DEFINITION OF LABOR DISPUTE

THIRD DIVISION [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.
Page | 1
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.
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 Page | 2
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.
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 injunction5 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. Page | 3
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 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 dispute8. 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, Page | 4
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.
Narvasa, C.J., Romero, and Purisima, JJ., concur.
Kapunan, J., no part. He was a signatory of its CA decision appealed from.

[1]CA-G.R. No. SP 25584, promulgated on March 31, 1992.

[2]Adopted on February 12, 1993
3 Petition, Annex "A", Rollo, pp. 37- 42.
4 Civil Case No. 90-1612.
5 CA-G.R. SP No. 25584.
6 Sandigan Savings and Loan Bank, Inc. v. National Labor Relations Commission, 254 SCRA

126; See also Victorias Milling Co., Inc. v. National Labor Relations Commission, 262 SCRA
623; Filipinas Broadcasting Network, Inc. v. NLRC and Simeon Mapa, Jr., G.R. No. 118892,
March 11, 1998.
7 Philippine Airlines, Inc. v. National Labor Relations Commission, 263 SCRA 638; Georg

Grotjahn GMBH & Co. vs. Isnani, 235 SCRA 216.

8 Cf. Liwayway Publications, Inc. v. Permanent Concrete Workers Union, 108 SCRA 161; Trade

Union of the Philippines & Allied Services v. Coscolluela, 140 SCRA 302 [1985].
9 Serdoncillo v. Benolirao, G.R. No. 118328, October 8, 1998, citing cases; San Miguel Corp. v.

National Labor Relations Commission, 255 SCRA 133.

10 Serdoncillo v. Benolirao, supra, citing Banayos v. Susana Realty, Inc., 71 SCRA 557 [1976]
11 National Mines and Allied Workers Union v. Vera, 133 SCRA 259; Pealosa v. Villanueva, 177

SCRA 778.
SECOND DIVISION [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 Page | 5
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 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 Page | 6
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:
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 Page | 7
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 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 Page | 8
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:
(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 Page | 9
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]
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." Page | 10
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.
Regalado (Chairman), Melo, Puno, and Mendoza, JJ., concur.

[1] Annex "3", pp. 134-147, Rollo.

[2] Annex "A", pp. 19-23, Rollo.
[3] Annex "1", pp. 124-133, Rollo.
[4] Annex B, pp. 24-46, Rollo.
[5] Del Rosario vs. Court of Appeals, 255 SCRA 152 [1996].
[6] Devesa vs. Arbes, 13 Phil. 273 [1909]; Gilchrist vs. Cuddy, et.al., 29 Phil. 542 [1915]
[7] See also Pondoc vs. National Labor Relations Commission, 262 SCRA 632, 638 [1996].
[8] Article 212(l), Labor Code of the Philippines.
[9] Federico B. Moreno, Philippine Law Dictionary, 1982 edition, p. 136.
[10] Delumen vs. Republic, 94 Phil. 288, cited in Moreno, supra, p. 336.
[11] Article 217 (a), Labor Code of the Philippines.
[12] Pondoc vs. NLRC, supra.
[13] Mt. Vermon vs. Borman, 100 Ohio St., 2, 75, 125 NE 116[1919].
[14] See Silvestre vs. Torres, 57 Phil. 885.
[15] Article 217 (a) Labor Code of the Philippines.
[16] 22 Phil., 465
[17] Section 1, Rule XI of the New Rules of Procedure of the NLRC. See also Pondoc vs.

NLRC, supra.
[18] Allundorff vs. Abrahanson, 38 Phil. 58 cited in Phil. Virginia Tobacco Administration vs. De

los Angeles, 164 SCRA 555 [1988].

[19] Phil. Law Dictionary, supra., p. 321 .
[20] 48 Am. Jur. 2d, 2071, p. 437, cited in Azucena, The Labor Code, vol. 2, 1996 ed., p. 430
[21] Ibid., p. 35
MANAGERIAL EMPLOYEE

FIRST DIVISION G.R. No. 159577 May 3, 2006

CHARLITO PEÑARANDA, Petitioner, vs.
BAGANGA PLYWOOD CORPORATION and HUDSON CHUA, Respondents.
DECISION
PANGANIBAN, CJ: Page | 11
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, 20032 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 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 Page | 12
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
"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 Page | 13
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
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.
"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 Page | 14
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.
FIRST DIVISION 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 Page | 15
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.
This Petition for Review on Certiorari seeks to reverse and set aside the Court of Appeal’s March
15, 2005 Decision1 in CA-G.R. SP No. 58203, which annulled and set aside the January 13,
2000 Decision2 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 Decision6 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
Code7 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 Decision8 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 Page | 16
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:
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
I
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
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 Page | 17
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 Union14 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, 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. Page | 18
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 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-laws26— 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 24527 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). Page | 19
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 descriptions29 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:
"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 Page | 20
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
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- Page | 21
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.
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.
THIRD DIVISION

PAMELA FLORENTINA G.R. No. 187887

P. JUMUAD,
Petitioner, Present:

VELASCO, JR, J., Chairperson, Page | 22

PERALTA,
ABAD,
- versus - VILLARAMA, JR.,* and
MENDOZA, JJ.

HI-FLYER FOOD, INC. and/or JESUS R. Promulgated:

MONTEMAYOR,
Respondents. September 7, 2011

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

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,
4th 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 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
3rd 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 Page | 23
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.

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, 13th 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 Page | 24
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
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
 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.
Page | 25
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:

WHEREFORE, in view of the foregoing, the Petition is GRANTED. The

Decision of the National Labor Relations Commission (4th 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]
Page | 26
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]

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 4TH 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 4THDIVISION 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:

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. Page | 27

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 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 Page | 28
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:

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] Page | 29

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]
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.