meralco to submit memorandum of arguments in support of their respective position in NLRC NCR CC No. 000021-91.

Labor Arbiter Adolfo C. Babiano is directed to continue handling this case and to submit periodic report[s] thereon.

SO ORDERED.10

However, in a Decision promulgated on 14 December 2001, 11 the NLRC First Division modified the 23 January 1998 Decision and ruled:
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WHEREFORE, premises considered, the Decision of January 23, 1998 is hereby MODIFIED:

1. Declaring the illegality of the strike of June 6-8, 1991 on the basis of the uncontested facts and allegations of the respondent;

2. As a matter of consequence, the officers and members who participated therein and who committed the illegal acts perforce are hereby deemed to have lost their
employment status;

3. The dismissal of complainants Jose Zafra, Vicente G. Rallos, Enrique T. Barrientos, Reynaldo M. Caberte, Cesar S. Cruz, Nazario C. dela Cruz, Arturo B. Vito, Melchor
E. Banaga, Alfredo dela Cruz, Nataner F. Pingol, Danilo M. Perez, and Crispin S. Frondozo [is] hereby declared unjustified, their participation in the commission of the
prohibited and illegal acts not having been proved;

4. Accordingly, respondent is hereby ordered to reinstate the twelve (12) complainants, without however, payment of backwages, complainants themselves having
admitted participation in the strike.

SO ORDERED.12

In an Order dated 29 May 2002,13 the NLRC ruled on the motions for reconsideration filed by MERALCO, Dizon and Diloy, and the 12 respondents in NLRC NCR Case No.
00-12-06878-92, as follows:

WHEREFORE, premises considered, the Decision appealed from is, as it is hereby MODIFIED: ordering respondent MANILA ELECTRIC COMPANY to reinstate to their
former or equivalent positions DANILO DIZON and LUISITO DILOY, without loss of seniority rights and payment of backwages computed from the time of their dismissal.

The rest of the decretal portion of the Decision of December 14, 2001 stays.

SO ORDERED.14

From the 14 December 2001 Decision and 29 May 2002 Order of the NLRC, two petitions for certiorari were filed before the Court of Appeals:

1. CA-G.R. SP No. 72480 filed by MERALCO; and

2. CA-G.R. SP No. 72509 filed by Frondozo, Barrientos, Pingol, Caberte, Zafra, Perez, Cruz, A. dela Cruz, and Banaga.

MERALCO moved for the consolidation of the two cases but the motion was denied.

On 31 July 2002, the NLRC issued an Entry of Judgment 15 stating that the 29 May 2002 NLRC Order became final and executory on 19 July 2002 On 3 October 2002,
Labor Arbiter Veneranda C. Guerrero (Labor Arbiter Guerrero) issued a Writ of Execution 16 directing the reinstatement of the 1417 respondents. In a Manifestation dated
24 January 2003,18 MERALCO informed the NLRC of the payroll reinstatement of the 14 respondents.

On 30 May 2003, the Court of Appeals' Special Second Division promulgated its Decision in CA-G.R. SP No. 72480 19 in favor of MERALCO. The Court of Appeals found
that the strike of 6-8 June 1991 was illegal because it occurred despite an assumption order by the DOLE Secretary and because of the commission of illegal acts
marred with violence and coercion. The dispositive portion of the Decision reads:
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WHEREFORE, premises considered, petition is hereby granted. The decision of the Labor Arbiter dated 16 January 1998 and ruling of the NLRC dated 23 January 1998
are reinstated. Private respondents Jose Zafra, Vincent G. Rallos, Enrique T. Barrientos, Reynaldo M. Caberte, Cesar S. Cruz, Nazario C. [d]ela Cruz, Arturo B. Vito,
Melchor E. Banaga, Alfredo dela Cruz, Nataner F. Pingol, Danilo M. Perez, Crispin S. Frondozo, Danilo Dizon and Luisito Diloy are dismissed from service.

SO ORDERED.20

In view of the 30 May 2003 Decision of the Court of Appeals' Special Second Division dismissing the 14 respondents from the service, MERALCO stopped their payroll
reinstatement.

On 11 June 2003, Labor Arbiter Guerrero approved the computation of backwages and ordered the issuance of a Writ of Execution for the satisfaction of the judgment
award. MERALCO filed a Manifestation calling the attention of Labor Arbiter Guerrero to the 30 May 2003 Decision of the Court of Appeals' Special Second Division in CA-
G.R. SP No. 72480. In an Order dated 7 October 2003, Labor Arbiter Guerrero ruled that the Court of Appeals’ 30 May 2003 Decision had not attained finality and as
such, respondents should be reinstated from the time they were removed from the payroll until their actual/payroll reinstatement based on their latest salary prior to
their dismissal. An Alias Writ of Execution 21 was issued on 10 October 2003 for the satisfaction of the judgment award which resulted to the garnishment of MERALCO’s
funds deposited with Equitable-PCI Bank.

Dizon, Diloy, and the other respondents filed their respective motions for reconsideration in CA-G.R. SP No. 72480, which the Court of Appeals’ (Former) Special Second
Division denied in its 18 December 2003 Resolution.

On 27 January 2004, the Court of Appeals' Fourteenth Division promulgated its Decision in CA-G.R. SP No. 72509 22 as follows:

WHEREFORE, in view of the foregoing, the petition is PARTIALLY GIVEN DUE COURSE. The assailed Decision of December 14, 2001 and the Order of May 29, 2002 of
public respondent National Labor Relations Commission are hereby MODIFIED in that respondent MERALCO is ordered to pay the petitioners full backwages computed
from July 26, 1991, when they were illegally dismissed, up to the date of their actual reinstatement in the service.

SO ORDERED.23

MERALCO filed a motion for reconsideration but it was denied in the Resolution of 17 August 2004.

The respondents moved for the issuance of an Alias Writ of Execution for the satisfaction of their accrued wages arising from the recall of their payroll reinstatement. On
10 June 2004, Labor Arbiter Guerrero granted the motion. On 14 June 2004, a Second Alias Writ of Execution 24 was issued directing the Sheriff to cause the
reinstatement of the respondents and to collect the amount of ₱2,851,453 representing backwages from 14 December 2001 to 15 January 2003 and from 1 June 2003
to 1 June 2004.25 MERALCO filed a motion to quash the Second Alias Writ of Execution but it was denied on 2 July 2004. On 20 July 2004, the Sheriff reported that the
amount of ₱2,879,967.53 garnished funds had been delivered to and deposited with the NLRC Cashier for the satisfaction of the monetary award. 26 However, the
reinstatement portion of the judgment remained unimplemented due to the failure of MERALCO to reinstate the respondents.

On 6 February 2004, Dizon and Diloy filed a petition before this Court assailing the 30 May 2003 Decision and 18 December 2003 Resolution of the Court of Appeals'
Special Second Division in CA-G.R. SP No. 72480. The case was docketed as G.R. No. 161159.

On 12 February 2004, Frondozo, Barrientos, Pingol, Caberte, Perez, Cruz, A. dela Cruz, and Banaga filed a petition before this Court assailing the same 30 May 2003
Decision and 18 December 2003 Resolution of the Court of Appeals' Special Second Division in CA-G.R. SP No. 72480. The case was docketed as G.R. No. 161311.
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On 11 October 2004, MERALCO filed a petition before this Court questioning the 27 January 2004 and 17 August 2004 Decision of the Court of Appeals' Fourteenth
Division promulgated in CA-G.R. SP No. 72509. The case was docketed as G.R. No. 164998.

In a Resolution dated 23 February 2004, 27 this Court's Third Division denied the petition in G.R. No. 161159 on the ground that the petitioners failed to show that a
reversible error had been committed by the Court of Appeals in rendering its Decision.

In a Resolution dated 3 March 2004, the Court's Second Division referred G.R. No. 161311 for consolidation with G.R. No. 161159. 28

In a Resolution dated 24 May 2004,29 the Court's Third Division denied with finality the petitioners' motion for reconsideration of the 23 February 2004 Resolution
denying the petition in G.R. No. 161159 on the ground that no substantial arguments were raised to warrant a reconsideration of the Court's Resolution. In the same
Resolution, the Court denied the petition in G.R. No. 161311 for failure of petitioners therein to show that a reversible error had been committed by the appellate court.

Petitioners in G.R. No. 161311 filed a motion for reconsideration of the 24 May 2004 Resolution denying their petition. In its 28 July 2004 Resolution, 30 the Court's Third
Division denied the motion with finality as no substantial arguments were raised to warrant a reconsideration of the Resolution.

The 23 February 2004 Resolution became final and executory on 15 July 2004. 31 The 24 May 2004 Resolution became final and executory on 2 September 2004. 32

In a Resolution dated 15 June 2005,33 the Court's First Division denied the petition in G.R. No. 164998 for MERALCO's failure to file a reply, amounting to failure to
prosecute. MERALCO filed a motion for reconsideration but it was denied in the Resolution of 22 August 2005. The 15 June 2005 Resolution became final and executory
on 4 October 2005.34

Meanwhile, MERALCO filed two motions before the NLRC: (1) a motion for reconsideration and/or appeal filed on 5 July 2004 assailing the 10 June 2004 Order of Labor
Arbiter Guerrero granting the issuance of the Second Alias Writ of Execution and directing the payment of backwages of ₱2,851,453 to respondents and ordering their
reinstatement actually or in the payroll, which was accompanied by a bond equivalent to the amount of the accrued backwages; and (2) an urgent motion for the
issuance of a temporary restraining order and/or preliminary injunction filed on 13 July 2004 directed against the Second Alias Writ of Execution pending the resolution
of its first motion.

The Resolutions of the NLRC

In a Resolution dated 28 February 2006, 35 the NLRC granted the prayer for preliminary injunction of MERALCO. The NLRC considered the difficulty in proceeding with the
execution given the conflicting decisions of the Court of Appeals' Special Second Division in CA-G.R. SP No. 72480 and the Court of Appeals' Fourteenth Division in CA-
G.R. SP No. 72509 that were also passed upon by this Court, respectively, in G.R. Nos. 161159 and 161311 and in G.R. No. 164998. The NLRC ruled:

At the outset, it must be stated that while this Commission has broad powers within its sphere of jurisdiction, it cannot encroach on judicial power which is the exclusive
domain of the courts. The Court of Appeals has two contrasting rulings, one upholding the legality of complainants' dismissal, and the other declaring such dismissal
illegal. This Commission has no power to overrule what has been decided by the courts. This is especially true with respect to judgments that have become final and
executory not only at the level of the Court of Appeals, but also of the Supreme Court.

Indeed, there is an insurmountable obstacle in the execution of the decision favoring complainants. 1âwphi1 If We let execution proceed, We will disregard the Court of
Appeals' ruling in the MERALCO petition. On the other hand, We cannot declare complainants to have been legally dismissed as this will contravene the Court of Appeals'
ruling in the Frondozo petition.
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Confronted with this dilemma, and in deference to the exercise of the judicial power as the courts may find appropriate, this Commission has no recourse but to enjoin
all proceedings until the parties would have exhausted all available judicial remedies toward the possible reconciliation of the contrasting decisions.

WHEREFORE, there being no speedy or adequate remedy in the ordinary course of law, MERALCO's prayer for preliminary injunction is GRANTED. All proceedings with
this Commission as well as with the Labor Arbiter are hereby enjoined and suspended until further orders from the appropriate court.

SO ORDERED.36

Two sets of respondents filed their respective motions for reconsideration. In its Resolution promulgated on 26 May 2006, 37 the NLRC denied the motions.

Frondozo, Perez, Zafra, Vito, Cruz, N. dela Cruz, and Diloy filed a petition for certiorari before the Court of Appeals assailing the 28 February 2006 and 26 May 2006
Resolutions of the NLRC.

The Decision of the Court of Appeals

In its 6 March 2007 Decision, the Court of Appeals affirmed the 28 February 2006 and 26 May 2006 Resolutions of the NLRC. According to the Court of Appeals,
MERALCO's recourse was due to the two separate petitions before it (CA-G.R. SP No. 72480 and CA-G.R. SP No. 72509) that resulted in two contradictory rulings on the
matter of petitioners' dismissal. The Court of Appeals acknowledged that the execution of a final judgment is a matter of right on the part of the prevailing party and is
mandatory and ministerial on the part of the court or tribunal issuing the judgment. However, the Court of Appeals stated that a suspension or refusal of execution of
judgment or order on equitable grounds can be justified when there are facts or events transpiring after the judgment or order had become final and executory, thus
materially affecting the judgment obligation.

The Court of Appeals stated:

In the case at bar, finality of the CA Decision in SP No. 72480 on May 24, 2004, is a supervening event which transpired afterthe CA Decision in SP 72509 (which was in
favor of petitioners) had become final and executory, and which decision directly contradicts the ruling in the said case. It may also be noted that the Resolution of the
Supreme Court's Third Division in G.R. No. 161311 categorically declared that the petition filed by herein petitioners is being denied for their failure to show that a
reversible error has been committed by the appellate court in rendering the decision in CA-G.R. SP No. 72480. Hence, with the denial with finality of the petition for
review in G.R. No. 161159 (161311) the CA Decision in SP 72480 upholding the dismissal of petitioners has clearly become a legal obstacle to the enforcement of the
final and executory decision in SP 72509 which in effect declared petitioners to have been illegally dismissed and upheld their right to back wages computed from
December 14, 2001 and up to the date of their actual reinstatement.

In fine, no grave abuse of discretion was committed by the NLRC in granting preliminary injunction to private respondent MERALCO and enjoining or suspending all
proceedings for the implementation of the 2nd alias writ of execution earlier issued by Labor Arbiter Guerrero with respect to the back wages/monetary award and
reinstatement of petitioners pursuant to the May 29, 2002 Decision of the NLRC as affirmed/modified by the CA Decision in SP No. 72509.

As to the contention of petitioners that the NLRC should have instead proceeded to reconcile or harmonize the conflicting decisions rendered by the two (2) divisions of
the Court, We find the same untenable and runs against established principles of immutability of final judgments in this jurisdiction. In fact, nothing is more settled in
law than that once a judgment attains finality it thereby becomes immutable and unalterable. It may no longer be modified in any respect, even if modification is meant
to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it
or by the highest court of the land.
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We cannot but concur with the NLRC's pronouncement that MERALCO has no speedy and adequate remedy in the ordinary course of law for the preservation of its rights
and interests, at least insofar only and solely as to avoid the injurious consequences of the 2nd alias writ of execution relative to the reinstatement aspect of the final
decision in CA-G.R. No. SP 72509.38

The dispositive portion of the Court of Appeals' Decision reads:

WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and accordingly DISMISSED for lack of merit. The challenged Resolutions dated
February 28, 2006 and May 26, 2006 of the National Labor Relations Commission are hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.39 (Italicization in the original)

The petitioners in CA-G.R. SP No. 95747 filed a motion for reconsideration. In its 14 June 2007 Resolution, the Court of Appeals denied the motion for lack of merit.

Hence, the petition for review filed before this Court by Frondozo, Perez, Zafra, Vito, Cruz, N. dela Cruz, and Diloy. 40

Petitioners alleged that the Court of Appeals committed grave abuse of discretion in upholding the 28 February 2006 and 26 May 2006 Resolutions of the NLRC, in not
passing upon the issues of reinstatement and release of the garnished amount against MERALCO, and in ruling that the Decision in CA-G.R. SP No. 72480 is considered
a bar in the implementation of the Decision in CA-G.R. SP No. 72509.

The Issue

Whether the Court of Appeals committed a reversible error in upholding the NLRC in issuing the writ of preliminary injunction prayed for by MERALCO.1âwphi1

The Ruling of this Court

The petition has no merit.

The Court of Appeals cited the 2005 Revised Rules of Procedure of the NLRC which provides that "[u]pon issuance of the entry of judgment, the Commission, motu
proprio or upon motion by the proper party, may cause the execution of the judgment in the certified case." According to the Court of Appeals, the 2005 Revised Rules
of Procedure of the NLRC did not make a distinction between decisions or resolutions decided by the Labor Arbiter and those decided by the Commission in certified
cases when an order of reinstatement is involved. Thus, even when the employer had perfected an appeal, the Labor Arbiter must issue a writ of execution for actual or
payroll reinstatement of the employees illegally dismissed from the service. The Court of Appeals also cited Article 223 of the Labor Code which provides that the
reinstatement aspect of the Labor Arbiter's Decision is immediately executory.

In this case, the applicable rule is Article 263 of the Labor Code and the NLRC Manual on Execution of Judgment, as amended by Resolution No. 02-02, series of 2002.
Section 1, Rule III of the NLRC Manual on Execution of Judgment provides:

Section 1. Execution Upon Final Judgment or Order. Execution shall issue only upon a judgment or order that finally disposes of an action or proceeding, except in
specific instances where the law provides for execution pending appeal.

Article 263(i) of the Labor Code, on the other hand, provides:

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(i) The Secretary of Labor and Employment, the Commission or the voluntary arbitrator shall decide or resolve the dispute within thirty (30) calendar days from the date
of the assumption of jurisdiction or the certification or submission of the dispute, as the case may be. The decision of the President, the Secretary of Labor and
Employment, the Commission or the voluntary arbitrator shall be final and executory ten (10) calendar days after receipt thereof by the parties.

A judicial review of the decisions of the NLRC may be filed before the Court of Appeals via a petition for certiorariunder Rule 65 of the Rules of Court but the petition
shall not stay the execution of the assailed decision unless a restraining order is issued by the Court of Appeals. 41

In this case, the NLRC issued an Entry of Judgment stating that the 29 May 2002 NLRC Order became final and executory on 19 June 2002; a Writ of Execution was
issued; and MERALCO complied with the payroll reinstatement of petitioners. However, with the promulgation of the 30 May 2003 Decision of the Court of Appeals'
Special Second Division, finding that the 6-8 June 1991 strike was illegal, illegal acts marred with violence and coercion were committed, and dismissing petitioners from
the service, MERALCO stopped the payroll reinstatement. This prompted petitioners to move for the issuance of an Alias Writ of Execution for the satisfaction of their
accrued wages arising from the recall of their payroll reinstatement which Labor Arbiter Guerrero granted on 10 June 2004. Later, a second Alias Writ of Execution was
issued.

As both the NLRC and the Court of Appeals stated, they were confronted with two contradictory Decisions of two different Divisions of the Court of Appeals. The petitions
questioning these two Decisions of the Court of Appeals were both denied by this Court and the denial attained finality. The Court of Appeals sustained the NLRC that
the 30 May 2003 Decision of the Court of Appeals’ Special Second Division is a subsequent development that justified the suspension of the Alias Writs of Execution.

There are instances when writs of execution may be assailed. They are:

(1) the writ of execution varies the judgment;

(2) there has been a change in the situation of the parties making execution inequitable or unjust;

(3) execution is sought to be enforced against property exempt from execution;

(4) it appears that the controversy has been submitted to the judgment of the court;

(5) the terms of the judgment are not clear enough and there remains room for interpretation thereof; or

(6) it appears that the writ of execution has been improvidently issued, or that it is defective in substance, or issued against the wrong party, or that the judgment debt
has been paid or otherwise satisfied, or the writ was issued without authority. 42

The situation in this case is analogous to a change in the situation of the parties making execution unjust or inequitable. 1âwphi1 MERALCO's refusal to reinstate
petitioners and to pay their backwages is justified by the 30 May 2003 Decision in CA-G.R. SP No. 72480. On the other hand, petitioners' insistence on the execution of
judgment is anchored on the 27 January 2004 Decision of the Court of Appeals' Fourteenth Division in CA-G.R. SP No. 72509. Given this situation, we see no reversible
error on the part of the Court of Appeals in holding that the NLRC did not commit grave abuse of discretion in suspending the proceedings. Grave abuse of discretion
implies that the respondent court or tribunal acted in a capricious, whimsical, arbitrary or despotic manner in the exercise of its jurisdiction as to be equivalent to lack of
jurisdiction.43 Thus, this Court declared:

The term "grave abuse of discretion" has a specific meaning. An act of a court or tribunal can only be considered as with grave abuse of discretion when such act is done
in a "capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction." The abuse of discretion must be so patent and gross as to amount to an
"evasion of a positive duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an
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arbitrary and despotic manner by reason of passion and hostility." Furthermore, the use of a petition for certiorari is restricted only to "truly extraordinary cases wherein
the act of the lower court or quasi-judicial body is wholly void." From the foregoing definition, it is clear that the special civil action of certiorariunder Rule 65 can only
strike an act down for having been done with grave abuse of discretion if the petitioner could manifestly show that such act was patent and gross. x x x. 44

Clearly, the NLRC did not act in a capricious, whimsical, arbitrary, or despotic manner. It suspended the proceedings because it cannot revise or modify the conflicting
Decisions of the Court of Appeals.

However, we need to resolve the issue on the conflicting Decisions in order to put an end to this litigation.

The Court of Appeals stated that "the finality of the CA Decision in SP No. 72480 on May 24, 2004, is a supervening event which transpired after the CA Decision in SP
No. 72509 (which was in favor of petitioners) had become final and executory." 45 This is not accurate. The Decision in CA-G.R. SP No. 72480 was promulgated on 30
May 2003. The Decision in CA-G.R. SP No. 72509 was promulgated on 27 January 2004. Even when the cases were elevated to this Court, G.R. No. 161159 and G.R.
No. 161311 were resolved first before G.R. No. 164998. The Court's 23 February 2004 Resolution and the 24 May 2004 Resolution, both favoring MERALCO, became
final and executory on 15 July 2004 and 2 September 2004, respectively, while the Resolution of 15 June 2005 which denied MERALCO's petition for review became final
and executory on 4 October 2005, over a year after the final resolutions in G.R. Nos. 161159 and 161311.

Further, contrary to the finding of the Court of Appeals that CA-G.R. SP Nos. 72480 and 72509 attained finality without this Court actually passing upon the merits of
the illegal dismissal aspect, this Court actually ruled on the merits of CA-G.R. SP No. 72480. The Court's Third Division denied the petition in G.R. No. 161159 in its 23
February 2004 Resolution on the ground that the petitioners failed to show that a reversible error had been committed by the Court of Appeals in rendering its Decision
in CAG.R. SP No. 72480. The Court's Third Division also denied the petition in G.R. No. 161311 in its 24 May 2004 Resolution for failure of the petitioners to show that a
reversible error had been committed by the appellate court in the same case, CA-G.R. SP No. 72480.

In Agoy v. Araneta Center, Inc., 46 this Court explained that "[ w ]hen the Court does not find any reversible error in the decision of the CA and denies the petition, there
is no need for the Court to fully explain its denial, since it already means that it agrees with and adopts the findings and conclusions of the CA. The decision sought to be
reviewed and set aside is correct." Hence, the Court's Third Division adopted the findings and conclusions reached by the Court of Appeals in CA-G.R. SP No. 72480
which dismissed petitioners from the service. The finality of the denial of the petitions in G.R. Nos. 161159 and 161311 should be given greater weight than the denial of
the petition in G.R. No. 164998 on technicality. It can also be interpreted that, in effect, the finality of the denial of the petitions in G.R. Nos. 161159 and 161311 also
removed the jurisdiction of the Court's First Division and bound it to the final resolution in G.R. Nos. 161159 and 161311. The Court's First Division denied MERALCO's
petition for failure to prosecute only on 15 June 2005, long after the denial of the petitions in G.R. Nos. 161159 and 161311 became final and executory on 15 July 2004
and 2 September 2004, respectively.

WHEREFORE, we DENY the petition. We REMAND this case to the National Labor Relations Commission for the execution of the 23 February 2004 and the 24 May 2004
Resolutions of this Court's Third Division in G.R. Nos. 161159 and 161311 in accordance with this Decision.

SO ORDERED.